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Data Science for Social Impact 36

4043

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 325/2022 In the matter between: ASSOCIATION FOR VOLUNTARY STERILIZATION OF SOUTH AFRICA APPELLANT and STANDARD TRUST LIMITED FIRST RESPONDENT PROFESSOR MUSHI MATJILA NO SECOND RESPONDENT ASSOCIATE PROFESSOR LIONEL GREEN-THOMPSON NO THIRD RESPONDENT EDWARD LESLIE HAYNES-SMART NO FOURTH RESPONDENT UNIVERSITY OF CAPE TOWN FIFTH RESPONDENT MASTER OF THE HIGH COURT, CAPE TOWN SIXTH RESPONDENT Neutral citation: Association for Voluntary Sterilization of South Africa v Standard Trust Limited and Others (325/2022) [2023] ZASCA 87 (7 June 2023) Coram: PONNAN, SALDULKER and MEYER JJA and KATHREE-SETILOANE and SIWENDU AJJA Heard: 3 May 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down are deemed to be delivered on 7 June 2023. Summary: Section 21(1)(c) of the Superior Courts Act 10 of 2013 ─ enquiry into a determination of existing, future or contingent right or obligation ─ declaratory order ─ when competent ─ appeal fails at two related preliminary levels ─ first, no practical effect ─ relief sought in the application does not address any acts taken by the respondents ─ second, nature and extent of declaratory order ─ order sought on appeal is irredeemably vague, lacks certainty and is unclear. ____________________________________________________________________ ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Allie J, sitting as court of first instance). The appeal is dismissed with costs. JUDGMENT Saldulker JA (Ponnan and Meyer JJA and Kathree-Setiloane and Siwendu AJJA concurring): [1] This appeal is against the judgment of the Western Cape Division of the High Court, Cape Town, per Allie J (the high court). The high court dismissed an application for declaratory relief brought by the appellant, the Association for Voluntary Sterilization of South Africa (AVSSA). The appeal is with the leave of this Court. [2] The declaratory relief sought by the appellant involved the interpretation of a clause in a will (the will) executed by a Mr James Scratchley (the testator) on 16 May 1982. The testator died in 1982. In terms of the will, he bequeathed the residue of his estate to his administrators to be held in a testamentary trust, the James Sivewright Scratchley Testamentary Trust (the trust), the income of which was to be paid to Mrs Agnes Scratchley, his wife, until her death. The first respondent, Standard Trust Limited, is the sole trustee of the trust. Following the death of Mrs Scratchley, and in accordance with the testator’s wishes, a committee was established comprising the Chairman of AVSSA, the Professor of Gynaecology of the Medical Faculty at the University of Cape Town (UCT), the Medical Officer of Health, Cape Town and the Dean of the Medical Faculty at UCT (the committee). The second and third respondents, Professor Matjila NO and Associate Professor Green-Thompson NO of UCT, along with the fourth respondent, Mr Edward Haynes-Smart of AVSSA, currently make up the committee. [3] AVSSA is a beneficiary of the trust. The will provided that the committee shall work in close collaboration with and render such financial assistance as it deems fit to AVSSA. The committee would, subject to clause 4.3.2.1 of the will, have the responsibility, in their absolute discretion and after they had been informed by the administrators of the testator’s estate of the amount of income available for these purposes, to select beneficiaries and disburse to them such amounts for such purpose as the said committee may from time to time direct, in line with the object of the trust. The object of the trust was to utilise the income therefrom for the purposes described in clauses 4.3.2.1 and 4.3.2.2 of the will in such proportions as the committee may determine, it being the testator’s intention that priority was at all times to be given to the allocation of the moneys for the purposes envisaged in clause 4.3.2.1 of the will. In terms of clause 4.3.2.1, the committee was obliged to apply the income of the Trust for the following purpose: ‘4.3.2.1 To financially assist, to the extent that this is possible and as far as medical ethics and the Law permits and in whatever form is deemed appropriate, any established venture which has as its sole object the furtherance of the cause of Family Limitation and Planning and/or Voluntary Sterilisation in the Republic of South Africa it being my particular wish that, in this context, funds be utilised to establish Clinics (mobile or otherwise) and to disseminate propaganda and information by such means as may be available.’ [4] There is disagreement amongst the members of the committee regarding the meaning of the word ‘planning’ in the phrase ‘Family Limitation and Planning’ in clause 4.3.2.1 of the testator’s will. They are accordingly not in agreement as to who should benefit from the Trust. [5] The high court held that the appellant had not laid a basis for the relief sought. Before this Court, aside from the question of costs, the appellant seeks declaratory relief set out in paragraph 1.2 of the notice of motion. It contends that the word ‘planning’ in clause 4.3.2.1 of the will refers to the limiting of births, rather than the spacing and timing of births. [6] It is common cause that the relief sought in this appeal by AVSSA is not directed against any decision taken by the committee. Thus, this Court on 19 April 2023, directed the Registrar to dispatch the following to the parties: ‘In this matter, the relief sought in the application, the subject of the appeal, is not directed at any of the decisions taken or implemented by the Committee, whether in relation to the selection of beneficiaries or disbursement of monies. Accordingly: (i) will the judgment and order sought on appeal have any practical effect or result as contemplated in section 16(2)(a) of the Superior Courts Act? (ii) that aside, is the order to which the appellant confines itself on appeal not irredeemably vague? See inter alia: Clear Enterprises v Commissioner, SARS [2011] ZASCA 164 paras 16-19; Minister of Water & Environmental Affairs v Kloof Conservancy [2015] ZASCA 177 paras 13- 14; West Coast Rock Lobster Association v Minister of Environmental Affairs & Tourism [2010] ZASCA 114 paras 40-45. In the circumstances, should the appeal be persisted in, the appellant must be prepared to fully address these questions at the hearing of the matter.’ [7] Section 21(1) of the Superior Courts Act 10 of 2013 (Superior Courts Act) provides: ‘21 Persons over whom and matters in relation to which Divisions have jurisdiction (1) A Division has jurisdiction over all persons residing or being in, and in relation to all causes arising and all offences triable within, its area of jurisdiction and all other matters of which it may according to law take cognisance, and has the power – (a) to hear and determine appeals from all Magistrates’ Courts within its area of jurisdiction; (b) to review the proceedings of all such courts; (c) in its discretion, and at the instance of any interested person, to enquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon the determination.’ [8] In Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd,1 Jafta JA said of s 19(1)(a)(iii) of the Supreme Court Act 59 of 1959 (the predecessor to s 21(1)(a)) that: ‘[16] Although the existence of a dispute between the parties is not a prerequisite for the exercise of the power conferred upon the High Court by the subsection, at least there must be interested parties on whom the declaratory order would be binding. The applicant in a case such as the present must satisfy the court that he/she is a person interested in an “existing, future or contingent right or obligation” and nothing more is required (Shoba v Officer Commanding, Temporary Police Camp, Wagendrif Dam 1995 (4) SA 1 (A) at 14F). In Durban City Council v Association of Building Societies 1942 AD 27 Watermeyer JA with reference to a section worded in identical terms said at 32: “The question whether or not an order should be made under this section has to be examined in two stages. First the court must be satisfied that the applicant is a person interested in an ‘existing, future or contingent right or obligation’, and then, if satisfied on that point, the Court must decide whether the case is a proper one for the exercise of the discretion conferred on it.”.’ [9] The difficulty in this matter is that there is no decision of the committee that has been challenged. In para 9 of the second respondent’s answering affidavit, the point is made that the relief sought in the application does not address any acts taken by the committee, or by the trust, that have been implemented, whether in relation to discretionary decisions as to the selection of beneficiaries or the disbursements of amounts to such beneficiaries. The decisions of the committee therefore stand and they will continue to have consequences. [10] In Cordiant, this Court said that: ‘[17] It seems to me that once the applicant has satisfied the court that he/she is interested in an “existing, future or contingent right or obligation”, the court is obliged by the subsection to exercise its discretion. This does not, however, mean that the court is bound to grant a declarator but that it must consider and decide whether it should refuse or grant the order, following an examination of all relevant factors. In my view, the statement in the above dictum, to the effect that once satisfied that the applicant is an interested person, “the Court must decide whether the case is a proper one for the exercise of the discretion” should be read in its proper context. Watermeyer JA could not have meant that in spite of the applicant 1 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd [2005] ZASCA 50; [2006] 1 All SA 103 (SCA); 2005 (6) SA 205 (SCA) para 16. establishing, to the satisfaction of the court, the prerequisite factors for the exercise of the discretion the court could still be required to determine whether it was competent to exercise it. What the learned Judge meant is further clarified by the opening words in the dictum which indicate clearly that the enquiry was directed at determining whether to grant a declaratory order or not, something which would constitute the exercise of a discretion as envisaged in the subsection (cf Reinecke v Incorporated General Insurances Ltd 1974 (2) SA 84 (A) at 93A-E).’ In this matter the high court, having examined all the relevant facts, declined to grant the declaratory order sought by the appellant. [11] The test for interference by this Court, as an appellate court, is set out in Reinecke v Incorporated General Insurance Ltd.2 At 99B-E Wessels JA said: ‘It follows, in my opinion, that counsel’s contention that the Court a quo lacked jurisdiction to make a declaratory order cannot be upheld. In conclusion, there remains for consideration Mr Wulfsohn’s alternative argument relating to the exercise of its discretionary power by the Court a quo, which proceeded from the assumption that the learned Judge had misdirected himself in the respect to which I have already referred to earlier in this judgment. It was submitted on respondent’s behalf that, even if it appeared that the learned Judge had misdirected himself in the exercise of his discretion, this Court would not allow the appeal if the order appealed from is, notwithstanding the misdirection, clearly consistent with the proper exercise of a judicial discretion. This approach necessarily requires this Court to bring a judicial discretion to bear upon the question whether or not the case is a proper one for the granting of a declaratory order. In the absence of misdirection or irregularity, this Court would ordinarily not be entitled to substitute its discretion for that of the Court a quo.’ (Own emphasis.) In this case no misdirection or irregularity has been relied upon. Thus, we are not simply at large to interfere with the discretion exercised by the high court. [12] Whilst it is correct that the absence of an existing dispute is not an absolute bar to the grant of a declaratory order, a court may decline to grant such an order if it regards the question raised before it as hypothetical, abstract or academic. This Court in West Coast Rock Lobster Association and Others v Minister of Environmental Affairs and Tourism and Others,3 has said the following: 2 Reinecke v Incorporated General Insurances Ltd [1974] 2 All SA 80 (A); 1974 (2) SA 84 (A). 3 West Coast Rock Lobster Association and Others v Minister of Environmental Affairs and Tourism and Others [2010] ZASCA 114; [2011] 1 All SA 487 (SCA) para 45. ‘What was required was that there should be interested parties upon whom the declaratory order would be binding. In considering whether to grant a declaratory order a court exercises a discretion with due regard to the circumstances. The court must be satisfied that the applicant has an interest in an existing, future or contingent right or obligation. If the court is so satisfied it must consider whether or not the order should be granted. In exercising its discretion the court may decline to deal with the matter where there is no actual dispute. The court may decline to grant a declaratory order if it regards the question raised before it as hypothetical, abstract or academic. Where a court of first instance has declined to make a declaratory order and it is held on appeal that that decision is wrong the matter will usually be remitted to the lower court.’ [13] Importantly, what this Court said in Clear Enterprises (Pty) Ltd v Commissioner for the South African Revenue Services and Others,4 bears relevance. Ponnan JA said that absent an undisputed factual substratum, it would be extremely difficult to define the limits of a declaratory relief: ‘[16] . . . Not all of the cases pending before the High Court involve the same parties. To the extent that they concern different parties any declaratory order that issues can hardly be binding on those other parties. Moreover, each of the pending applications involves different vehicles. The fallacy in the approach of the parties is that they assume, erroneously so, that what confronts us is a discrete point of statutory construction. It is not. It is first and foremost a fact-based enquiry. Any interpretive exercise to be undertaken will be inextricably linked to the facts. And, it is trite that every case has to be decided on its own facts. That is particularly the case where, as here, the one party contends that the facts advanced by the other are a “sham”, “fictional” and a “stratagem” to circumvent the applicable legislation. It follows that efforts to compare or equate the facts of one case to those of another are unlikely to be of assistance. For, as we well know, parties frequently endeavour to distinguish their case on the facts from those reported decisions adverse to their cause. Moreover, absent an undisputed factual substratum, it would be extremely difficult to define the limits of the declaratory relief that should issue.’ [14] As Kriegler J pointed out in Ferreira v Levin NO and Others,5 and quoted at para 17 in Clear Enterprises: 4 Clear Enterprises (Pty) Ltd v Commissioner for South African Revenue Services and Others [2011] ZASCA 164 (SCA) paras 16-19. 5 Ferreira v Levin NO and Others; Vryenhoek v Powell NO and Others 1996 (1) BCLR 1 (CC); 1996 (1) SA 984 (CC). ‘Simply put, whatever issues do arise in the pending matters none of them are yet “ripe” for adjudication by this Court. To borrow from Kriegler J in Ferreira v Levin NO & others; Vryenhoek v Powell NO & others 1996 (1) SA 984 (CC) para 199: “The essential flaw in the applicants' cases is one of timing or, as the Americans and, occasionally the Canadians call it, ‘ripeness’. That term has a particular connotation in the constitutional jurisprudence of those countries which need not be analysed now. Suffice it to say that the doctrine of ripeness serves the useful purpose of highlighting that the business of a Court is generally retrospective; it deals with situations or problems that have already ripened or crystallised, and not with prospective or hypothetical ones. Although, as Professor Sharpe points out and our Constitution acknowledges, the criteria for hearing a constitutional case are more generous than for ordinary suits, even cases for relief on constitutional grounds are not decided in the air. And the present cases seem to me, as I have tried to show in the parody above, to be pre-eminent examples of speculative cases. The time of this Court is too valuable to be frittered away on hypothetical fears of corporate skeletons being discovered.”.’ [15] It is trite that an order of court has to be certain and clear. Initially the appellant in its Notice of Motion sought the following order: ‘1. Declaring clause 4.3.2.1 of the Will of the late James Sivewright Scratchley (Will) to mean that “The words ‘Family Limitation and Planning and/or Voluntary Sterilisation in the Republic of South Africa’ to mean the limiting of births, rather than the spacing and timing of births”. Properly construed what they meant was ‘limiting of births’ instead of spacing and timing of births. This in my view is the construction that the appellants ultimately settled upon during the debate before us. [16] There is a presumption against tautology.6 In their replying affidavit the appellant accepted that it may well be that the interpretation favoured by it would give rise to tautology. It was stated: ‘in the sense that counselling people on the benefit of having no children, contraception or sterilization are all methods to achieve family limitation (so that to say those things after the word “limitation” involves a measure of repetition) but there is no difficulty with that. People use tautology in speech and writing all the time’. The appellant seeks to attribute to the testator’s will 6 See the dictum in Portion 1 of 46 Wadeville (Pty) Ltd v Unity Cutlery (Pty) Ltd [1984] 1 All SA 260 (A); 1984 (1) SA 61 (A) at 70A-72C. an intention equating the use of the word ‘planning’ to ‘limiting of births’, and not family planning in the broader sense. [17] The sum effect of what the appellant is suggesting is that we should not merely interpret the will, but that we must put a red line through the relevant provision and substitute in its stead the words ‘limiting of births’. That will not be an interpretative exercise, but a recrafting of the will. [18] In the circumstances, the high court cannot be faulted for declining to issue the declaratory order sought by the appellant. It was contended that the costs order of the high court warrants reconsideration. However, it is trite that costs is in the discretion of the court below and that in the absence of a misdirection, a court of appeal will not interfere therewith. [19] In the result, the appeal is dismissed with costs. ______________________________ H K SALDULKER JUDGE OF APPEAL Appearances For the appellant: D W Baguley Instructed by: Assheton-Smith Ginsberg Inc, Cape Town Michael du Plessis Attorneys, Bloemfontein For the second, third and fifth respondents: R Goodman SC Instructed by: Fairbridges Wertheim Becker, Cape Town McIntyre Van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 7June 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 Association for Voluntary Sterilization of South Africa v Standard Trust Limited and Others (325/2022) [2023] ZASCA 87 (7June 2023) Today, the Supreme Court of Appeal (SCA) dismissed an appeal with costs against the judgment of the Western Cape Division of the High Court, Cape Town (the high court), which dismissed an application for declaratory relief brought by the appellant, the Association for Voluntary Sterilization of South Africa (AVSSA). The declaratory relief sought by the appellant involved the interpretation of a clause in a will executed by a Mr James Scratchley (the testator) on 16 May 1982 (the will). In terms of the will, he bequeathed the residue of his estate to his administrators to be held in a testamentary trust, the James Sivewright Scratchley Testamentary Trust (the trust). The first respondent, Standard Trust Limited, was the sole trustee of the trust. In accordance with the testator’s wishes, a committee was established comprising the Chairman of AVSSA, the Professor of Gynaecology of the Medical Faculty at the University of Cape Town (UCT), the Medical Officer of Health, Cape Town and the Dean of the Medical Faculty at UCT (the committee). The second and third respondents, Professor Matjila NO and Associate Professor Green- Thompson NO of UCT, along with the fourth respondent, Mr Edward Haynes-Smart of AVSSA, made up the committee at the time of the case. AVSSA was a beneficiary of the trust. There was disagreement amongst the members of the committee regarding the meaning of the word ‘planning’ in the phrase ‘Family Limitation and Planning’ in clause 4.3.2.1 of the testator’s will. They were accordingly not in agreement as to who should benefit from the Trust. Before the SCA, the appellant contended that the word ‘planning’ in clause 4.3.2.1 of the will referred to the limiting of births, rather than the spacing and timing of births. It was common cause that the relief sought in the appeal by AVSSA was not directed against any decision taken by the committee. Thus, the SCA directed the Registrar to notify the parties to be prepared to address the Court on the following matters: (i) would the judgment and order sought on appeal have any practical effect or result as contemplated in s 16(2)(a) of the Superior Courts Act 10 of 2013? (ii) whether the order to which the appellant confined itself on appeal was not irredeemably vague? The SCA found that the high court, having examined all the relevant facts, correctly declined to grant the declaratory order sought by the appellant. Thus, the SCA found that it was not simply at large to interfere with the discretion exercised by the high court. The SCA found further that the appellant sought to attribute to the testator’s will an intention equating the use of the word ‘planning’ to ‘limiting of births’, and not family planning in the broader sense. The appellant accepted that its interpretation might have given rise to tautology. The SCA found that the sum effect of what the appellant suggested was that it should not merely interpret the will, but that it ought to put a red line through the relevant provision and substitute in its stead the words ‘limiting of births’. That, the SCA found, would not have been an interpretative exercise, but a recrafting of the will. Thus, the SCA held that, in the circumstances, the high court could not be faulted for declining to issue the declaratory order sought by the appellant. ~~~~ends~~~~

4173

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1280/2021 In the matter between: CHAIM COHEN Appellant and ABSA BANK LIMITED Respondent Neutral citation: Cohen v Absa Bank Limited (Case no 1280/2021) [2024] ZASCA 16 (9 February 2024) Coram: MOCUMIE, NICHOLLS and MEYER JJA and CHETTY and KEIGHTLEY AJJA Heard: 1 November 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time of hand-down is deemed to be 11:00 am on 9 February 2024. Summary: Insolvency law – Interpretation – s 31(2) read with s 32 of the Insolvency Act 24 of 1936 – whether a surety has locus standi to invoke s 31(2) to avoid liability to a creditor after the liquidation of the primary debtor. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Mahalelo J, sitting as court of first instance): 1 The application for condonation and reinstatement of the appeal is dismissed with costs, including those of two counsel. 2 The appeal is struck from the roll with costs, including those of two counsel. JUDGMENT Meyer JA (Mocumie and Nicholls JJA and Chetty and Keightley AJJA concurring): [1] The appellant, Mr Chaim Cohen (Mr Cohen), seeks to avoid liability under a deed of suretyship executed in favour of the respondent, Absa Bank Limited (Absa), on the basis of s 31(2) of the Insolvency Act 24 of 1936 (the Insolvency Act).1 As a result of the primary debtor, A Million Up Investments 105 (Pty) Limited (AMU), being unable to meet its obligations under a loan agreement to Absa in full, it was liquidated. Thereafter, Absa sought to hold Mr Cohen liable as surety. In his defence Mr Cohen invoked s 31(2) and alleged that, before its liquidation, AMU colluded with Absa to dispose of property belonging to AMU in a manner which had the effect of prejudicing AMU’s creditors or of preferring one of them above the others. The question is whether s 31(2) permits a surety, in these circumstances, to raise this defence. The commercial court of the Gauteng Division of the High Court, Johannesburg (the high court) said no. Consequently, it ordered Mr Cohen to pay to Absa 40 million rand plus interest 1 Section 31(2) reads: ‘Any person who was a party to such collusive disposition shall be liable to make good any loss thereby caused to the insolvent estate in question and shall pay for the benefit of the estate, by way of penalty, such sum as the Court may adjudge, not exceeding the amount by which he would have benefitted by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim against the estate.’ and costs. It is that finding and order which the surety wishes to assail in this appeal. The appeal is with leave of the high court. [2] Since the appeal record was filed late, the appeal lapsed under rule 8 of the Rules Regulating the Conduct of the Proceedings of the Supreme Court of Appeal. Mr Cohen seeks condonation and the reinstatement of the appeal. His application is opposed by the Absa. Evidentially, Mr Cowen’s founding affidavit fails to provide a full and reasonable explanation which covers the entire period of the delay. It is trite that ‘very weak prospects of success may not offset a full, complete and satisfactory explanation for a delay; while strong merits of success may excuse an inadequate explanation for the delay (to a point)’.2 In this case, as I demonstrate below, it is the absence of any prospects of success that ultimately decide the fate of the application for condonation and reinstatement of the appeal. [3] The following factual background is common cause. In 2006, AMU purchased a property located on Orange Street, Cape Town (the property). Mr Cohen served as the chief executive officer and chairman of AMU’s holding company, Quantum Property Group Limited (QPG). He referred to himself as the ‘driving force and controlling mind on the boards of QPG and AMU’. [4] There were several financing agreements concluded between Absa and AMU. Under these agreements, Absa extended substantial loans to AMU to build a hotel on the property. The hotel, known as 15 on Orange (the hotel), has 129 rooms. There were also plans for 12 penthouses, 2 567 m² of retail space, and 169 parking spaces in the basement of the hotel building. July 2006 marked the beginning of construction. The expected completion date was June 2009, with the hotel scheduled to open on 1 September 2009. [5] In November 2006, a shareholders’ agreement was concluded between AMU and Protea Hotel Group (Pty) Limited (Protea). In terms of this agreement, each party was entitled to 50 percent of the shares in Darwo Trading 75 (Pty) Limited (Darwo), 2 Valor IT v Premier, North West Province and Others [2020] ZASCA 62; [2020] 3 All SA 397 (SCA); 2021 (1) SA 42 (SCA) para 38. the company that was to lease and operate the hotel. Darwo, in turn, concluded a management agreement with African Pride (Pty) Limited (AP), a wholly owned subsidiary of Protea, under which AP agreed to manage Darwo’s hotel operations for a period of 20 years. [6] Absa and AMU signed the first loan agreement in 2006. In April 2008, a new loan agreement was concluded, which replaced the initial one (the 2008 loan agreement). It was agreed that Absa would provide AMU with up to R370 600 000 in funding to build the hotel. The loan was due for repayment in May 2009, which was 34 months following the first drawdown in July 2006. The retail areas within the hotel building were to be fully leased when the hotel opened on 1 September 2009. The penthouse apartments were to be sold ahead of time and transferred once they had been built, generating income to reduce the Absa debt. [7] On 9 January 2008, Mr Cohen signed a deed of suretyship in favour of Absa. Under the suretyship, he bound himself as surety and co-principal debtor, jointly and severally with AMU, in favour of Absa for the repayment on demand of any sum or sums of money which AMU owed or might owe to Absa in the future, from whatever cause arising. He agreed to be bound by all admissions made by or on behalf of AMU. This included, but was not limited to, any acceptance of Absa’s claim by a trustee or liquidator in the case of AMU’s insolvency or liquidation, and any judgment granted by a competent court against AMU in favour of Absa. Absa’s entitlement to recover from Mr Cohen was limited to a minimum amount of R20 million, plus any further amounts for interest and costs that had accrued or would accrue until the date of payment. [8] The hotel construction was not completed on time or within budget. The hotel did not open until December 2009, and even then, only two floors of finished rooms were ready for usage. The retail space areas remained unleased, while the penthouses were still to be completed. Due to the ongoing construction work, the hotel was unable to reap the anticipated benefits of being a preferred hotel during the 2010 FIFA World Cup. [9] AMU needed additional funding due to the delay and cost overruns. It requested an extension of the Absa credit facility. In November 2009, in an addendum, the parties agreed upon the provision of extra funds and an extension of the loan repayment date to 31 March 2010. Due to the loan not being repaid by 31 March 2010, Absa could call up the loan, apply for AMU’s liquidation if payment was not made, and call on the sureties, among whom was Mr Cohen, for payment. During that period, Absa was convinced by AMU and the sureties, including Mr Cohen, that AMU could trade itself into a better financial position, allowing it to repay the loan. Absa and the AMU directors engaged in discussions for several months to achieve a mutually acceptable solution that would enable AMU to repay its debt to Absa. [10] AMU and QPG finally reached an agreement on 16 November 2010 to sign a new ‘Commitment Letter’ and ‘Term Sheet’ to restructure the Absa loan (the 2010 Term Sheet). Mr Cohen, the executive chairman of QPG, presided over the QPG board meeting. On 23 November 2010, the 2010 Term Sheet was signed. It outlined the principles that would govern the restructuring of the credit facility and the implementation of the turnaround plan. [11] The three key components of the financial model that underpinned the 2010 Term Sheet, were the following. First, to lower Absa’s risk and the debt, AMU had to raise R50 million in external equity capital, plus interest of about R9 million (the equity injection). The equity injection deadline was 30 November 2011. QPG had suggested that it would raise funds by issuing and selling debentures. This money could then be used to purchase shares in AMU. Second, AMU had to acquire the whole 100 percent benefit of the revenue generated by the operation of the hotel to pay off the Absa debt (the revenue requirement). In August 2010, AMU board recommended to Absa that AMU purchase Protea’s 50 percent stake in Darwo, the hotel operating company, to meet the full revenue requirement. At the time, Protea’s loan account in Darwo topped R20 million. This meant that in order for AMU to purchase Protea’s shares, it would also need to acquire its loan account. Third, the penthouses had to be sold and the money paid to Absa to reduce the loan. [12] AMU and QPG used the 2010 Term Sheet to inform QPG's shareholders that the loan repayment terms had been extended. Absa and AMU needed to finalize an ‘Amended and Restated Loan Agreement’ (the ARLA), which included the restructuring plan they agreed on in November 2010. Since December 2010, all parties concerned have been negotiating the terms of the formal agreement. Mr. Cohen was actively involved in the early discussions and decisions around this agreement, the agreements with Protea, and the draft sale agreement between Protea and AMU. His position as director of AMU and of QPG was subsequently terminated. [13] The ARLA was ultimately concluded on 31 August 2011. The terms recorded were almost identical to those recorded in the 2010 Term Sheet. Despite the abandonment of the debenture arrangement, the deadline for paying the equity injection requirement was extended to 31 March 2012. To meet the complete revenue requirement, the ARLA included three sets of agreements: The ‘Operator Restructure Agreements’; the ‘Hotel Lease Agreement’; and the ‘New Management Agreement’. These agreements anticipated the sale agreement between Protea and AMU, under which Protea sold and transferred its 50 percent shareholding in Darwo, as well as its loan account to AMU for an amount of R25 million. The sale agreement between Darwo and AMU was concluded on 6 September 2011. AMU settled the acquisition cost by transferring a penthouse to Protea for an estimated value of R11 million. Additionally, cash payments of R11 million and R3 million were made using Absa’s loan facility. [14] As of 31 March 2012, AMU had not paid Absa the mandatory equity injection amount. Following the breach, Absa demanded payment from Absa and from Mr Cohen, qua surety. On 4 June 2012, the board of directors of AMU resolved that ARLA voluntarily begin business rescue proceedings and be placed under supervision. Following an application by Absa, the Western Cape high court issued an order on 18 June 2012, setting aside the resolution. On 29 June 2012, AMU was placed under provisional winding-up by order of court, which order was made final on 14 August 2012. The liquidators accepted Absa’s claim for R576 991 787.69. Following the sale of the property, the liquidators published the amended second and final liquidation and distribution account that showed a deficiency of R380 million payable to Absa. [15] On 1 September 2012, Absa initiated action proceedings against Mr Cohen in the high court, claiming the amount of R20 million, interest plus costs, in respect of his liability under the suretyship. The interest that had accrued on the suretyship capital amount of R20 million attained the in duplum limit. Thus, Mr Cohen was sued for payment of the amount of R40 million plus costs on the scale as between attorney and own client, which scale of costs was provided for in the suretyship. Before the trial ended, Mr Cohen abandoned all but one of his defences. That defence raises the interpretation of s 31(2) of the Insolvency Act.3 [16] Based on the interpretation contended for by Mr Cohen, he argues that he was released ex lege from his suretyship obligations due to Absa’s forfeiture of its claim against the insolvent estate of AMU in terms of s 31(2) of the Insolvency Act. That is so, he maintains, because AMU entered into a transaction with Absa in terms of which AMU disposed of property belonging to it in a manner which had the effect of prejudicing AMU’s creditors through preferring one of its creditors over the other creditors. Absa, therefore, according to Mr Cohen, was a party to a collusive disposition within the meaning of s 31(1) of the Insolvency Act and, as a creditor, it forfeited its claim against AMU’s insolvent estate in terms of s 31(2). [17] In Gert de Jager (Edms) Bpk v Jones NO & McHardy NO,4 Rumpff JA held that if the parties to the collusion know that the debtor is insolvent and also know that the alienation will have the effect of what is mentioned in s 31(1), then it follows that the collusion is fraudulent in respect of the creditors in the sense that its purpose is to short change them.5 [18] What constitutes the collusive disposition to which Absa was a party, according to Mr Cohen, is the disposal of AMU’s property to Protea, which took place in terms of the sale agreement concluded between Protea and AMU. In concluding the ARLA and the sale agreement, Mr Cohen argues, AMU, in collusion with Absa, disposed of R14 million as well as a penthouse in the hotel building worth R11 million. [19] Absa, in contrast, asserts the following. First, Absa was the only creditor who could have been prejudiced by the penthouse’s sale and the R14 million payment to 3 Op cit fn 1. 4 Gert de Jager (Edms) Bpk v Jones NO & McHardy NO 1964 (3) SA 325 (A) at 330H-331. 5 Own loose translation of the following passage in which Rumpff JA held that ‘. . . as die partye tot die samespanning weet dat die skuldenaar insolvent is en ook weet dat die vervreemding die gevolg sal hê wat in art. 31(1) genoem word, dan volg dit dat die samespanning bedrieglik is ten opsigte van die skuldeisers in die sin dat die oogmerk daarvan is om hulle tekort te doen’. Protea. This is because Absa held a mortgage bond that entitled it to the proceeds of the sale of the penthouse, and the R11 million and R3 million payments were made using the loan facility that Absa provided. Second, the ARLA and the sale agreement had a legitimate purpose, not a fraudulent one, to provide AMU with the best chance of trading out of its debt-laden distressed situation. In extending the additional loan facility to AMU in accordance with the ARLA, Absa facilitated AMU’s ability to pay its existing and continuing current creditors. Furthermore, in order to satisfy the debt owed to Absa, the intention of the sale agreement was to secure the full revenue generated from the hotel operations. Absa contends that the absence of evidence refutes a finding of collusion between AMU and Absa, or a finding that the sale agreement, or the ARLA, was concluded or implemented with a fraudulent purpose. I find Absa’s assertions to be plausible, taken at face value. Nonetheless, the anterior question is whether Mr Cohen has the locus standi to invoke one of the remedies enumerated in s 31(2) of the Insolvency Act. [20] I shall proceed to an interpretative analysis of s 31(2), using the established triad of language, context, and purpose.6 Sections 31 and 32 read thus: ‘31 Collusive dealings before sequestration (1) After the sequestration of a debtor’s estate the Court may set aside any transaction entered into by the debtor before the sequestration whereby he, in collusion with another person, disposed of property belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his creditors above another. (2) Any person who was a party to such collusive disposition shall be liable to make good any loss thereby caused to the insolvent estate in question and shall pay for the benefit of the estate by way of penalty, such sum as the Court may adjudge, not exceeding the amount by which he would have benefitted by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim against the estate. (3) Such compensation and penalty may be recovered in any action to set aside the transaction in question. 32 Proceedings to set aside improper disposition 6 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 25; Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd ZASCA 16; 2020 (4) SA 428 (SCA), para 8; 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). (1)(a) Proceedings to set aside any improper disposition of property under section 26, 29, 30 or 31, or for the recovery of compensation or a penalty under section 31, may be taken by the trustee. (b) If the trustee fails to take any such proceedings, they may be taken by any creditor in the name of the trustee upon his indemnifying the trustee against all costs thereof. (2) . . . (3) When the Court sets aside any disposition of property under any of the said sections, it shall declare the trustee entitled to recover any property alienated under the said disposition or in default of such property the value thereof at the date of the disposition at the date on which the disposition is set, whichever is the higher.’ [21] Section 31 is in a part of the Insolvency Act in which the provisions address the following topics: (a) disposition without value (s 26);7 (b) antenuptial contracts (s 27);8 7 Section 26 reads: ‘(1) Every disposition of property not made for value may be set aside by the Court if such disposition was made by an insolvent— (a) more than two years before the sequestration of his estate, and it is proved that, immediately after the disposition was made, the liabilities of the insolvent exceeded his assets; (b) within two years of the sequestration of his estate, and the person claiming under or benefited by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities: Provided that if it is proved that the liabilities of the insolvent at any time after the making of the disposition exceeded his assets by less than the value of the property disposed of, it may be set aside only to the extent of such excess. (2) A disposition of property not made for value, which was set aside under subsection (1) or which was uncompleted by the insolvent, shall not give rise to any claim in competition with the creditors of the insolvent’s estate: Provided that in the case of a disposition of property not made for value, which was uncompleted by the insolvent, and which— (a) was made by way of suretyship, guarantee or indemnity; and (b) has not been set aside under subsection (1), the beneficiary concerned may compete with the creditors of the insolvent’s estate for an amount not exceeding the amount by which the value of the insolvent’s assets exceeding his liabilities immediately before the making of that disposition.’ 8 Section 27 reads: ‘(1) No immediate benefit under a duly registered antenuptial contract given in good faith by a man to his wife or any child to be born of the marriage shall be set aside as a disposition without value, unless that man’s estate was sequestrated within two years of the registration of that antenuptial contract. (2) In subsection (1) the expression “immediate benefit” means a benefit given by a transfer, delivery, payment, cession, pledge, or special mortgage of property completed before the expiration of a period of three months as from the date of the marriage.’ (c) voidable preferences (s 29);9 (d) undue preference to creditors (s 30);10 (e) collusive dealings before sequestration; and (f) proceedings to set aside an improper disposition (s 32). ‘Disposition’ is defined in s 2 to mean- ‘[A]ny transfer or abandonment of rights to property and including a sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or any contract therefor, but does not include a disposition in compliance with an order of court; and “dispose” has a corresponding meaning;’ [22] Sections 26, 29, 30 and 31 detail the several forms of ‘improper dispositions’ that may be set aside by the court. Additionally, these sections set out the substantive requirements that must be met for the setting aside of each form of disposition. Section 32 governs the procedure for the setting aside of each form of ‘improper disposition’. Each of ss 26, 29, 30 and 31 must be read alongside s 32. Only the trustee or liquidator of the insolvent estate has the locus standi to bring any such proceedings. Only if the liquidator fails to bring such proceedings, may a creditor do so in the liquidator’s name, as long as the creditor indemnifies the liquidator for all costs. The compensation and penalty provided for in s 31(2), may in terms of s 31(3), be recovered in any action to set aside the collusive transaction or disposition at issue. The default position is that if the liquidator, or a creditor in the liquidator’s name, fails to initiate legal proceedings 9 Section 29 reads: ‘(1) Every disposition of his property made by a debtor not more than six months before the sequestration of his estate or, if he is deceased and his estate is insolvent, before his death, which has had the effect of preferring one of his creditors above another, may be set aside by the Court if immediately after the making of such disposition the liabilities of the debtor exceeded the value of his assets, unless the person in whose favour the disposition was made proves that the disposition was made in the ordinary course of business and that it was not intended thereby to prefer one creditor above another. (2) . . . (3) Every disposition of property made under a power of attorney whether revocable or irrevocable, shall for the purposes of this section and of section 30 be deemed to be made at the time at which the transfer or delivery or mortgage of such property takes place. (4) For the purposes of this section any period during which the provisions of subsection (1) of section 11 of the Farmers’ Assistance Act, 1935 (Act 48 of 1935), applied in respect of any debtor as an applicant in terms of the said act, shall not be taken into consideration in the calculation of any period of six months.’ 10 Section 30 reads: ‘(1) If a debtor made a disposition of his property at a time when his liabilities exceeded his assets, with the intention of preferring one of his creditors above another, and his estate is thereafter sequestrated, the Court may set aside the disposition. (2) For the purposes of this section and of section 29 a surety for the debtor and a person in a position by law analogous to that of a surety shall be deemed to be a creditor of the debtor concerned.’ to set aside such ‘improper disposition’, the disposition remains valid. This is because the transaction is not void, but voidable.11 [23] As to the purpose of the Insolvency Act, this Court recently in Emontic Investments (Pty) Ltd v Bothomley NO and Others,12 reaffirmed that: ‘A concursus creditorum is established with a trustee or liquidator who is entrusted with the estate’s assets, including the property rights and obligations of the insolvent or company. The liquidator is obliged to hold and administer the estate and distribute the proceeds among the competing creditors in the manner and order of preference specified in the Insolvency Act. This procedure is followed after an estate is sequestrated or a company is liquidated. The hand of the law is laid upon the estate and no transaction can thereafter be entered into regarding estate matters by a single creditor to the prejudice of the general body of creditors. The claim of each creditor must be dealt with as it existed at the issue of the order. That is the fundamental purpose of insolvency legislation.’ (Footnotes omitted.) [24] The purpose of ss 26, 29, 30 and 31 of the Insolvency Act is to empower a trustee or liquidator to institute proceedings against the parties (or beneficiaries of the dispositions) listed in those sections, for the setting aside of an ‘improper disposition’, and to obtain the remedies therein provided for the benefit of the body of creditors. And, the purpose of s 31(2) is to provide the remedies therein specified to a liquidator who has successfully secured an order to set aside a collusive transaction. [25] Mr Cohen argues that the correct interpretation of s 31(1) and 31(2) reveals that s 31(1) defines the phrase ‘collusive disposition’ and the word ‘such’ in the first line of s 31(2) refers to a collusive disposition as it is defined in s 31(1), regardless of whether it has been set aside. The interpretation offered by Mr Cohen is legally unsustainable. Section 31(1) concerns a specific disposition from a specific debtor’s estate, which may be set aside by the court. It does not provide a definition of a collusive disposition. Instead, it provides the substantive requirements that must be satisfied before such a disposition may be set aside. 11 Galaxie Melodies (Pty) Ltd v Dally NO 1975 (4) SA 736 (A) at 743. 12 Emontic Investments (Pty) Ltd v Bothomley NO and Others [2024] ZASCA 1 para 17. [26] The subject of the introductory line in s 31(2) is a person who was a party to such collusive disposition. In grammatical usage, specifically in formal contexts, the determiner ‘such’ is employed to refer to the ‘type previously mentioned’. The collusive disposition mentioned in the first line of s 31(2) is the one specified in that subsection. That is a collusive disposition in respect of which a trustee (or creditor in the name of the trustee) may commence legal proceedings to set aside the disposition in question and seek to recover compensation and the penalty stipulated in s 31(2). [27] The ensuing terminology employed in s 31(2), which imposes sanctions on transgressors, affirms the clear meaning that the word ‘such’ in the first line refers to the specific transaction mentioned in s 31(1). The first consequence imposed on a ‘party to such collusive disposition’ is the liability ‘to make good any loss thereby caused to the insolvent estate in question’. This reinforces the link between the specific transaction being set aside in terms of s 31(1) and the liability consequence imposed. No such liability can be imposed if the transaction is not set aside. Undoubtedly, a third party, such as a surety, could not come along after the winding up and use this provision to seek compensation from a transgressor. The second sanction, the penalty, imposed in s 31(2) is payable ‘for the benefit of the estate’. The penalty can only be payable to the same estate in which the collusive disposal is set aside under s 31(1). If the disposal has not been set aside, no penalty is imposed. A third party, such as a surety, cannot use this provision to seek payment of a penalty from a transgressor. [28] The third consequence, forfeiture, is not separate from the first and second consequences: rather, it follows them, as the conjunctions ‘and’ and ‘also’ indicate. The forfeiture sanction necessarily requires that the collusive disposition be set aside and that the remedies of restoring value to the insolvent estate and paying a penalty have been exercised as a first step. If the transgressor is also a creditor of the insolvent estate, the liquidator imposes an additional sanction: the claim against the insolvent estate is forfeited. [29] In Louw NO and Another v Sobabini CC and Others,13 Plasket J said: 13 Louw NO and Another v Sobabini CC and Others [2015] ZAECGHC 153 paras 76-78. ‘First, on the setting aside of the dispositions, s 31(2) envisages Jackson having to make good any loss occasioned to the trust by his actions. In this matter, that is simple enough. I shall order him to return the cattle and the equipment that he took or pay their value. Secondly, s 31(2) makes provision for a penalty to be imposed on the person guilty of collusive dealing. The use of the word ‘shall’ in this respect, followed close on the heels of the same word used in relation to making good any loss occasioned by the collusion indicate to me that the imposition of a penalty is not discretionary. The quantum of the penalty, however, lies within the discretion of the court but may not exceed the value of the benefit which would have accrued to the person had the disposition not be set aside. . . . Thirdly, s 31(2) makes provision for the forfeiture of the creditor’s claim against the insolvent estate – and that means any claim which the creditor may have against the insolvent estate. This is an automatic consequence of the finding of collusive dealing. The court has no discretion in this regard. [Gert de Jager (Edms) Bpk v Jones NO & McHardy NO 1964 (3) SA 325 (A) at 337E-F; Mohamed’s Estate v Khan 1927 EDL 478 at 488.]’ [30] Section 31(3) strengthens the unity of the subsections of s 31. It allows for the compensation and penalty remedies to be claimed ‘in any action to set aside the transaction in question’. Once again, the phrase ‘in question’ can only be a reference back to the specific transaction being set aside in terms of s 31(1). [31] An interpretative analysis of s 31(2) leads to the inevitable conclusion that s 31 establishes a unified process in which: (a) a collusive disposition is set aside provided the requirements of s 31(1) have been established; (b) the loss occasioned to the insolvent estate due to the transgressor’s actions is made good; (c) a penalty is imposed upon the transgressor; and (d) the ex lege forfeiture of the creditor’s claim against the insolvent estate if the transgressor is also a creditor of the insolvent estate. [32] Thus, s 31(2) of the Insolvency Act does not afford a shield to the surety who seeks to escape liability on the basis that the insolvent primary debtor colluded with the creditor prior to its liquidation to dispose of the insolvent’s property in a manner which had the effect of prejudicing the insolvent’s creditors or of preferring one of them above another. Only the liquidator (or a creditor in the liquidator’s name), and not a third party, such as a surety, has locus standi to rely on the remedies outlined in s 31. In other words, s 31 serves as a sword for the liquidator in winding up the insolvent estate, rather than a shield for third parties in subsequent litigation. If the liquidator (or a creditor in the liquidator’s name) did not take proceedings to set aside a collusive disposition, the disposition remains valid, and neither the liquidator nor anyone else has recourse to the remedies outlined in s 31(2). [33] The high court correctly held that the interpretation contended for by Mr Cohen is at odds with the text and purpose ss 31 and 32 and is not supported by the relevant authorities, and concluding that- ‘. . . section 31 does not stand on its own and does not provide any relief in and in itself. It operates together with section 32 of the Insolvency Act which expressly regulates the proceedings to set aside a disposition of property under sections 26, 29 and 30. Section 32 provides the procedure to be followed by an aggrieved person intending to challenge the disposition in terms of the substantive requirements of each of sections 26, 29, 30 and 31.’ [34] The high court correctly rejected the s 31(2) defence Mr Cohen raised and relied upon and dismissed his counterclaim due to his lack of standing. It thus did not decide whether AMU, prior to its liquidation, entered into a transaction whereby it, in collusion with Absa, disposed of property belonging to AMU which had the effect of prejudicing its creditors or of preferring one over another. The question likewise does not need to be decided by this Court. [35] Mr Cohen’s s 31(2) defence is unmeritorious and does not trump the inadequate explanation for the delay. [36] In the result, the following order is made: 1 The application for condonation and reinstatement of the appeal is dismissed with costs, including those of two counsel. 2 The appeal is struck from the roll with costs, including those of two counsel. P.A. MEYER JUDGE OF APPEAL Appearances For the appellant: A F Arnoldi SC Instructed by: Ian Levitt Attorneys, Johannesburg Lovius Block Inc, Bloemfontein For the respondent: D A Turner (with O Motlhasedi) Instructed by: Webber Wentzel, Johannesburg 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: 9 February 2024 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Cohen v Absa Bank Limited (Case no 1280/2021) [2024] ZASCA 16 (9 February 2024) Today the Supreme Court of Appeal (SCA) dismissed an application for condonation and reinstatement of the appeal with costs including those of two counsel. It further struck the appeal from the roll with costs including those of two counsel. The appeal emanated from the commercial court of the Gauteng Division of the High Court, Johannesburg (the high court) and was brought by the appellant, Mr Chaim Cohen (Mr Cohen), who was dissatisfied with the high court’s order in favour of the respondent, Absa Bank Limited (Absa). Before the SCA, Mr Cohen applied for condonation and reinstatement of the appeal as, according to rule 8 of the Rules Regulating the Conduct of the Proceedings of the SCA, the appeal had lapsed due to the appeal record not being timeously lodged. This application was opposed by Absa. In pointing out that Mr Cohen’s founding affidavit failed to provide a full and reasonable explanation covering the entire period of the delay, the SCA proposed to consider Mr Cohen’s prospects of success on the merits of the appeal before reaching a conclusion on the fate of his application for condonation and reinstatement of the appeal. In considering the prospects of success on the merits, the SCA crystallised the issue before it as follows: whether s 31(2) of the Insolvency Act 24 of 1936 (the Insolvency Act) affords a shield to a surety and co-principal debtor to escape liability under a deed of suretyship given in favour of a creditor for the due performance by the principal debtor of its obligations under a loan advanced to it by the creditor in circumstances where the principal debtor failed to pay the full indebtedness, was liquidated, and the surety alleges that, before its liquidation, the insolvent in collusion with the creditor disposed of property belonging to the insolvent in a manner which had the effect of prejudicing the insolvent’s creditors or of preferring one of them above another. The upshot of the matter was that on 1 September 2012, Absa initiated action proceedings against Mr Cohen in the high court, claiming the amount of R20 million, interest plus costs, in respect of the liability he incurred under his suretyship. The interest that had accrued on the suretyship capital amount of R20 million attained the in duplum limit. Thus, Mr Cohen was sued for payment of the amount of R40 million plus costs on the scale as between attorney and own client, which scale of costs is provided for in the suretyship. Despite having raised several defences against Absa’s claim, Mr Cohen abandoned all but one before the conclusion of the trial, which defence raised the interpretation of s 31(2) of the Insolvency Act. Based on the interpretation contended for by Mr Cohen, he argued that he was released ex lege from his suretyship, because Absa forfeited its claim against the insolvent estate of AMU in terms of s 31(2) of the Insolvency Act. That was so because A Million Up Investments 105 (Pty) Limited (AMU) entered into a transaction with Absa in terms of which AMU disposed of property belonging to it in a manner which had the effect of prejudicing AMU’s creditors through preferring one of its creditors over the other creditors. Absa, therefore, according to Mr Cohen, was a party to a collusive disposition within the meaning of s 31(1) of the Insolvency Act and, as a creditor, it forfeited its claim against AMU’s insolvent estate in terms of s 31(2). What constituted the collusive disposition to which Absa was a party, according to Mr Cohen, was the disposal of AMU’s property to Protea Hotel Group (Pty) Limited (Protea), which took place in terms of the sale agreement concluded between Protea and AMU. In concluding the Amended and Restated Loan Agreement (the ARLA) and the sale agreement, so Mr Cohen argued, AMU, in collusion with Absa, disposed of R14 million as well as a penthouse in the hotel building worth R11 million. Absa, conversely, asserted as follows: First, it was the sole creditor who might have suffered any prejudice by the penthouse’s sale and the R14 million payment to Protea. This is because Absa held a mortgage bond entitling it to the proceeds of the penthouse’s sale, and the R11 million and R3 million payments were financed through the loan facility Absa provided. Second, the ARLA and the sale agreement had a legitimate purpose, not a fraudulent one. Its purpose was to provide AMU with the best chance of trading out of its debt-laden distressed situation. By extending the additional loan facility to AMU, in accordance with the ARLA, Absa facilitated AMU’s ability to pay its existing and continuing current creditors. Furthermore, in order to satisfy the debt owed to Absa, the intention of the sale agreement was to secure the full revenue generated from the hotel operations. Absa contended that the absence of evidence refutes a finding of collusion between AMU and Absa, or a finding that the sale agreement, or the ARLA, was concluded or implemented with a fraudulent purpose. The SCA found that the above assertions made by Absa appeared to contain much force, finding that the anterior question in the matter was whether Mr Cohen has the locus standi to invoke one of the remedies outlined in s 31(2) of the Insolvency Act. After a consideration of the merits, the SCA reasoned that the purpose of s 31(2) is to provide the remedies therein specified to a liquidator who successfully secured an order to set aside a collusive transaction, holding further that an interpretative analysis of s 31(2) leads to the inevitable conclusion that s 31 establishes a unified process whereby the following occurs: (a) a collusive disposition is set aside provided the requirements of s 31(1) have been established; (b) the loss occasioned to the insolvent estate due to the transgressor’s actions is made good; (c) a penalty is imposed upon the transgressor; and (d) if the transgressor is also a creditor of the insolvent estate, the ex lege forfeiture of the creditor’s claim against the insolvent estate. The SCA stated that the high court was correct in holding that the interpretation contended for by Mr Cohen was at odds with the text and purpose of ss 31 and 32 and was not supported by the relevant authorities, adding further that the high court correctly rejected Mr Cohen’s s 31(2) defence and dismissed his counterclaim due to his lack of standing. In the result, the SCA concluded that Mr Cohen’s s 31(2) defence was unmeritorious and, therefore, did not trump the unsatisfactory explanation for the delay. The application for condonation and the reinstatement of the appeal was dismissed and the appeal was struck from the roll. --------oOo--------

1425

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 59/10 In the matter between: PUMA AG RUDOLF DASSLER SPORT Appellant and RAMPAR TRADING (PTY) LTD First Respondent THE COMMISSIONER OF SOUTH AFRICAN REVENUE SERVICES Second Respondent MAGISTRATE H C NIEUWOUDT NO Third Respondent Neutral citation: Puma v Rampar Trading (59/10) [2010] ZASCA 140 (19 November 2010) Coram: Harms DP, Heher, Snyders and Tshiqi JJA and R Pillay AJA Heard: 03 November 2010 Delivered: 19 November 2010 Summary: Counterfeit Goods Act 37 of 1997 – definition of ‘counterfeiting’ – definition of ‘protected goods’. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Kwa-Zulu Natal High Court (Durban) (Koen J sitting as court of first instance): ‘The appeal is upheld with costs and the order of the court below substituted with an order dismissing the application with costs.’ ___________________________________________________________________ HARMS DP (HEHER, SNYDERS AND TSHIQI JJA AND R PILLAY AJA concurring) HARMS DP: [1] The interpretation of the Counterfeit Goods Act 37 of 1997 remains contentious but since no visible steps have been taken to solve the problems it remains our duty to interpret it as best we can.1 [2] The appellant, Puma AG Rudolf Dassler Sport (Puma for short), is a German company with an international reputation in the field of sportswear, including sport shoes. It has, in addition to its Puma word and leaping puma device trade marks, a number of other device trade marks referred to generically, as the form strip device. These are registered in class 25, usually in respect of clothing, footwear and headgear. [3] The basic form strip device can, in very general terms, be described as a tapering curved stripe running from the upper left to the lower right. If applied to the side of a shoe it conventionally runs from the upper portion of the heel to meet the sole at the middle of the shoe. Two form strip marks (one of which is in issue in this appeal) formed the subject matter of a recent trade mark infringement judgment of this court in Puma AG Rudolf Dassler Sport v Global Warming (Pty) Ltd 2010 (2) SA 600 (SCA). [4] The respondent, Rampar Trading (Pty) Ltd, is the owner of a chain of retail 1 For an earlier discussion see AM Moolla Group Ltd v The Gap Inc 2005 (2) SA 412 (SCA). shoe stores known as Dodo’s. It sells generally known branded shoes but also a budget line under its name mark and a device mark consisting of a stylised letter D. The Dodo name has been known for about a century in relation to shoe stores and shoes although the respondent’s relationship with the original business is somewhat tenuous. [5] During September 2009, inspectors appointed under the Act detained a consignment of shoes imported by Rampar on suspicion that the shoes were counterfeit. The shoes, of which there were four types, bear some or other stripe device on the side of the shoe which, according to Puma, infringed one or other of its form strip marks and were indeed counterfeit. They also bear a Dodo trade mark. Rampar’s main contention was that stripe devices were only decorative and did not perform a trademark function [6] Acting on the suspicion (enforced by an affidavit on behalf of Puma) that the goods were counterfeit the police applied for and obtained a search and seizure warrant in terms of s 6 of the Act, and an inspector seized the goods on 28 October 2009, and removed them to a counterfeit depot. [7] Rampar filed an application in the Durban High Court seeking, first, the setting aside of the warrant and the subsequent search and seizure. This was soon abandoned. It also sought an order under s 7(4) of the Act, namely a declaration that the goods were not counterfeit and for a consequent order that the goods be returned.2 This was the case before the court below and, with its leave, the case before us. [8] The application turned in this regard primarily on two issues. The first, to which I shall refer as the cloning issue, can best be described with reference to a simplified example. A trade mark is registered in class 25 in relation to clothing, shoes and headgear. The rights owner uses the trade mark on shoes only but the alleged counterfeiter uses the identical mark on headgear or on a completely different type of shoe. One can also conceive of a situation where the rights holder has not used the trade mark at all. In these cases the infringer (because it will be 2 Section 7(4)(a): ‘Any person prejudiced by a seizure of goods in terms of section 4(1), may at any time apply to the court on notice of motion for a determination that the seized goods are not counterfeit goods and for an order that they be returned to him or her.’ trade mark infringement), although using the identical trade mark, did not clone goods bearing a trade mark of the rights holder. Rampar argued that unless trademarked goods have been cloned they cannot be ‘counterfeit’ within the meaning of the Act and that cloning of the mark itself and used on goods covered by the mark is not enough. What this would have meant in the context of counterfeiting of money notes is that one cannot make a counterfeit R300 note because the Reserve Bank does not produce one. [9] The court below agreed with this submission of Rampar’s counsel and granted an order in terms of s 7(4)(a) without finding it necessary to deal with the second issue namely whether the shoes were counterfeit within the meaning of the definition of ‘counterfeiting’ in s 1 of the Act. This depends on whether the shoes bore a sufficiently identical trade mark to that of the registered mark. It should be noted that one of the four types has been released from detention by the inspectorate on this ground and that leaves for consideration the other three. THE FIRST ISSUE: IS CLONING REQUIRED? [10] The background to the Act was dealt with in AM Moolla where it was pointed out that the Act had its genesis in the Trips agreement.3 Although South Africa is party to Trips by virtue of its membership of the World Trade Organisation, the provisions of Trips do not form part of our municipal law. This means that although one would tend to interpret consequent legislation to conform to the provisions of Trips, the legislation on a proper interpretation may nevertheless not comply with the Trips obligations or, on the other hand, have stricter requirements.4 [11] The object of the Act is to prevent dealing in counterfeit goods. This object is obtained by prohibiting a number of acts in relation to counterfeit goods, such as (in very general terms) possession, manufacture, sale, exhibition, distribution, importation or export of such goods for commercial as distinct from private or personal purposes (s 2(1)). A person who performs a prohibited act will be guilty of an offence if at the time of the act or conduct, the person knew or had reason to suspect that the goods to which the act or conduct relates, were counterfeit goods; or failed to take all reasonable steps in order to avoid any such dealing from being 3 Agreement on Trade-Related Aspects of Intellectual Property Rights. 4 Compare Gallo Africa v Sting Music (40/10) [2010] ZASCA 96 para 18. performed or engaged in with reference to the counterfeit goods (s 2(2)). [12] The prohibition is directed to the protection of those ‘intellectual property rights’ (‘IPRs’) defined in s 1(1) of the Act. These are copyright (in relation to which the term ‘counterfeiting’ is inappropriate – it should have been ‘piracy’), trade marks registered in terms of the Trade Marks Act 194 of 1993, unregistered well-known foreign marks that are entitled to local protection by virtue of art 6bis of the Paris Convention,5 and certain marks protected by s 15 of the Merchandise Marks Act 17 of 1941. For present purposes we are concerned with registered trade marks only. [13] ‘Counterfeiting’ is defined in s 1(1) in a somewhat opaque manner but one thing is clear: it is not the same as copyright or trade mark infringement – it requires more. This follows from the proviso to this definition, namely that ‘the relevant act of counterfeiting must also have infringed the intellectual property right in question’. And it follows from the fact that the Act did not refer back to or reproduce the definitions of infringement in the IPR statutes. This appears to be logical because ‘to counterfeit’ ordinarily means to make an imitation of something in order to deceive or to make a copy of something. [14] The elements of counterfeiting under para (a) of the definition are in logical order: 6 (i) manufacturing, producing or making of any goods (ii) in the Republic or elsewhere (iii) without the authority of the owner of any IPR (iv) subsisting in the Republic (v) in respect of protected goods (vi) whereby they are imitated 5 Paris Convention for the Protection of Industrial Property. 6 Section 1: ‘Counterfeiting (a) means, without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, the manufacturing, producing or making, whether in the Republic or elsewhere, of any goods whereby those protected goods are imitated in such manner and to such a degree that those other goods are substantially identical copies of the protected goods.’ (vii) in such manner and to such a degree that they are substantially identical copies of the protected goods. [15] Counterfeiting under para (b), in turn, means: 7 (i) manufacturing, producing or making, or applying to goods (ii) in the Republic or elsewhere (iii) without the authority of the owner of any IPR (iv) subsisting in the Republic (v) in respect of protected goods (vi) the subject matter of that IPR, or a colourable imitation (vii) so that the ‘infringing’ goods are calculated to be confused with or to be taken as being the protected goods of the IPR owner. [16] The first question is whether paras (a) and (b) are intended to cover both copyright piracy and trademark counterfeiting. (Para (c), which deals with counterfeiting of goods protected under the Merchandise Marks Act can be discounted for present purposes.) The authors of Webster and Page8 believe quite reasonably that they do. I have to disagree because in my judgment para (a) was intended to deal with piracy while para (b) was intended to deal with trademark counterfeiting. Although both (a) and (b) refer in general terms to ‘any’ IPR, there are other indications that each is limited to either the one or the other. The words ‘substantially identical copies’ in para (a) are phrased in copyright terms while the concepts in para (b), ‘colourable imitation’ and ‘calculated to be confused’, are cast in traditional trademark terminology. Another indication is the reference to ‘applying’ to goods in para (b), something that in spite of the definition of ‘apply to’, cannot refer to copyright but clearly does apply to trade marks. Also, para (b) covers the use 7 Section 1: ‘Counterfeiting (b) means, without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, manufacturing, producing or making, or applying to goods, whether in the Republic or elsewhere, the subject matter of that intellectual property right, or a colourable imitation thereof so that the other goods are calculated to be confused with or to be taken as being the protected goods of the said owner or any goods manufactured, produced or made under his or her licence.’ 8 South African Law of Trade Marks (4 ed) para 17.5. of identical marks by the use of the phrase ‘the subject matter of that IPR’ and it is accordingly not necessary to rely on para (a) to prohibit the use of ‘copies’ of trade marks. Last, the definition of IPR distinguishes between the three rights, namely trade marks, copyright and merchandise marks, and it is reasonable to assume that the definition of counterfeiting would do the same, although it did not do so in the same sequence. [17] The next issue concerns the meaning of ‘protected goods’. It has two meanings. First, it means – ‘(a) goods featuring, bearing, embodying or incorporating the subject matter of an intellectual property right with the authority of the owner of that intellectual property right, or goods to which that subject matter has been applied by that owner or with his or her authority.’ Applied to trade marks, protected goods are genuine goods that feature the registered trade mark. With reference to the other provisions of the Act it simply intends to protect cloning of goods incorporating the relevant IPR. [18] The second meaning is – ‘(b) any particular class or kind of goods which, in law, may feature, bear, embody or incorporate the subject matter of an intellectual property right only with the authority of the owner of that intellectual property right, or to which that subject matter may in law be applied, only by that owner or with his or her authority, but which has not yet been manufactured, produced or made, or to which that subject matter has not yet been applied, with the authority of or by that owner (whichever is applicable).’ [19] Shorn of verbiage para (b) covers any particular class or kind of goods which may bear a registered trade mark, but has not yet been produced or to which it has not yet been applied with the authority of or by the IP owner. In other words, the goods protected by para (b) are not actual goods but notional goods, ie, goods to which the owner could have applied the trade mark. It means that counterfeiting is possible without cloning and the fact that Puma may not have produced a shoe bearing the particular trade mark does not mean that Rampar’s shoes could not be counterfeit. [20] Confirmation of the fact that the Act contemplates counterfeiting of notional goods is also to be found in s 3(2)(b), which deals with the information a complainant has to supply when laying a complaint. It concludes by requiring a specimen of the relevant protected goods where the IPR ‘that subsists in respect of or has been applied to protected goods contemplated in paragraph (a) of the definition of “protected goods” in section 1(1)’. Significantly, it does not require a specimen in the case of para (b) because one would imagine there cannot be one. [21] Counsel for Rampar submitted that in spite of the wide wording, para (b) should be read to conform with Trips which, it was suggested, does not require such protection. This, he said, is supported by a statement by the which was quoted with approval by this court in Cadac v Weber-Stephen [2010] ZASCA 105 where it was said that ‘counterfeit cases involve an infringer attempting to reproduce – and substitute for – the goods (not just the trademark) of the trademark owner’. A study sponsored by the New Zealand government, for instance, states as follows in this regard:9 ‘The term "counterfeiting" is generally understood to mean the unauthorised manufacture and distribution of copies of such goods and works which are intended to appear to be so similar to the original as to be passed off as genuine examples. This includes use of famous brands on clothing not manufactured by or on behalf of the owner of the trade mark, and exact copies of CDs containing music or software, which are traded in a form intended to be indistinguishable to ordinary consumers from the genuine product.’ Counsel also relied on a statement in Webster and Page,10 submitting that the authors were of the view that para (b) was intended to protect only famous foreign marks that have not been registered and goods that have been produced elsewhere but not in South Africa. [22] Whatever the general understanding of the term ‘counterfeiting’ or the motive behind the anti-counterfeiting Trips provisions, the limitation is not to be found in Trips or the clear wording of the Act.11 The extract was quoted in Cadac v Weber- 9 AJ Park & Son for the Ministry of Commerce Consultant’s Report on Theft of Intellectual Property – Piracy and Counterfeiting para B7 http://www.med.govt.nz/templates/MultipageDocumentPage____1830.aspx (accessed 10 November 2010). 10 Para 17.4 11 Whether para (b) can apply to copyright piracy is not clear. Stephen in another context to make a different point. As far as Webster and Page are concerned, I believe that counsel misread the learned authors. THE SECOND ISSUE: ARE THE SHOES COUNTERFEIT? [23] It follows that in my judgment the court below erred in requiring cloning. It is now necessary to consider the second question, namely whether the shoes were counterfeit. As mentioned above, the answer has to be sought in para (b) of the definition of counterfeiting. In view of the common cause facts the only remaining issue is whether the marks applied to Rampar’s shoes are ‘the subject matter’ or ‘a colourable imitation’ of any of Puma’s registered trade marks. To be ‘the subject matter’ means, as mentioned, that the Rampar mark must be identical to a Puma trade mark. An ‘imitation’, in turn, is by definition a copy, and the adjective ‘colourable’ reinforces the fact that the copy is counterfeit. In other words, the definition says no more than that a counterfeit must be counterfeit. That is why it must be ‘calculated to be confused with’ or ‘taken as being’ the registered mark and why it involves deliberate and fraudulent infringement of trademarks.12 [24] This test is not the same as the standard trade mark infringement test of ‘likely to deceive or cause confusion’13 but counterfeiting, by its very nature, amounts a fortiori to trade mark infringement. Reference during argument to the test to be applied to determine the likelihood of deception and confusion, confusing similarity, to passing-off principles, imperfect recollection, momentary confusion, the prospective purchaser, that a substantial (ie, not negligible) number of people have to be confused, evidence about the public’s perception and how Rampar intended to market the goods was, accordingly, singularly out of place and unhelpful. [25] My main problem with the manner in which Puma’s case was presented was that it took a bundle of related (some associated) trade marks, referred to them as its form strip mark (in the singular), and then argued that the marks on the Rampar shoes were counterfeit. The heads of argument relied on five marks in relation to three shoes. During argument the number came down to two and when it transpired that one of them had not been registered at the time of seizure, Puma was left with 12 Cadac v Weber-Stephen [2010] ZASCA para 6. 13 Trade Marks Act s 34(1). Trade mark infringement and not counterfeiting was the issue in Puma v Global Warming. one, called its ‘split’ form strip which is registered under no 2004/14412. [26] This trade mark consists of the basic form strip device of a tapering curved stripe running from the upper left to the lower right, but splits into two with an inverted V, widening towards the lower more substantial part. If applied to the side of a shoe it would run (but not necessarily so) from the upper portion of the heel to meet the sole at the middle of the shoe. [27] There can be little doubt that the white Rampar shoe (C) has a copy of the split form strip device on its inner and outer sides. The strip is in blue and the split is white. This device however has additionally two white strips that run more or less parallel with the strip form thereby framing it. But these stripes make no impression against the white background of the shoe. Rampar sought to distinguish this reproduction of the Puma mark by relying on the presence of a prancing dragon and the Dodo device mark on the heel and the name Dodo Sport on the inside of the shoe. It also said that the mark would have been perceived as decorative and not as a trade mark. I disagree on both counts. The dragon and the Dodo marks are at best subsidiary and they do not touch the essence of the split form strip. One also cannot use a trade mark and then argue that it was used as ornamentation. It could be different if one is dealing with changes to the mark, for instance, if the registered mark consists of three stripes it would be a question of fact whether the use of two or four stripes would be perceived as decorative or as trade mark use but one could not, I would think, use the same argument in relation to the use of three stripes. On the other hand, I could not understand Puma’s reliance on the presence of the dragon, which was said to be similar to the prancing horse on the Ferrari mark and which Puma is licensed to use, to establish counterfeiting. It was probably based on a confusion of counterfeiting with passing off. [28] Shoe B is virtually identical to the one just mentioned but differs, importantly, in colour. It is a black shoe. It also contains the split form device, which is now in black. The V of the split is in white and the outer parallel stripes are in white. In other words, the Rampar shoe contains a counterfeit split form framed in contrasting white. In my judgment the addition of the frame does not change the result. Rampar took the registered mark and in spite of the presence of the frame the mark on the shoe is still ‘calculated to be confused with’ or ‘taken as being’ that of Puma. [29] The third shoe (A) also incorporates the split form but in addition has an inverted form strip made of a different material at the heel but which appears to be part of the construction of the shoe. It, too, in my assessment, is counterfeit because even with the inverted strip the shoe is still ‘calculated to be confused with’ or ‘taken as being’ that of Puma especially since the inverted device is identical to Puma’s ‘traditional’ strip form. CONCLUSION [30] It follows that the court below had erred and that the appeal must be upheld. The following order is made: ‘The appeal is upheld with costs and the order of the court below substituted with an order dismissing the application with costs.’ _______________________ L T C HARMS DEPUTY PRESIDENT APPEARANCES APPELLANT/S I Joubert Instructed by Spoor & Fisher Pretoria C/o Chapman Dyer Inc Durban Matsepes Inc Bloemfontein RESPONDENT/S: G Marriott Instructed by D M Kisch Inc Sandton C/o Barkers Attorneys Durban Rossouws 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 19 November 2010 STATUS: Immediate PUMA AG RUDOLF DASSLER SPORT v RAMPAR TRADING (PTY) LTD AND OTHERS Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (SCA) upheld an appeal against an order of the KwaZulu-Natal High Court, (Durban) and held that the shoes imported by the respondents were counterfeit. The respondent is the owner of a chain of retail shoe stores known as Dodo’s and has a budget line under its name mark together with a device mark incorporating a stylised letter D. A consignment of shoes, imported by the respondent, were detained on suspicion that the shoes were counterfeits of the appellant’s brand PUMA, and were later seized by the police. The respondent then proceeded to file an application in the Durban High Court for an order setting aside the warrant and the search and seizure. The respondent furthermore sought an order in terms of s 7 (4) of the Counterfeit Goods Act 37 of 1997, that the goods were not counterfeit and they should therefore be returned. The court a quo found in favour of the respondent and granted the order in terms of s 7 (4) of the Act and neglected to deal with the issue of whether the shoes were indeed counterfeit. The appellant’s then proceeded to lodge an appeal against this decision. The respondent argued that his shoes could be distinguished from that of the appellant’s as it contained the presence of a prancing dragon and the Dodo device mark on the heel and the name Dodo Sport on the side which was distinguishable from the Puma trade marks of the appellant. The court dismissed this argument, contending that the marks do not come close in comparison to the split form strip so as to distinguish nor could it be viewed as ornamentation. The SCA had to decide whether the respondent discharged the onus on it, in terms of s 7 (4) of the Act, to show that the goods in question were not counterfeit, and whether actual cloning of a product was required. The SCA found that counterfeiting was possible without cloning. The fact that the appellant may not have produced a shoe bearing the particular trade mark was not an indication that the shoes imported by the respondent were not counterfeit. The SCA considered whether the marks applied to the respondents shoes are ‘the subject matter’ or ‘a colourable imitation’ of the appellant’s trade marks in terms of the Act. It was decided that to be ‘the subject matter’, the respondent’s mark must be identical to the appellant’s Puma trade mark, whereas an ‘imitation’, is essentially a copy and the word ‘colourable’ merely affirms that the copy is counterfeit. It was on this premise that the court concluded that ‘calculated to be confused with’, or ‘taken as being’ the registered trade mark, as stated in the Act, involves a deliberate and fraudulent infringement of trade marks. The appellant relied on five marks, which during argument it reduced to two, one of which had not been registered at the time of seizure and therefore the appellant was only left with one mark, called its split form strip, registered under no. 2004/14412. The SCA held that there could be little doubt from the evidence presented that the shoes of the respondent were counterfeit. --- ends ---

430

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 20821/2014 In the matter between: NURCHA FINANCE COMPANY (PTY) LTD APPELLANT and OUDTSHOORN MUNICIPALITY RESPONDENT Neutral citation: Nurcha Finance Company (Pty) Ltd v Oudtshoorn Municipality (20821/2014) [2016] ZASCA 28 (23 March 2016) Coram: Ponnan, Pillay and Petse JJA and Fourie and Tsoka AJJA Heard: 1 March 2016 Delivered: 23 March 2016 Summary: Undertaking to pay amounts due in terms of a building contract to third party ─ failure to do so giving rise to claim for damages ─ claim not precluded by virtue of subsequent cancellation of building contract. ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Griesel J sitting as court of first instance): 1 The appeal is upheld with costs, including the costs consequent upon the employment of two counsel. 2 The order of the court below is set aside and substituted by the following order: „Judgment is granted in favour of the plaintiff as follows: (a) The defendant is ordered to pay the plaintiff the sum of R2 692 467.43, together with interest thereon at the rate of 15,5 per cent per annum calculated from date of service of summons to date of final payment. (b) The defendant is ordered to pay the plaintiff‟s costs of suit, including all reserved costs save for those occasioned by the postponement of the matter on 12 March 2012 which are to be paid by the plaintiff, such costs, where applicable, to include the costs of two counsel.‟ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Fourie AJA (Ponnan, Pillay and Petse JJA and Tsoka AJA concurring): [1] This appeal has its origin in an opposed application brought in the Western Cape Division of the High Court, Cape Town, which was subsequently referred to trial. After the exchange of pleadings the parties identified two questions of law which they agreed to place before the trial court by way of a stated case in terms of Uniform rule 33(4). The matter proceeded before Griesel J who ruled in favour of the respondent, but granted the appellant leave to appeal to this court. [2] The factual background to the appeal appears from the following agreed facts forming part of the stated case. [3] During 2007 the respondent, Oudtshoorn Municipality (the municipality), awarded a tender for the construction of 663 houses (the project) to Silver Buckle Trade (Pty) Ltd t/a Yethu Projects (Yethu). [4] In November 2007 Yethu applied to the appellant, Nurcha Finance Company (Pty) Ltd (Nurcha), for bridging finance to enable it to complete the project. Consequently, during December 2007, Nurcha and Yethu concluded a bridging finance agreement (the finance agreement). [5] Pursuant to the conclusion of the finance agreement, Yethu issued an irrevocable instruction to the municipality advising it that Yethu had concluded the finance agreement with Nurcha and had ceded to Nurcha all payments payable to Yethu by the municipality in respect of the project. Yethu further instructed the municipality that it should „from this day forward as per the instructions of [Nurcha]‟ pay all moneys owing to Yethu in respect of the project into a nominated bank account in the name of Yethu (the project account). The project account was the only account into which the municipality was to pay moneys due to Yethu and this instruction could only be varied with Nurcha‟s written consent. [6] Pursuant to the instruction, the municipality, duly represented by its municipal manager, gave a written undertaking in favour of Nurcha (the undertaking), in terms of which the municipality irrevocably and unconditionally consented to the cession of Yethu‟s rights arising out of the project to Nurcha. The municipality further consented irrevocably and unconditionally to Yethu pledging and ceding in securitatem debiti to Nurcha all of its rights to any moneys payable by the municipality, and it irrevocably and unconditionally undertook, in favour of Nurcha, to pay all moneys due and payable to Yethu into the project account exclusively. [7] In giving the undertaking the municipality accepted the instruction and thereby concluded an agreement with Nurcha upon the terms set out in paragraphs 5 and 6 above. [8] The municipality had appointed Arcus Gibb (Pty) Ltd (Arcus Gibb) as project managers for the project. Arcus Gibb, together with the municipality‟s building control officer, were responsible for assessing and certifying the work completed on the project by Yethu. Arcus Gibb and/or the municipality‟s building control officer would inspect all work completed by Yethu pertaining to the project and certify work completed during the course of the project, by issuing certified payment certificates upon which payment was to be made by the municipality into the project account in accordance with the undertaking. [9] Nurcha relied upon the certified payment certificates in allowing further draw downs and loan advances to Yethu to enable it to complete the project for the municipality. During the period October 2007 to the end of August 2009, Arcus Gibb and/or the municipality‟s building control officer certified that Yethu had completed work in relation to 39 payment certificates. The municipality effected payment in respect of 36 of the certificates into the project account, but failed to make payment of three certificates, being certificates 7, 8 and 20, into the project account. Instead, the municipality made payment in respect of the three certificates into a different account held by Yethu. In particular, the municipality failed to pay the amounts of R1 493 638.90 (certificate 7), R2 086 204.10 (certificate 8) and R635 076.49 (certificate 20) into the project account. [10] Yethu subsequently failed to complete the project and the municipality cancelled the contract with Yethu due to the latter‟s breach of contract. Yethu was then placed under final liquidation by the Western Cape High Court on 14 April 2010. The municipality appointed another contractor to complete the project. As at the date of the stated case, Nurcha had not recovered any further payment from the insolvent estate of Yethu. [11] Nurcha claimed damages from the municipality for breach of contract in the amount of R2 692 467.43, being the balance owing to Nurcha in terms of the finance agreement, by virtue of the non-payment of certified payment certificates 7, 8 and 20. [12] Nurcha‟s submissions, as plaintiff, were recorded as follows in the stated case: (a) In terms of the agreement between Nurcha and the municipality, and on a proper interpretation thereof, once payments had been certified, the money so certified became due, owing and payable and had to be paid into the project account; (b) The parties‟ agreement prohibited the municipality from making any payments to Yethu into any account other than the project account, for the duration of the project in respect of work which had been certified for payment. The municipality breached the agreement and is liable to Nurcha for the payment of damages in the aforesaid amount. (c) In any event, the municipality was aware of the cession of Yethu‟s right to payments under the project to Nurcha and was legally bound to give effect thereto by making payment of the amounts certified in terms of the payment certificates, to Nurcha into the project account. [13] The submissions of the municipality, as defendant, were recorded as follows in the stated case: (a) Nurcha‟s claim is founded on the non-payment of the payment certificates into the project account. (b) The payment certificates constituted claims for pre-payments on payment of the contract sum. (c) Due to the cancellation of the contract between Yethu and the municipality, Yethu could not and did not complete the project and did not fulfil its contractual obligations in terms thereof. (d) Yethu accordingly lost its contractual standing to claim for payment of the contract sum as well as all pre-payments. The payment certificates are therefore no longer prima facie proof that amounts reflected therein are due and payable to Yethu; and (e) Nurcha ipso facto lost its right to rely on non-payment of the certificates into the project account due to the breach of the agreement between Nurcha and the municipality, giving rise to a claim for damages. [14] The legal issues arising from the stated case which the court a quo was required to determine, were the following: (a) Is Nurcha entitled to rely on the non-payment of payment certificates 7, 8 and 20 into the project account, as a basis for its claim for damages? (b) If so, whether it is open to the municipality as a matter of law to dispute its liability for payment of those payment certificates on the basis that they were not validly issued? [15] Finally, the parties agreed that, if the court a quo were to find in favour of Nurcha in respect of both questions presented to it for determination, Nurcha was entitled to judgment in terms of prayers A, B and C of its particulars of claim. [16] The trial court answered the first question posed in the negative and the second question accordingly fell away. In effect, the trial judge held that Nurcha was not entitled as a matter of law to rely on the municipality‟s failure to make payment of the amounts certified under certificates 7, 8 and 20 into the project account, as a basis to claim damages from the municipality. [17] In arriving at this finding the trial judge, firstly, held that the municipality and Yethu had not agreed that the issuing of a payment certificate would be regarded as proof of what was due and payable to Yethu under their contract. Secondly, the trial court held that, as Nurcha derived its claim from Yethu in circumstances where Yethu, by virtue of the cancellation of the building contract, can no longer enforce a claim against the municipality on the basis of interim payment certificates, Nurcha is left without a claim against the municipality. [18] In the latter regard the court a quo relied on the decision in Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1986 (4) SA 510 (N) (confirmed on appeal at 1988 (2) SA 546 (A)), in which it was held that payment certified in an interim payment certificate is not (subject to any contrary provision in the underlying contract between the employer and the contractor) regarded as compensation for a completed segment of the work. It is treated as provisional and subject to adjustment and re-adjustment in subsequent certificates. This stems from the principle that payment ultimately depends on the delivery of a finished product of work. Therefore, the employer who makes payment in advance on a contract sum that is dependent upon completion of the work, does so in the expectation that the contractor will finish the work; and the contractor who claims an interim payment thereby confirms that he or she is ready, willing and able to do so. From this it follows that, upon the cancellation of the underlying contract, the employer‟s legitimate expectation of the continued performance of the work by the contractor, is disrupted. The contractor is no longer able to complete the work and should therefore be disqualified from insisting on payment to be made by the employer in terms of interim payment certificates. This is so as the claim on the interim payment certificate remains in essence a claim on the contract. Cancellation of the contract strikes at the very foundation of the claim and therefore debars a claim based upon the interim payment certificate. The contractor then has to look at remedies other than the payment certificate to exact compensation for work actually done in terms of the contract (cf BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A) in which a claim for a reduced contract price for incomplete performance under a bilateral contract was allowed on considerations of fairness). [19] Counsel for the municipality, whilst contending that the trial court had correctly answered the first question for determination in the negative, disavowed reliance on the trial judge‟s reasoning in support of that conclusion. There is no merit in the first ground upon which the trial court found in favour of the municipality, namely that the parties had not agreed that the issuing of a payment certificate would be proof of what was due and payable to Yethu under the building contract. It is trite that interim payment certificates of the kind in question provided Yethu with a self-standing and distinct cause of action which could be enforced without any need for Yethu to go beyond the certificates or to rely on the underlying building contract. See Mouton v Smith 1977 (3) SA 1 (A) at 5C-E; Thomas Construction (A) at 562E-F. See also the analogous status of „on demand‟ guarantees, as discussed in State Bank of India v Denel SOC Limited [2014] ZASCA 212 (3 December 2014); [2015] 2 All SA 152 (SCA). [20] Turning to the second ground upon which the trial judge found in favour of the municipality, counsel for the municipality, as I understood him, pinned his colours to the mast of an adapted version of the trial judge‟s second ground. His submission proceeded along the following lines: In claiming as it did, Nurcha implied that the amounts certified in the payment certificates constituted moneys due and payable to Yethu in terms of the building contract. However, by reason of the cancellation of the building contract prior to the issue of summons, the payment certificates, at the time of summons being issued, no longer constituted proof of indebtedness to Yethu in terms of the building contract. Therefore, the submission continued, after the cancellation of the building contract prior to the completion of the work, Nurcha‟s cause of action became one based on enrichment. As Nurcha‟s particulars of claim do not incorporate an alternative claim based on enrichment, it is not entitled to rely on the non-payment of the payment certificates into the project account, as a basis for its claim for damages against the municipality. In support of this submission counsel for the municipality, as was the case with the trial court, set considerable store by the decisions in Thomas Construction. [21] In my view the approach of the court below, as well as the approach of the municipality on appeal, failed to take proper account of the true nature of Nurcha‟s cause of action. Its cause of action is not that of a contractor claiming payment for work done under a building contract. As rightly conceded by the municipality, Nurcha‟s cause of action is founded on the undertaking of the municipality to pay all moneys due and payable by it to Yethu, as and when they fell due, into the project account. Therefore Nurcha‟s claim is not based on any payment certificate as such ─ its claim is made in terms of the municipality‟s undertaking to make all payments due and payable in terms of the building contract with Yethu, to Nurcha and not to anyone else. Furthermore, the municipality‟s obligation to make the payments to Nurcha arose from the acts of payment under the payment certificates (which payments were made by the municipality prior to the cancellation of the building contract with Yethu), and was not dependent upon the validity or ultimate status of the payment certificates. Put differently, upon the amounts being certified as due and payable in terms of the relevant payment certificates, the municipality was contractually obliged to pay the amounts into the project account, and its failure to do so, by paying same into another account, constituted a breach of contract. As submitted on behalf of Nurcha, any claims that the municipality and Yethu may have against each other in terms of the building contract between them, or on any other ground, are res inter alios acta as regards the municipality‟s obligations under its agreement with Nurcha. [22] From the above it is immediately apparent that the facts in Thomas Construction differ markedly from those in the instant case. In the former the court had to consider whether a claim in terms of a (as yet unpaid) payment certificate issued to a contractor under a building contract, survived the subsequent cancellation of the building contract. In the instant matter there is no relationship of contractor and employer under a building contract between Nurcha and the municipality. As explained earlier, Nurcha‟s claim is based on an independent agreement concluded with the municipality in terms of which the municipality contractually undertook to pay all moneys due and payable by it to Yethu, into the project account for the benefit of Nurcha. Payment certifcates 7, 8 and 20 certified amounts due for payment, which were paid by the municipality prior to the cancellation of the building contract, but payment was not made into the project account and therefore the municipality acted in breach of the contractual undertaking made to Nurcha. [23] I fail to comprehend why (as submitted on behalf of the municipality) the cancellation of the building contract between the municipality and Yethu, prior to the issue of summons by Nurcha, resulted in the demise of Nurcha‟s claim for contractual damages. What makes this submission even more startling, is the concession by the municipality that, prior to the cancellation of the building contract, it would have had no defence against Nurcha‟s claim for damages. To my mind, the subsequent cancellation of the building contract cannot legally impact upon the nature and extent of the obligation of the municipality vis-à-vis Nurcha and somehow transform Nurcha‟s claim for damages to one which „has become determinable only on the basis of enrichment‟. [24] I understood counsel for the municipality‟s submission to be that, subsequent to the cancellation of the building contract, any indebtedness of the municipality to Nurcha was to be determined only on the basis of the municipality‟s indebtedness to Yethu. Differently put, the submission is that the parties intended that, upon the cancellation of the building contract, the municipality would only be liable to Nurcha to the extent that the municipality may have been unjustly enriched at the expense of Yethu. [25] This submission, once again, fails to take proper account of the fact that Nurcha‟s cause of action is based on the municipality‟s breach of contract vis-à-vis Nurcha, by failing to make the payments in respect of certificates 7, 8 and 20 into the project account, giving rise to a claim for damages arising from the breach of contract. This cause of action arose, at the latest, upon the municipality‟s failure to make payment thereof into the project account, before the cancellation of the building contract between Yethu and the municipality. Whether or not the municipality is liable to Yethu for unjustified enrichment due to the premature cancellation of the building contract (on the BK Tooling basis or on the basis of any of the other condictiones recognised in our law), is legally irrelevant for the determination of Nurcha‟s claim for damages arising from the breach of a separate contract concluded between the municipality and Nurcha. [26] In the result I find that Nurcha is entitled to rely on the municipality‟s breach of the agreement (ie the non-payment of the amounts certified in terms of payment certificates 7, 8 and 20 into the project account) as a basis for its claim for damages against the municipality. I therefore conclude that the first question of law ought to have been answered in the affirmative. [27] This brings me to the second question posed, namely whether it is open to the municipality to dispute its liability to Nurcha on the basis that the relevant payment certificates had not been validly issued. From the bar, in this court, counsel for the municipality accepted that, strictly speaking, this is not a question of law and, in view of the absence of a proper factual basis in the stated case, the question could not be answered in favour of the municipality. The question accordingly fell away. [28] In view of the agreement of the parties, as recorded in paragraph 15 above, Nurcha is accordingly entitled to judgment in terms of prayers A, B and C of its particulars of claim. I should record that we have been advised by counsel that all reserved issues as to costs have been settled, as reflected in the order below. [29] In the result the following order is made: 1 The appeal is upheld with costs, including the costs consequent upon the employment of two counsel. 2 The order of the court below is set aside and substituted by the following order: „Judgment is granted in favour of the plaintiff as follows: (a) The defendant is ordered to pay the plaintiff the sum of R2 692 467.43, together with interest thereon at the rate of 15,5 per cent per annum calculated from date of service of summons to date of final payment. (b) The defendant is ordered to pay the plaintiff‟s costs of suit, including all reserved costs save for those occasioned by the postponement of the matter on 12 March 2012 which are to be paid by the plaintiff, such costs, where applicable, to include the costs of two counsel.‟r ________________________ P B FOURIE ACTING JUDGE OF APPEAL APPEARANCES: For Appellant: R G L Stelzner SC L C Kelly Instructed by: DMO Attorneys, Bryanston Honey Attorneys, Bloemfontein For Respondent: L J Joubert Instructed by: Coetzee & Van Der Bergh, Oudtshoorn Rossouws, Bloemfontein THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20821/2014 In the matter between: NURCHA FINANCE COMPANY (PTY) LTD APPELLANT and OUDTSHOORN MUNICIPALITY RESPONDENT Neutral Citation: Nurcha Finance Company (Pty) Ltd v Oudtshoorn Municipality (20821/2014) [2016] ZASCA 28 (23 March 2016) Coram: Ponnan, Pillay and Petse JJA and Fourie AJA Delivered: 22 July 2016 ORDER The order granted in the above appeal on 23 March 2016 is varied by substituting sub-paragraph (a) of paragraph 2 thereof with the following: „(a) The defendant is ordered to pay the plaintiff the sum of R2 692 467,43, together with interest thereon at the rate of 15,5 per cent per annum calculated from date of service of the application to date of final payment.‟ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Fourie AJA (Ponnan, Pillay and Petse JJA concurring): [1] On 23 March 2016 this court handed down judgment in the above appeal from the Western Cape Division of the High Court, Cape Town (Griesel J sitting as court of first instance). The order made was the following: „1. The appeal is upheld with costs, including the costs consequent upon the employment of two counsel. 2. The order of the court below is set aside and substituted by the following order: “Judgment is granted in favour of the plaintiff as follows: (a) The defendant is ordered to pay the plaintiff the sum of R2 692 467.43, together with interest thereon at the rate of 15,5 per cent per annum calculated from date of service of summons to date of final payment. (b) The defendant is ordered to pay the plaintiff‟s costs of suit, including all reserved costs save for those occasioned by the postponement of the matter on 12 March 2012 which are to be paid by the plaintiff, such costs, where applicable, to include the costs of two counsel”.‟ [2] The appeal had its origin in an opposed application which was subsequently referred to trial and, after the exchange of pleadings, two questions of law were identified which the parties agreed to place before the trial court by way of a stated case in terms of Uniform Rule 33(4). It was not a trial action which had been commenced by the issuing of summons. [3] The parties have drawn our attention to the fact that the order in sub- paragraph 2(a) thereof erroneously refers to the calculation of interest „from date of service of summons‟. The order should refer to the calculation of interest from the date of service of the application by means of which this matter had been commenced. This is a patent error which stands to be corrected in terms of Uniform Rule 42(1)(b). [4] In the result the order above will issue. ______________________ P B Fourie Acting Judge of Appeal

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 23 March 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Nurcha Finance Company (Pty) Ltd v Oudtshoorn Municipality (20821/2014) [2016] ZASCA 28 (23 March 2016) The Supreme Court of Appeal has upheld the appellant’s appeal against the judgment of the Western Cape High Court dismissing its claim for damages against the Oudtshoorn Municipality. The municipality had undertaken to pay amounts due by it in terms of a building contract with a third party, to the appellant. However, upon the cancellation of the building contract, the municipality refused to make the payments due to the appellant. The SCA held that the payments were due in terms of the undertaking given by the municipality and that the appellant’s claim was not precluded by virtue of the cancellation of the building contract. The municipality was accordingly ordered to pay damages to the appellant in an amount of R2 692 467.43, together with interest thereon and costs. --- ends ---

3101

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 235/2015 In the matter between: LAGOON BEACH HOTEL (PTY) LTD APPELLANT and CHRISTOPHER D LEHANE NO FIRST RESPONDENT CASTORENA LTD SECOND RESPONDENT INVESTEC BANK LTD THIRD RESPONDENT DLA CLIFFE DEKKER HOFMEYR FOURTH RESPONDENT Neutral citation: Lagoon Beach Hotel v Lehane (235/2015) [2015] ZASCA 210 (21 December 2015) Coram: Navsa, Cachalia, Leach, Tshiqi and Willis JJA Heard: 06 November 2015 Delivered: 21 December 2015 Summary: Cross-border insolvency ─ recognition of foreign trustee ─ interim interdict serving as preservation order ─ nature of evidence required to obtain such an order ─ practical common sense approach to the issue. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Western Cape Division, Cape Town (Yekiso J sitting as court of first instance) reported as Lehane NO v Lagoon Beach Hotel (Pty) Ltd & others 2\2013 (4) SA 72 (WCC): 1 The appeal is upheld solely to the limited extent that the order of the court a quo is altered as follows: (a) The reference to s 82 of the Insolvency Act 24 of 1936 is deleted from para 3. (b) By the insertion of the following para 3A: „Notwithstanding paras 2 and 3 above, the applicant shall not be entitled to sell property belonging to Mr Sean Dunne (as contemplated in s 82 of the Insolvency Act 24 of 1936 or otherwise) without the leave of this Court.‟ (c) Paragraph 10 is substituted with the following: „All questions of costs will stand over for later determination and the parties are given leave to approach this Court, on the same papers duly amplified as necessary, to determine the question of costs of this application after the finalisation of the proceedings referred to in paragraph 2.5 of the Notice.‟ 2 The appellant is to pay the first respondent‟s cost of appeal, such costs to include the costs of two counsel where so employed. ________________________________________________________________ JUDGMENT ________________________________________________________________ Leach JA (Navsa, Cachalia, Tshiqi and Willis JJA concurring) [1] The affairs of Mr Sean Dunne, an Irish businessman currently residing in Connecticut, United States of America, lies at the heart of this appeal. He conducted his business interests through an intricate web of holding and subsidiary companies as well as trusts, registered in different parts of the world, including tax havens. Although he became a man of immense wealth, he also incurred considerable debt. On 9 March 2012, the National Asset Management Agency Limited obtained judgment against him in the High Court of Ireland for a sum of approximately €185.3 million. Subsequently, on 21 May 2012, the Ulster Bank Ireland Limited obtained judgment against him for more than €163 million. That Mr Dunne found himself in straitened financial difficulties is further borne out by him having been declared bankrupt in the United States by a court order obtained at his instance on 23 March 2013. Thereafter, on 29 July 2013, upon a petition by the Ulster Bank Ireland Limited, the Dublin High Court also granted an order that Mr Dunne be „adjudged bankrupt‟. Pursuant to this order, the first respondent in this appeal, Mr Christopher D Lehane, was appointed as „the Official Assignee in Bankruptcy‟ of Mr Dunne‟s estate (for convenience, I intend to refer to him simply as Lehane). [2] Amongst his many holdings, Mr Dunne had an interest in the appellant, Lagoon Beach Hotel (Pty) Ltd, a company which owns 205 sectional title units that comprise the hotel and conference facilities known as the Lagoon Beach Hotel in Milnerton, Western Cape. Until June 2012, the appellant‟s entire shareholding was held by the company Mountbrook Homes Ltd, the name of which was changed to Mavior on 30 March 2012. For convenience I intend to refer to it simply as „Mavior‟. On 29 June 2012 the second respondent, Castorena Ltd, a company registered in Mauritius, acquired the appellant‟s entire shareholding from Mavior. A little over a year later, on 14 November 2013, the shares were transferred from Castorena to Volcren Management Ltd, a company wholly owned by Enia Investments Limited, which, in turn, is wholly owned by Mr Dunne‟s wife, Gayle Dunne. [3] She and Mr Dunne were married out of community of property in Italy on 11 July 2004. After he had been appointed as Official Assignee, Lehane learned of two handwritten contracts Mr Dunne had signed with his wife some time before. The first, dated 23 March 2005, purported to have been concluded between them at Hua Hin, Thailand, the material part of which reads as follows: „Property transfer agreement between Sean and Gayle Dunne ─ 23 March 2005 I Sean Dunne, hereby undertake to give to my wife Gayle Dunne (née Killilea), whom I married on 11 July 2004, 70% of the profits accrued from the sale of my share of the following properties for the benefit of her and our son Bobby Luke and any future children born to us: [There are then listed six properties, including the Lagoon Beach Hotel, Cape Town.] This transfer of money and/or assets is to secure the financial independence of my wife and children for the future and to secure their independence from my own property investments. The 30% of the profits left over is estimated to cover all tax and associated costs in relation to these assets, any shortfall will be covered by me, and surplus is for my account. Lagoon Beach: In relation to Lagoon Beach, which is owned by Mountbrook Homes Ltd, I have to date loaned Mountbrook Homes approximately €4 million. I hereby transfer this debt owing to me from Mountbrook Homes Ltd to my wife Gayle. . . . . I further confirm that I renounce on behalf of my estate all claims over or against these properties or the amount of money derived from their sale should I die before this transfer is fully completed. I reserve the right to retain ownership of all these properties and transfer and value as cash or alternatively properties at values to be agreed between us. If no mutual agreement re values then this agreement must stand with no referral to arbitration or legal proceedings by either party, except from the enforcement of the agreement itself.‟ [4] The second agreement, purportedly signed on 15 February 2008, the ostensible purpose of which was to deal with subsequent events and clarify the earlier one, reads: „Ref: Property Transfer Agreement between Sean Dunne and Gayle Dunne (Killilea) 23rd March 2005 I Sean Dunne, Ouragh Shrewsbury Road, Ballsbridge Dublin 4 confirm the following in reference to the above agreement. As the sale of item 3, Lagoon Beach Hotel, Cape Town SA has not been possible I hereby irrevocably transfer to my wife Gayle Dunne (Killilea) my full interest in this property with immediate effect. Any and all tax issues arising on the future sale of this property are also hereby transferred to my wife Gayle Dunne (Killilea). I also hereby transfer with immediate effect the full book value as calculated as of today‟s date all loans made by me to Mountbrook Homes Ltd, and all of its associated companies and subsidiaries. The open market value of the above as of today is circa €1.95 million. I further confirm that I hereby renounce on behalf of my estate all present and/or for further claims over and against the assets the subject of this agreement or any monies derived from their sale, should I die before they are sold. I furthermore hereby renounce all claims over any present or future income derived from the on-going trade or trade or sale of the assets the subject of this agreement. This agreement hereby acknowledges that my obligations under the Property Transfer Agreement between my wife and in relation to Lagoon Beach Hotel and the Mountbrook Homes Ltd loans dated 23rd March 2005 is hereby fully satisfied and settled between us ie full and final settlement in relation to these assets.‟ [5] After his appointment as Official Assignee, Lehane‟s investigations led him to believe that Mr Dunne had been insolvent both at the time he concluded these agreements and made the dispositions to which they refer to his wife. He also heard that a third party, later identified as Great Africa 999 Investment (Pty) Ltd (the fifth respondent in the court a quo), was in the process of acquiring the Lagoon Beach Hotel, by purchasing either the appellant‟s assets or its shareholding and loan account. On learning of this, Lehane did two things. [6] First, he applied ex parte and as a matter of urgency to the Cape Town High Court for relief, including an order recognising him as the Official Assignee and interdicting the proposed transaction. He cited the appellant as the first respondent, Castorena, the entity then thought to be the appellant‟s sole shareholder, as second respondent, Investec Bank as the third respondent (it was cited by virtue of its interest as a secured creditor of the appellant) and a law firm, DLA Cliffe Dekker Hofmeyr, as fourth respondent (in its case his information was that it might be holding the proceeds from any sale). When Great Africa 999 Investment then applied to intervene as a respondent on 16 September 2014, the first respondent learned for the first time that it was the proposed purchaser of the appellant‟s assets for a sum of approximately R260 million under an agreement concluded in July 2014. [7] Second, Lehane instituted legal proceedings in the High Court of Ireland alleging, inter alia, that the natural and probable effect of both agreements and the dispositions made as a result, was to put assets (including of course the Lagoon Beach Hotel) beyond the reach of Mr Dunne‟s creditors, and had been concluded to „delay, defer and hinder‟ such creditors. As a result, Lehane claimed, inter alia, the following relief: „1. A declaration that the transfer of all shares in Mavior, in the legal or beneficial ownership of Sean Dunne, date 28th October 2008 from Sean Dunne to Gayle Dunne and/or companies controlled by Gayle Dunne is void and of no effect by virtue of Section 59 of the Bankruptcy Act of 1988 and/or by reason of the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10CHAS. 1 SESS. 2, C.3); 2. A declaration that the purported transfer of Sean Dunne‟s interest in the Lagoon Beach Hotel, Cape Town, South Africa made pursuant to the Agreement of the 15th February 2008 between Sean Dunne and Gayle Dunne is void and of no effect by reason of the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHAS. 1 SESS. 2, C.3); 3. A declaration that the purported transfer by Sean Dunne of the full book value as calculated as of the 15th February 2008 or otherwise of all loans made by him to Mavior and all of its related companies and subsidiaries made pursuant to the Agreement of the 15th February 2008 between Sean Dunne and Gayle Dunne is void and of no effect by reasons of the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHS. 1 SESS. 2, C.3); 4. An injunction requiring Gayle Dunne, and her servants and agents, including any corporate entities of which she is a director or has control, to restore any assets purportedly transferred to her by reason of the Agreement of the 15th February 2008 and/or the share transfer of the 28th October 2008 to the Estate of Sean Dunne in bankruptcy or damages in lieu of such injunction.‟ Those proceedings have not yet run their course. [8] Reverting to the proceedings in this country, on 2 September 2014 Steyn J granted a rule nisi returnable on 13 October 2014, operating as an interim interdict pending the return day and restraining the transaction from proceeding to its conclusion. The appellant thereafter gave notice of its intention to anticipate the return day and to seek a reconsideration of the order under Uniform rule 6(12)(c). On 22 September 2014, the matter came before Yekiso J who, on 17 October 2014, confirmed the rule substantially in the form sought by Lehane. His reasons for doing so were handed down on 23 January 2015, and the judgment since reported as Lehane NO v Lagoon Beach Hotel (Pty) Ltd & others 2015 (4) SA 72 (WCC). However, on 24 March 2015, the court a quo granted the appellant leave to appeal to this court, with costs of the application for leave to appeal being costs in the appeal. The only parties who actively participated in the appeal were the appellant, on the one hand, and Lehane on the other. The third respondent, Investec Bank Ltd, employed counsel with a watching brief to protect its interest insofar as any order might affect its rights. [9] The debate in this court initially turned on whether the order of Yekiso J was appealable in the light of it being interim in nature, pending the decision of the Irish High Court. The appellant argued that not merely the form of the order was of importance but also its effect. Consequently, so the argument went, as the issues between the appellant and Lehane will not be revisited either by the court a quo or the Irish court, and the confirmed rule relates to pending litigation between parties in a foreign jurisdiction and is to endure for a period of at least six months after those proceedings have been finalised, whenever that uncertain date in the future might be, the matter should in effect be considered as being an application for a final interdict – thereby bringing the rules applicable to proceedings of that nature into play. [10] This argument largely overlooks that almost invariably interim interdicts seek relief different from that claimed in the pending litigation and may involve, in effect, the rights of parties who are not parties to main proceedings - none of which renders an interim order as being final in effect. Moreover, as has been pointed out, inter alia by this court in Knox D’Arcy, whilst the refusal of an interim interdict may be final in that it cannot be reversed on the same facts, it may be open to an unsuccessful respondent against whom it is passed to approach the court for its amelioration or to have it set it aside „even if the only new circumstance is the practical rule experience of its operation.‟1 Certainly, in the present case, should the Irish proceedings be unduly delayed or should there arise some other material change in circumstances likely to have a bearing on its continued enforcement, the appellant can apply to have the interim interdict either varied or even set aside. [11] In any event, no more really need be said about this issue as, during argument, counsel for the appellants accepted that for purposes of this appeal, save for certain paragraphs of the order which should be regarded as final (and therefore appealable), such as the recognition of Lehane as the Official Assignee, the remaining interdictory provisions of the order should be treated as not being final in effect. It is trite that in respect of such a case a court has the discretion to grant interim relief to an applicant who establishes a prima facie right even if open to some doubt, where there is a well-grounded apprehension of irreparable injury and the absence of another ordinary remedy. [12] It is necessary at this stage to mention the appellant‟s strident criticism of Lehane‟s papers, and its complaint that the court a quo took into account evidence that it alleged was hearsay in nature or which conflicted with the so- called rule in Hollington v Hewthorn2 which has been adopted by this court in 1 Knox D’Arcy Ltd & others v Jamieson & others 1996 (4) SA 348 (A) at 359I-360B. 2 Hollington v F Hewthorn & Co Ltd [1943] KB 587 (CA). Hassim3 and cited with approval by the Constitutional Court in Prophet.4 The rule is that, generally speaking, the fact that a person may have been convicted in criminal proceedings is not admissible in subsequent civil proceedings as proof of his guilt. Essentially, under the rule, a previous conviction amounts to no more than an opinion which has been expressed in regard to certain facts, and does not determine them. [13] It was argued by the appellant that the court a quo, in having regard to the various allegations and documents, that amounted to hearsay, impermissibly elected to allow this into evidence on the basis of the interests of justice without having due regard to the law as to their admissibility, to the prejudice of the appellant who had to answer to largely incomplete and unsubstantiated allegations. This was all the more so when the source of information was not disclosed, rendering it impossible for the appellant to make independent investigations to verify the accuracy of the information. In support of this argument the appellant invoked the following dictum in Southern Pride Foods (Pty) Ltd v Mohidien 1982 (3) SA 1068 (C) at 1071H-1072B: „The source of information must be disclosed to enable a respondent, confronted by an allegation normally inadmissible as hearsay, to check its accuracy. And when the Courts prescribed the disclosure of the source of information, they mean, in my view, a disclosure with a degree of particularity sufficient to enable the opposing party to make independent investigations of his own, including, if necessary, verification of the statement from the source itself.‟ [14] That there is a great deal of hearsay in the first respondent‟s papers is clear enough. In the circumstances of the matter, that is understandable. As Lehane says, he „came to Mr Dunne‟s affairs as a stranger‟, and during the course of carrying out his duties as Official Assignee, he came into possession of documents and records relevant to Mr Dunne‟s affairs which, in turn, led him to conclude, inter alia, that Mr Dunne had retained the true ownership of the 3 Hassim (also known as Essack) v Incorporated Law of Society of Natal 1977 (2) SA 575 (A) at 764E-765E. 4 Prophet v National Director of Public Prosecutions 2007 (6) SA 169 (CC). shares in Mavior and that his disposition of such shares and his loan accounts to Mrs Dunne constituted an invalid stratagem to place assets beyond the reach of creditors. In his approach to court, Lehane made documents in his possession available to support certain statements made by him. Some of them included judgments of the Irish courts, which relate to certain of the facts established in those proceedings, as well as financial statements of companies, correspondence and statements made by others and official records of government bodies and the like. In a case such as this, in which the first respondent is in a position akin to that of a trustee in an insolvency in this country, the comment in Registrar of Insurance v Johannesburg Insurance Co Ltd (1) 1962 (4) SA 546 (W) at 547E-F that „[i]f all the people who know about every small fact which makes up this complex case should have to make affidavits, the matter would become quite impracticable. In a case like that a court will relax its rules for the sake of facilitating litigation and in the interests of justice,‟ becomes pertinent. It is also necessary to state that Lehane could not swear positively to the facts, but was only called on to justify his suspicions. [15] That a practical and common sense approach is required in cases of this nature is also reflected in the decision in Naidoo.5 In that matter, the NDPP had applied for a confiscation order under the Prevention of Organised Crime Act 121 of 1988. Twenty-two defendants were cited as persons or entities who stood to be prosecuted, with another twenty-three respondents being cited as persons or entities who allegedly held an interest in, or were in possession of, realisable property. The NDPP sought to restrain them from disposing of or dealing in any manner with such property. In the course of seeking relief, the NDPP relied upon documents and allegations which were hearsay, and in respect of which Rabie J said the following:6 „Without detracting from the caveat regarding “wild and unsupported hearsay allegations”, and without proposing an absolute rule in this regard, I am of the view that it would be 5 National Director of Public Prosecutions v Naidoo & others 2006 (2) SACR 403 (T). 6 At 427d-i. unnecessary to consider the relevance of hearsay evidence in a matter such as the present on the basis of a strict application of the provisions of s 3 of the Law of Evidence Amendment Act 45 of 1988 in respect of every piece of hearsay evidence in the applicant‟s papers (as it was submitted on behalf of the defendants the approach should be). In considering hearsay evidence in a matter such as the present, the court will necessarily have regard to factors such as the nature and purpose of the evidence, the probative value and reliability thereof, the reason why direct evidence was not submitted, the possible prejudice to the other party and all the other facts, of the case. These are, inter alia, the factors which, according to s 3 of (the Law of Evidence Amendment Act 45 of 1988), the court should take into account, but as the veracity of the evidence is at this stage of the process not the primary question but only whether there is evidence that might reasonably be believed and which might reasonably support a future conviction and a consequent confiscation order, a formal ruling in terms of Act 45 of 1988 as to the admissibility of every piece of hearsay evidence is not required. Furthermore, in an application for a restraint order, especially one involving alleged criminal activities of the magnitude alleged in the present case, reliance upon hearsay evidence is virtually indispensable and even more so where the restraint is applied for before an indictment is served. This is so because the application for a restraint will usually precede the completion of the criminal investigation, and disclosure of evidence before completion of the investigation might well prejudice the capacity of the prosecution to effectively prosecute in the ensuing trial and may also, as I have indicated above, endanger the safety of potential witnesses.‟ Although these comments were made in regard to criminal proceedings, in a case such as this in which averments of fraudulent conduct on the part of Mr Dunne are made to justify an interim preservation order, they encapsulate the correct approach. [16] Then there is the fact that a voluminous replying affidavit containing a great deal of evidential material relevant to the issues at hand had been filed. Relying upon authorities such a Sooliman,7 the appellant argued that it was „axiomatic . . . that a reply is not a place to amplify the applicant‟s case‟ and that the new matter had been impermissibly raised by Lehane in reply, that it was evidential material to which the appellant had not been able to respond, and 7 Industrial Development Corporation of South Africa v Sooliman 2013 (5) SA 603 (GSJ) para 9. that it fell to be ignored. However, again, practical, common sense must be used, and it is not without significance that many of the hearsay allegations complained of were admitted by the appellant in its answering affidavit. And although Lehane had been appointed the Official Assignee to Dunne‟s estate some thirteen months before the application was launched in the court a quo, and the information set out in reply could therefore have been contained in the founding affidavits, sight must not be lost of the fact that the application was initially launched by Lehane‟s deputy official, Mr D Ryan, in the absence of Lehane who was abroad at the time and unable to depose to an affidavit. The detailed allegations made by Lehane speak of he, and not Mr Ryan, having been more au fait with the facts and circumstances of the matter. Moreover, the initial application was moved as a matter of urgency, and the courts are commonly sympathetic to an applicant in those circumstances, and often allow papers to be amplified in reply as a result, subject of course to the right of a respondent to file further answering papers. Regard should also be had to the intricacy of Mr Dunne‟s dealings that required intensive and on-going investigations. Furthermore, the appellant, as respondent a quo, did not seek to avail itself of the opportunity to deal with the additional matter Lehane set out in reply, and I see no reason why these allegations should therefore be ignored. [17] In the light of these general observations, I turn to deal with the more specific contentions of the appellant. I have already mentioned that an applicant seeking interim relief must show a right, albeit one that might be attended by some doubt. The appellant‟s argument was that no right at all had been established and therefore Lehane had not only failed to establish this essential part of his case, but had failed to show that he had locus standi and that the court ought not to have granted an order recognising him. [18] It was the appellant‟s contention that Mr Dunne‟s bankruptcy fell to be dealt with by the trustee appointed in the United States and in accordance with the bankruptcy laws of that country, rather than pursuant to the laws of Ireland, the standard position being that the insolvent estate will fall into the jurisdiction of the first court which grants a sequestration order.8 Accordingly, so it was argued, Lehane who was appointed pursuant to the proceedings in Ireland, had no right to take the steps he had done in this court. The basis of this argument is set out in an expert opinion provided by a practising counsel in Cape Town, Mr Osborne, who holds himself out as an expert in the law of the United States. He expressed the view that the effect that the original bankruptcy order issued in the United States was to bring about a worldwide stay which the courts of the United States have held applies extra-territorially. This worldwide stay operates to bar any other person from obtaining possession of or commencing action to obtain control over property falling with the bankrupt estate of Mr Dunne. Thus, so it was argued, Lehane has no right to obtain any restraint over the Lagoon Beach Hotel, even if it is an asset in Dunne‟s estate. [19] There is a dispute in the papers as to the precise effect of this worldwide stay. Lehane filed an expert report of Joshua W Cohen, an attorney admitted to practice in the United States of America, who expressed the opinion that although the automatic stay in bankruptcy applies extra-territorially, it only applies to actions against property of the bankruptcy estate and that the relevant assets do not fall within the bankruptcy estate of Mr Dunne. [20] This gave rise to considerable debate as to whether the views of Advocate Osborne or Attorney Cohen should be accepted. Relying on the judgment of Wallis JA in this court in Imperial Marine Company v Deiulemar Compagnia di Navigazione SPA 2012 (1) SA 58 (SCA) para 27, the appellant argued that we could have regard to the United States law without further reference to any expert opinion as the law on the issue could be ascertained with sufficient certainty. There are in my view a number of answers to this. First, I do not think the principles of the law in the United States of America are 8 Richard Sheldon QC Cross-Border Insolvency (4ed) paras 28-9. so clear that this court should attempt to take judicial notice either of what it perceives that country‟s law to be nor, for that matter, what an Irish court would regard as being the correct position and to what extent it would recognise the United States worldwide stay provisions. This it seems to me, is an issue far more conveniently dealt with in the Irish Courts rather than ours. Significantly the Irish High Court has given judgment dismissing an application by Mr Dunne to set aside the Irish bankruptcy order, inter alia on the ground of an objection similar to the argument advanced by Advocate Osborne – an appeal was pending when the replying affidavits were filed in the court a quo – and it would be inappropriate for this court in any way to be seen as interfering in that process. [21] Furthermore, and most importantly, sight cannot be lost of the fact that the American and Irish bankruptcy officials are working hand in glove to attempt to recover assets for the benefit of Mr Dunne‟s creditors. Indeed the American trustee of Mr Dunne‟s estate, Mr Coan, states in his letter of 12 September 2014 that he is working „in collaboration‟ with Lehane and that, after reviewing the order of the court a quo, he concurs that „the interdict is appropriate to protect the Irish and American bankruptcy estates.‟ This goes to the very nub of the matter. All that is being sought is an anti-dissipation order that seeks to protect Mr Dunne‟s creditors and ensures the integrity of the legal process, both in the United States and in Ireland. [22] In any event, it is clear that the effect of the worldwide stay can be lifted. Significantly, on 12 June 2013, Judge Shiff of the United States Bankruptcy Court granted an order at the request of the Ulster Bank of Ireland Limited to modify the automatic stay to permit the bank to take all actions necessary under Irish law to effect service upon Mr Dunne and to permit the continuation of bankruptcy proceedings against Mr Dunne in Ireland. In this way, the proceedings in Ireland were authorised. As just mentioned, there has been close contact between Lehane and his counter-part in the United States in regard to the proceedings taken, not only in Ireland but in this country as well. In these circumstances, where the official representatives of both jurisdictions in effect support each other in the bringing of this relief in the interest of Mr Dunn‟s creditors, there seems to be no reason to refuse to recognise Mr Lehane‟s efforts to seek a preservation of assets order, the effect of which will ensure the integrity of the legal process of both courts. [23] Turning to another issue, as already mentioned, the proceedings were initially launched on the strength of a founding affidavit made by Mr D Ryan, the deputy to the official assignee in the absence of Lehane. It was deposed on 2 September 2014, the day after Cross J in the Irish High Court, Bankruptcy had issued an order requesting „the High Court of South Africa, Western Cape Division and the Offices of said Court to recognise the Irish High Court and the Official Assignee‟ as trustee of the estate of Mr Dunne, and authorising the Official Assignee to „have liberty if recognised by the High Court of South Africa‟ to apply in this country for „an anti-dissipation order in respect of the proceeds of sale of the Lagoon Beach Hotel . . . and/or of the shares in (the appellant).‟ The appellant contends that this order was fundamental to the granting of the relief sought against it, and drew attention to the allegation in the founding papers that a copy of the order would be made available „at the hearing of this matter‟. It contended further that as a copy was not attached to the founding affidavit, it had been impermissibly attached to Lehane‟s replying papers and should be ignored; and that an essential allegation that Lehane was obliged to establish, was therefore missing. [24] There is no merit in this. I have already dealt with it being necessary to approach urgent applications with a degree of flexibility and common sense. On the papers as they stand, the allegations made in regard to the deputy‟s appointment stand both unchallenged and supported by a court order. And for the reasons already mentioned, I have no difficulty with that order only being made available in reply. The appellant made no effort to challenge the allegations made in that respect, as it could easily have done had it had any doubt as to their correctness. Its argument in this regard amounts to no more than a clutch at a technical straw. [25] I turn more specifically to the recognition order granted by the court a quo. Of course the question of locus standi is relevant to the issue of recognition of the first respondent in this country as Official Assignee, to be empowered to administer the estate of the bankrupt in this country and, in particular, to conduct an enquiry into the bankrupt‟s affairs in South Africa. The argument of the appellant is that as this is final relief, the first respondent had to establish a clear right thereto, and as Lehane had failed to establish a case for recognition on that basis, the order of the court a quo should be dismissed. [26] Pertinent to this issue is the question of Mr Dunne‟s domicile. In Ex Parte Palmer NO: In re Hahn 1993 (3) SA 359 (C), Berman J dealt exhaustively with the authorities relevant to the recognition of foreign trustees. The learned judge pointed out9 that it is now well established that a foreign representative such a trustee (or in this case, the Official Assignee), who seeks to deal with assets present in this country, must first obtain the „active assistance‟ of a South African court by obtaining recognition of the foreign order. Without such recognition, he or she will be precluded from exercising authority and power, for example to convene a statutory meeting in order to interrogate the respondent. [27] It is unnecessary for present purposes to unduly scrutinise previous decisions relating to requirements of recognition in this country. Suffice it to say that they were summarised as follows by Berman J in Ex Parte Palmer: „Certainly, insofar as the movable property found in this country belonging to a person whose estate was sequestrated by order of a foreign Court within whose jurisdiction that 9 At 361G-I. person was domiciled is concerned, that property vests in his trustee appointed pursuant to that order, for our Courts. . . . . Indeed where movable property is concerned, a formal application for the recognition of the foreign trustee is not strictly necessary. . . . As a matter of practice, however, such an application is invariably made and the need for formal recognition has been elevated into a principle . . . The position in regard to immovable property is, however, different. To deal with the insolvent‟s immovable property situate in this country, formal recognition is required by a foreign trustee. And its grant is no formality: the South African Courts may grant or refuse to accord recognition of a foreign trustee in their discretion, and they will only exercise such discretion in favour of the foreign trustee in special circumstances. The basis for the apparent difference between the manner in which movable property of an insolvent and his immovable property is dealt with in South Africa is that, in the former case, such property is governed by the lex domicilii and it is a matter of convenience that a single concursus creditorum be established; in the case of immovable property it is the lex situs which governs the position. Thus the foreign trustee appointed in the foreign State where the insolvent was domiciled as at the date of the sequestration of his estate by a Court of that State has the power and authority, strictly speaking, to deal with the insolvent‟s movable property in South Africa without the need to obtain recognition here, but that trustee must first be granted judicial recognition in South Africa before he can deal with any immovable property of the insolvent situate in this country. As pointed out above, the grant of recognition to a foreign trustee to deal with an insolvent‟s immovable property in South Africa is a matter for the local Court‟s discretion. The discretion is absolute. It is exercised on the basis of comity and convenience. . . . . The aforegoing applies not only where an insolvent‟s property is situate in South Africa and the power and authority of a foreign trustee to deal therewith is concerned. It is applicable also in all matters relating to the administration of the insolvent estate, including the authority of the foreign trustee to convene a meeting in South Africa in terms of the Insolvency Act 24 of 1936 in order to interrogate the insolvent living here. In such a case, too, the foreign trustee requires formal recognition and here again the grant of recognition is a matter for the local Court‟s discretion, to be exercised on the basis of comity and convenience. The right, power and authority of a foreign trustee to deal with the movable property of an insolvent in South Africa exists only, and the grant of recognition to him by a local Court to deal with that insolvent‟s immovable property situate in this country is permissible only (subject to what is set out below with regard to the question of exceptions to the proposition here being stated), where the insolvent was domiciled in the foreign State, the Court of which sequestrated his estate and the trustee was appointed pursuant to the sequestration order. “Comity and convenience” is a factor which plays a part in influencing the local Court to exercise its discretion in favour of recognising a foreign trustee; it is not a separate ground for granting such trustee recognition.‟ [28] In the light of this, and returning to the issue of Mr Dunn‟s domicile, Mr D Ryan the Deputy Official Assignee, expressed his understanding that although Mr Dunne was then resident in Connecticut in the United State of America, he is domiciled in Ireland. In support of this, he referred to what purports to be a letter signed by Mr Dunne on 14 May 2010 which formed part of an application he had made for a visa in order to travel to the United States, and in which he had stated: „I am an Irish National who resides in Ireland. I am intending to go to the United States to develop and manage my United States‟ company pending an approved visa. Upon termination of the investor visa status, I have every intention of departing the United States and returning home to Ireland.‟ This is a clear indication that Mr Dunne regarded Ireland as being his place of domicile at that time. Although one can accept that he has since resided in the United States, there is nothing that clearly shows that he thereafter settled permanently in that country with a fixed and deliberate intention to abandon his domicile in Ireland (compare Eilon v Eilon 1965 (1) SA 703 (A) at 722A). [29] Relying upon certain later statements of Mr Dunne, the appellant argued that the visa application was out of date, unreliable and ought not to be taken into account in assessing Mr Dunne‟s domicile. In this regard, reference was made to documents in judicial separation proceedings that had taken place between Mr Dunne and his wife in Geneva in which it is stated that they had both been domiciled in Geneva „since August 2008‟. Also mentioned was an affidavit filed in the Irish High Court in 2013 in proceedings relating to his bankruptcy, wherein Mr Dunne stated that he was resident and domiciled in the United States and that, although he had travelled to Ireland frequently to visit family and to assist in the winding-up of his business interests, he had not resided there since early 2007. All of these allegations to some extent conflict with each other. Importantly, Mrs Dunne in her papers does not attempt to explain away any of these conflicts. In particular, she fails to explain how it came about that the judicial separation proceedings took place in Geneva on the strength of an allegation that she and her husband were domiciled there. [30] What Mrs Dunne does say, however, is that she, and not Mr Dunne, was the person who had invested in the United States and that he had done no more than work in that country for her company. Bearing in mind that it would require a fixed intention on Mr Dunne‟s part to permanently reside in the United States for him to acquire a domicile of choice in that country, as he was residing there under a visa granted on the supposition that he would return to Ireland, it seems improbable that he has since 2010 lawfully acquired a domicile in the United States. In the light of this, and the unexplained allegations in regard to his domicile in Geneva, I am of the view that a prima facie case has been made out that Mr Dunne has retained his domicile of origin in Ireland. [31] But in any event, while I accept that ordinarily a foreign trustee seeking recognition in South Africa must establish that the insolvent party was domiciled within the jurisdiction of the foreign court that appointed him, this is not a law set in stone. It has been accepted that in exceptional circumstances the requirement of domicile will not be insisted upon. As pointed out by Berman J in Ex parte Palmer10 South African courts have recognised a foreign trustee at times where the order pursuant to which the trustee was appointed was issued by a court other than that of domicile, but added the proviso that those cases „are certainly not authority for the contention that a South African court may, 10 At 364I-365B simply on the basis of comity and convenience, grant recognition to a foreign trustee, regardless of any consideration given to the insolvent‟s domicile‟. [32] In the present case, even though there appears to be a prima facie case that Mr Dunne must be domiciled in Ireland, the other allegations mentioned are such that there is a degree of uncertainty about the issue. But because of that uncertainty, and the fact that the American Courts have invoked the justice system of Ireland to assist in tracing assets and administering bankruptcy proceedings, there are in any event exceptional circumstances present that justify a South African court also rendering assistance by taking the necessary steps to recognise the Irish Official Assignee in order to protect the interests of Mr Dunne‟s creditors. But it is not simply a matter of comity and convenience to do so. It is also intimately bound up with the prima facie case made out against Mr Dunne for his being domiciled in Ireland. [33] In the light of these considerations, I see no reason to interfere with the court a quo‟s recognition of Mr Lehane. It had the discretion to exercise whether or not to do so, and in my view such discretion was properly exercised. It also properly exercised its discretion to grant an interim interdict to preserve assets in respect of which Lehane had established a prima facie right. In broad terms, then, the appeal must fail. [34] There are however, two issues arising from the order of the court a quo that do need to be addressed. In para 3 thereof, specific reference is made to s 82 of the Insolvency Act 24 of 1936 which, so it is stated, are to „exist in relation to the administration of Mr Dunne‟s estate as if the said Act applied thereto pursuant to a sequestration order granted by the Irish Court on 29 July 2013. Section 82 provides for the sale of property after a second meeting between creditors, and it seems to be wholly inappropriate in a case such as this where an order is sought to prevent property being dissipated prior to finalisation of proceedings in another court that will determine whether or not the property falls into the estate of the insolvent, for that section to be invoked. This was raised with counsel for Lehane who proposed a varied order deleting reference to s 82. This was placed before the appellant‟s legal representatives to consider the appropriateness of the variation. No objection was made and the variation, will be reflected in the order granted. [35] Similarly, in para 10 of the order of the court a quo, the appellant was ordered to pay the costs of the application. This, too, appears to be premature. In the event of the litigation in Ireland being resolved in the appellant‟s favour, its opposition to the proceedings in the court a quo would be justified. It is more appropriate for the costs to be reserved, as was also suggested by Lehane‟s counsel in the order he proposed in this court. This too will be reflected in the order. [36] This limited success on the part of the appellant is insufficient to deprive the first respondent of his costs of appeal. The appellant‟s primary objective in appealing was to have the restraint imposed by the preservation order set aside and in that it has failed. The first respondent, on the other hand, has successfully defended the interim relief granted by the court a quo. [37] It is therefore ordered as follows: 1 The appeal is upheld solely to the limited extent that the order of the court a quo is altered as follows: (a) The reference to s 82 of the Insolvency Act 24 of 1936 is deleted from para 3. (b) By the insertion of the following para 3A: „Notwithstanding paras 2 and 3 above, the applicant shall not be entitled to sell property belonging to Mr Sean Dunne (as contemplated in s 82 of the Insolvency Act 24 of 1936 or otherwise) without the leave of this Court.‟ (c) Paragraph 10 is substituted with the following: „All questions of costs will stand over for later determination and the parties are given leave to approach this Court, on the same papers duly amplified as necessary, to determine the question of costs of this application after the finalisation of the proceedings referred to in paragraph 2.5 of the Notice.‟ 2 The appellant is to pay the first respondent‟s cost of appeal, such costs to include the costs of two counsel where so employed. _______________________ L E Leach Judge of Appeal Appearances: For the Appellant: P B Hodes SC (with him T A Dicker SC and M A McChesney) Instructed by: Barnaschone Attorneys, Sea Point McIntyre & vd Post, Bloemfontein For the 1st Respondent: G W Woodland SC (with him AHA Morrissey) Instructed by: Alexander Cox Attorneys, Kloof Symington & de Kok, Bloemfontein For the 3rd Respondent: J Muller SC Instructed by: Edward Nathan Sonnenbergs Matsepes In c, 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: 21 December 2015 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Neutral citation: Lagoon Beach Hotel v Lehane (235/2015) [2015] ZASCA 210 (21 December 2015) An international businessman, Mr Sean Dunne, presently living in the USA, although Irish by descent, was declared bankrupt first in the USA and thereafter in Ireland. He had carried on business through a web of companies, holding companies and trusts and his affairs were complex. His Irish ‘Official Assignee on Bankruptcy’, Mr Lehane, acting with the support of the US trustee of Mr Dunne’s estate identified the Lagoon Beach Hotel in Milnerton, Cape Town as an asset held by a company whose shareholding had been transferred by Mr Dunne to his wife Mrs Gayle Dunne pursuant to two handwritten contracts which Mr Lehane contends were not genuine and had been designed to frustrate Mr Dunne’s creditors. Mr Lehane therefore instituted proceedings in Ireland to have the dispositors made under these agreements set aside and, in effect, to recover the Lagoon Beach Hotel as an asset in Mr Dunne’s bankrupt estate. In the interim, Mr Lehane applied to the Western Cape High Court and obtained an order recognising him as the Official Assignee and interdicting the proposed sale of the hotel to a third party pending the outcome of his claim in Ireland. He succeeded, the judgment of Yekiso J having been reported as Lehane NO v Lagoon Beach Hotel (Pty) Ltd 2015 (4) SA 72 (WCC). With leave of the court a quo Lagoon Beach Hotel (Pty) Ltd, the owner of the hotel, appealed to the Supreme Court of Appeal. The appellant contended that Mr Lehane ought not to have been recognised as Official Assignee by reason of the US order having predated that of the Irish Court declaring Mr Dunne bankrupt, as the effect of the US order was to provide worldwide stay that vested all assets in the US trustee, so that an Irish official could not recover any of Mr Dunne’s assets. The SCA however held that the US trustee and Mr Lehane were working hand in glove, and the US order had been modified to permit the Irish proceedings to take place. Furthermore, all that was sought in this country was an anti-dissipation order to protect the integrity of the legal process in both the US and Ireland. It also found there to be a dispute as to whether in American law the assets in dispute fall within the estate of Mr Dunne. The SCA held that the principles of the US bankruptcy law were not so clear that it could take judicial notice thereof, nor what an Irish court would decide the correct position to be and to what extent it would recognise the US worldwide provisions. The issue has already been adjudicated in Ireland in dismissing an application by Mr Dunne to have the Irish proceedings set aside, and as an appeal in those proceedings was pending it would be inappropriate to the SCA to be seen to be interfering in that process. In addition, ordinarily a foreign trustee seeking recognition in South Africa must establish that the insolvent is documented within the jurisdiction of the foreign court that appointed him, and a prima facie case had been made out that Mr Dunne had retained his domicile of origin in Ireland. Moreover this rule is not set in stone and in exceptional circumstances proof of domicile will not be insisted upon. In the light of the uncertainty as to domicile, the fact that the US courts have invoked the Irish justice system to trace international assets, there are such exceptional incidents present. In all these circumstances Mr Lehane had correctly been recognised. The appellant also objected to hearsay evidence relied upon by Mr Lehane and the fact that he had amplified his case in reply. The SCA however held that by the nature of things Mr Lehane had been obliged to rely on hearsay evidence, and that a practical and common sense approach was required. It approved the approach of Rabie J in NDPP v Naidoo 2006 (2) SACR 403 (T) at 427 in regard to the admissibility of hearsay in cases such as this, and drew attention to the fact that much of the hearsay had been admitted by the appellant. It also concluded that the appellant had not sought to challenge additional matter in the replying pages and that regard could therefore be had to such matter. These are however certain unsatisfactory details of the court below’s order which the respondents agreed to vary. The appellant raised no objection to these variations In the result, the SCA upheld the appeal solely to the limited extent that there be minor variations of the order of the court below, but ordered the appellant to pay the first respondent’s costs of appeal. ---ends---

2385

non-electoral

2013

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 405/12 In the matter between: PICBEL GROEP VOORSORGFONDS (In liquidation) Appellant and WILLIAM VASS GRAHAM SOMERVILLE & THREE RELATED MATTERS and CROSS APPEAL Respondent And in the matter between: SABLE INDUSTRIES PENSION FUND (Under curatorship) Appellant and SIMON JOHN NASH First Respondent MIDMACOR INDUSTRIES LIMITED Second Respondent AUBREY WYNNE-JONES Third Respondent WYNNE-JONES & COMPANY EMPLOYEE BENEFITS CONSULTANTS (PTY) LTD Fourth Respondent NEDBANK LIMITED Fifth Respondent WILLIAM VASS GRAHAM SOMERVILLE Sixth Respondent And in the matter between: MITCHELL COTTS PENSION FUND (In liquidation) First Appellant LUCAS SOUTH AFRICA PENSION FUND (In liquidation) Second Appellant and NEDBANK LIMITED First Respondent WILLIAM VASS GRAHAM SOMERVILLE Second Respondent And in the matter between: DATAKOR PENSION FUND (Under curatorship) First Appellant DATAKOR RETIREMENT FUND (Under curatorship) Second Appellant CORTECH PENSION FUND (Under curatorship) Third Appellant and WYNNE-JONES & COMPANY EMPLOYEE BENEFITS CONSULTANTS (PTY) LTD First Respondent AUBREY WYNNE-JONES Second Respondent JOHANNES ROETS Third Respondent MICHAEL MCEVOY Fourth Respondent DERRICK JOHN PETTITT Fifth Respondent WILLIAM VASS GRAHAM SOMERVILLE Sixth Respondent Neutral citation: Picbel Groep Voorsorgfonds v Somerville (405/12) [2013] ZASCA 24 (22 March 2013) Bench: PONNAN, CACHALIA and PETSE JJA, PLASKET and MBHA AJJA Heard: 18 FEBRUARY 2013 Delivered: 22 MARCH 2013 Summary: Apportionment of Damages Act 34 of 1956 – s 2(2)(b) read with s 2(12) – proceedings on exception – whether upon every interpretation which the particulars of claim and annexures can reasonably bear no cause of action disclosed. __________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: South Gauteng High Court (Pretoria) (Sutherland J sitting as court of first instance): (a) The appeal is dismissed with costs, including the costs of two counsel. (b) In SGHC case number 16215/2011(Mitchell Cotts Pension Fund (in liquidation) & another v Nedbank Limited & another), Nedbank Limited is ordered to pay the costs, including the costs of two counsel, of Mitchell Cotts Pension Fund (in liquidation) and of Lucas South Africa Pension Fund (in liquidation) in respect of Nedbank’s withdrawn cross-appeal. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN JA (PETSE JA concurring): [1] The appellants are all pension funds1 (the Funds), who suffered losses totalling some R946 million resulting from the wrongful removal of surplus assets from each fund through a scheme known as the Ghavalas Option, details of which are not material to the present appeal. It resulted in the Funds being placed under curatorship or winding-up. Part of those losses formed the subject matter of delictual (Aquilian) damages claims by the Funds (duly represented by their curators or liquidators as the case may be) instituted against Alexander Forbes Financial Services (Pty) Ltd (Alexander Forbes), as one of several wrongdoers in respect of the harm suffered. 1 Picbel Groep Voorsorgfonds (in liquidation), Sable Industries Pension Fund (under curatorship), Mitchell Cotts Pension Fund (in liquidation), Lucas South Africa Pension Fund (in liquidation), Datakor Pension Fund (under curatorship), Datakor Retirement Fund (under curatorship) and Cortech Pension Fund (under curatorship). [2] Alexander Forbes gave notice of the action to the various respondents2 in terms of s 2(2)(b) of the Apportionment of Damages Act 34 of 1956 (the Act). Section 2(2)(b) provides: 'Notice of any action may at any time before the close of pleadings in that action be given by any joint wrongdoer who is sued in that action, to any joint wrongdoer who is not sued in that action, and such joint wrongdoer may thereupon intervene as a defendant in that action.' None of the respondents intervened in the action. [3] The damages claims were settled by Alexander Forbes. The settlement agreement to the extent here relevant read: '4. The company [Alexander Forbes] shall: 4.1 without admission of liability pay to AL Mostert & Company, the attorneys for the Funds, the sum of R325 million, plus interest at prime rate from 21 January 2010 ("the payment"); and 4.2 cede to Mostert on behalf of the Funds the claims against all third parties to whom the company has given notice in terms of section 2(2)(b) of the Apportionment of Damages Act, arising in terms of the Act as a result of this settlement or howsoever arising. . . . 6. The Funds record that the payment does not reflect the full loss sustained by the Funds resulting from the Ghavalas option. Consequently one or more of the Funds are pursuing other remedies, including the return of assets or their proceeds. The payment serves to discharge only that portion of the loss for which the Funds regard the company liable. 7. The payment, determination and allocation as aforesaid shall operate in full and final settlement of the company's share of the amounts claimed in the action and the Funds shall thereupon have no further claims against the company and related entities, and shall discharge the company and related entities from all present and future liability to each of the Funds inclusive of all legal costs and costs orders. 2  William  Vass  Graham  Somerville,  Simon  John  Nash,  Midmacor  Industries  Limited,  Aubrey  Wynne‐ Jones,Wynne‐Jones  &  Company  Employee  Benefits  Consultants  (Pty)  Ltd,  Nedbank  Limited,  William  Vass Graham Somerville, Johannes Roets, Michael McEvoy and Derrick John Pettitt. 8. Mostert shall make such determinations as may be required on behalf of each of the Funds as to the allocation of the payment at any time but by no later than 30 days of final judgment or settlement of all claims of any of the Funds arising from the Ghavalas option. 9. Upon conclusion of this agreement, 9.1 Mostert shall sign and formally serve on the company's legal representatives a notice of withdrawal of the action instituted by the Funds . . . Mostert shall simultaneously deliver the served notice to the company; 9.2 Upon signature hereof the company shall sign and formally serve on Mostert notices of withdrawal of its: 9.2.1 opposition to the urgent application and its counter-application in Case No 08/20841; 9.2.2 opposition to the review applications launched under Case Nos 09/35014, 09/35015, 09/35016, 09/35017, 09/35018, 09/35019 and 09/35020; 9.2.3 application for leave to appeal against the dismissal of the application for leave to join third parties; and 9.2.4 The claim lodged against Picardi Holdings Limited (in liquidation). 9.3 The company shall simultaneously deliver the served notices to Mostert. 9.4 Upon payment by the company, Mostert and the company shall become entitled and be obliged to formally file the notices referred to above with the office the Registrar of the South Gauteng High Court. ASSISTANCE 10. The company undertakes to provide all reasonable assistance to the Funds for the purpose of enforcing the claims ceded by the company to the Funds and the claims referred to in clause 6 above.' [4] The Funds thereafter instituted action in the South Gauteng High Court against the respondents. The particulars of claim alleged: '4. The plaintiff seek enforcement of the ceded rights of contribution in terms of section 2(2)(b) read with 2(12) of the Apportionment of Damages Act 34 of 1956 ("the Apportionment Act") against the defendant jointly or severally, the one paying the other to be absolved, for payment of the entire amount of damages paid to the plaintiffs, alternatively such lesser amount to be determined by the court. . . . 6. In March 2008 under case number 08/7872 of this Court an action ("the action") was instituted by the plaintiffs and five others ("the plaintiff funds") against [Alexander Forbes] . . . . 7. A copy of the particulars of claim in the action is attached marked "POC 1" and the contents thereof incorporated herein by reference. 8. In the action the plaintiff claimed an amount in damages from Alexander Forbes of . . . . 9. Pursuant to the action being instituted, Alexander Forbes gave notice to the defendant in accordance with the provisions of section 2(2)(b) of the Apportionment Act 34 of 1956 as joint wrongdoers not having been sued in the action. 10. A copy of the notice is attached hereto marked "POC 2" and its contents are incorporated herein by reference. 11. On 22 April 2010 the plaintiffs and Alexander Forbes entered into a written agreement of settlement pursuant to which the claims of each of the plaintiffs in the action were settled. 12. A copy of the settlement agreement is attached hereto marked "POC 3" ("the settlement"). 13. In accordance with clause 4.1 of the settlement, Alexander Forbes ceded to the plaintiffs, its rights to contribution against all third parties to whom it gave notice in terms of section 2(2)(b) of the Apportionment Act arising in terms of the Apportionment Act as a result of the settlement. 14. In settlement of the plaintiff's claim Alexander Forbes paid to the plaintiff an amount of …. Accordingly, pursuant to section 2(12) read with section 2(6)(a) of the Apportionment [Act] the plaintiff qua cessionary of Alexander Forbes' rights to contribution as aforesaid, is entitled to claim and recover from the defendant such a contribution in respect of his responsibility for the amounts referred to in paragraph 14 as the court may deem just and equitable.' [5] The summons was met with various exceptions, one of which – the only one relevant for present purposes - was expressed thus: ‘(a) the right in terms of section 2(12) of the Act to recover a contribution in terms of section 2(6) from any other joint wrongdoer, is only afforded to a joint wrongdoer who "agrees to pay the plaintiff a sum of money in full settlement of the plaintiff's claim"; (b) ex facie clause 6 of the settlement agreement the payment by Alexander Forbes effected in terms thereof was not in full settlement of the claims of the plaintiffs in the Alexander Forbes action, and accordingly neither section 2(12) nor section 2(6)(a) of the Act finds application, the effect whereof is that Alexander Forbes did not become entitled to recover a contribution from [any of the other alleged joint wrongdoers], and no such right therefor was capable of being ceded by Alexander Forbes to [the Funds].' [6] That exception was upheld by Sutherland J, who thereafter granted leave to the Funds to appeal to this court against that order. The learned Judge, moreover, granted conditional leave to one of the respondents, Nedbank Limited (Nedbank), to cross-appeal the dismissal of two further exceptions presented and argued by it. By notice dated 22 January 2013 Nedbank withdrew its cross-appeal on the basis that the dismissal of those exceptions was not appealable. In that it was undoubtedly correct (Maize Board v Tiger Oats Ltd & others 2002 (5) SA 365 (SCA)). The notice of withdrawal made no provision for costs. Before us counsel for Nedbank conceded that it is indeed liable to pay such costs (including those of two counsel) as may be found to have been incurred by the appellant in respect of the cross-appeal. [7] At the outset it may be as well to remind ourselves that we are concerned with proceedings on exception. That being so, the respondents have the duty as excipients to persuade the court that upon every interpretation which the particulars of claim (including the annexures) can reasonably bear, no cause of action is disclosed (Lewis v Oneanate (Pty) Ltd & another 1992 (4) SA 811 (A) at 817F-G). [8] The Act, when it came into force, was described as 'the most important piece of law reform that has been carried out in the field of Private Law since Union'.3 For, 'with one clean surgical cut, [it] excised the rule of the last opportunity (in the strict sense) from the law'.4 But, while it may have set at rest some of the uncertainties that vexed the common law and 'while the passing into Law of the principles contained in it must be applauded there is no doubt that many a problem lies hidden in the folds of its tortuous syntax'.5 [9] Chapter 2 of the Act has been described as 'complex and textually involved'.6 Sections 2(12) and 2(13), which lie at the heart of the present appeal, read: '(12) If any joint wrongdoer agrees to pay to the plaintiff a sum of money in full settlement of the plaintiff's claim, the provisions of subsection (6) shall apply mutatis mutandis as if judgment had been given by a competent court against such joint wrongdoer for that sum of money, or, if the court is satisfied that the full amount of the damage actually suffered by the plaintiff is less than that sum of money, for such sum of money as the court determines to be equal to the full amount of the damage actually suffered by the plaintiff, and in the application of the provisions of paragraph (b) of the said subsection (6), any reference therein to the date of the judgment shall be construed as a reference to the date of the agreement. (13) Whenever judgment is in any action given against any joint wrongdoer for the full amount of the damage suffered by the plaintiff, or whenever any joint wrongdoer has agreed to pay to the plaintiff a sum of money in full settlement of the plaintiff's claim, and the judgment debt or the said sum of money has been paid in full, every other joint wrongdoer shall thereby also be discharged from any further liability towards the plaintiff.' And subsection 6 reads: '(a) If judgment is in any action given against any joint wrongdoer for the full amount of the damage suffered by the plaintiff, the said joint wrongdoer may, if the judgment debt has been paid in full, subject to the provisions of paragraph (b) of subsection (4), recover from any other joint wrongdoer a contribution in respect of his responsibility for such damage of such 3 Professor R G McKerron The Apportionment of Damages Act (1956) at 1. 4 M A Millner 'Notes and comments: the Apportionment of Damages Act' (1956) 73 SALJ 319 at 320. 5 M A Millner 'Law of Delict: A. Legislation' (1956) Annual Survey of South African Law 188 at 195. 6 M A Millner 'Law of Delict: A. Legislation' 195. an amount as the court may deem just and equitable having regard to the degree in which that other joint wrongdoer was at fault in relation to the damage suffered by the plaintiff, and to the damages awarded: Provided further that if the court, in determining the full amount of the damage suffered by the plaintiff referred to in subsection (1B), deducts from the estimated value of the support of which the plaintiff has been deprived by reason of the death of any person, the value of any benefit which the plaintiff has acquired from the estate of such deceased person no contribution which the said joint wrongdoer may so recover from the estate of the said deceased person shall deprive the plaintiff of the said benefit or any portion thereof. (b) The period of extinctive prescription in respect of a claim for a contribution shall be twelve months, calculated from the date of the judgment in respect of which a contribution is claimed or, where an appeal is made against such judgment, the date of the final judgment on appeal: Provided that if, in the case of any joint wrongdoer, the period of extinctive prescription in relation to any action which may be instituted against him by the plaintiff, is governed by a law which prescribes a period of less than twelve months as the period within which legal proceedings shall be instituted against him or within which notice shall be given that proceedings will be instituted against him, the provisions of such law shall apply mutatis mutandis in relation to any action for a contribution by a joint wrongdoer, the period or periods concerned being calculated from the date of the judgment as aforesaid instead of from the date of the original cause of action. (c) Any joint wrongdoer from whom a contribution is claimed may raise against the joint wrongdoer who claims the contribution any defence which the latter could have raised against the plaintiff.' [10] The high court concluded: ‘the settlement to the victims by Alexander Forbes was not such that it extinguished the liability of the joint wrongdoers and effected only a settlement of the liability of Alexander Forbes itself.' In arriving at that conclusion, it reasoned: '[19] The cessionary's particulars squarely allege a cause of action that can exist only as between joint wrongdoers as defined by the ADA [the Act]. This cause of action does not exist at common law; it is a creature exclusively of the ADA. The recovery of such contributions can occur if the conditions set out in s 2(13) are met, ie the discharge of any liability of the joint wrongdoers to the victims. Section 2(13) requires two conditions to discharge the joint wrongdoers from any liability to pay damages to the victims. Insofar as this case is concerned, first there must be "an agreement to pay a sum of money in full settlement of the [victims'] claim"; secondly, that "sum of money has been paid in full" to the victim. [20] Both of these conditions are necessary elements of the cause of action that has to be pleaded by the cessionary. However, no such averments appear expressly in the particulars. Instead, the cessionary asserts simply that it sues under the provisions of s 2(12) and annexes the settlement agreement. The particulars allege that the cessionary is entitled to a contribution from each of the defendants because it, the cessionary, has, in an agreement, settled with the victims and is entitled to a contribution towards that settlement from each of the defendants.' The high court then asked: '[21] If the allegations need to be made because they are absent from the particulars, they must appear from the annexed agreement. Do they?' In endeavouring to answer that question it then scoured the annexures to the Funds' particulars of claim. It held that s 2(13) applies; that it stipulates the allegations that have to be set out; and, that the Funds’ claims had to fail because they did not do so. In so doing the high court lost from sight that reliance on s 2(12) of the Act was expressly pleaded and not simply asserted. And that was therefore sufficient to invoke the ex lege effect of its provisions. [11] Prior to the coming into operation of the Act, the law made no provision for joint liability of wrongdoers. The Act, as a whole, must be interpreted in that light, namely, to facilitate the recovery by victims of wrongful acts of compensation from any or some or all of their wrongdoers, as also, to facilitate the adjustment of liability inter se the wrongdoers. It needs to be emphasised that the wrongdoer's claim is not that of the victim – it is not Aquilian, nor derived by extension from the Lex Aquilia, but a new statutory claim created by the Act inhering in the wrongdoer who pays the plaintiff's claim (whether by judgment or settlement). Thus nothing prevents the victim taking cession of that wrongdoer's right of recourse. Indeed, such a course entirely advances the purposes of the Act. Here the Funds' claims, acquired by cession, are based on Alexander Forbes' right to recover a contribution in terms of s 2(12) read with s 2(6)(a) of the Act. They are not based on any cause of action arising in their own right against the respondents. Although the Funds could at the outset have sued Alexander Forbes and all of the respondents in delict in the same action (s 2(1)), they chose to proceed against only one wrongdoer. Having made that choice it was nonetheless still open to them, at any time prior to the close of pleadings, to give notice to the respondents of that action (s 2(a)). Once again they chose not to. It was Alexander Forbes - their adversary in that litigation - who, as it was entitled to (s 2(2)(b)), gave notice of that action to the other wrongdoers (the present respondents). And, what is more, thereafter agreed to pay to the Funds a sum of money in settlement of their claim. [12] Section 2(12) deals with the right of one joint wrongdoer, X, to recover a contribution from another joint wrongdoer, Y, where X agrees to pay the plaintiff a sum of money in full settlement of the plaintiff's claim. Section 2(12) provides that where this occurs, section 2(6) then applies mutatis mutandis as if judgment had been given by a competent court against X for that sum of money. In terms of s 2(6)(a), X can recover a contribution from Y where: (a) judgment has been granted against X for the full amount of the damage suffered by the plaintiff; (b) X has paid the judgment debt in full; and, notice has been given to Y by the plaintiff in terms of section 2(2)(a) or by X in terms of section 2(2)(b). It seems to me that what is envisaged by the legislature is finality, whether pursuant to judgment or a settlement of the ‘action’. And action self-evidently refers to the action in respect of which notice has been given to the wrongdoer in terms of s 2(2). Thus notwithstanding the use of the words ‘judgment for the full amount of the damage suffered by the plaintiff’ in s 2(6)(a), a judgment for a lesser amount than that claimed in the summons by the plaintiff, would obviously suffice to trigger the right to recover. So too with a settlement – a settlement for a lesser amount than that claimed, provided it brings finality to that action should also suffice to trigger the right to recover. And so it seems to me that the question to be posed in an enquiry such as this should be: ‘Has the judgment or settlement, as the case may be, brought finality to that action?’ If the answer that that question yields is an affirmative one, then, in my view, that triggers the right of recovery. [13] Of s 2(12), Professor McKerron writes: 'This is a most useful provision. It enables a joint wrongdoer who does not dispute his liability to settle the plaintiff's claim, and then claim contribution from the other or other joint wrongdoers. It is to be noted that the effect of the reference to subsection (6) is that contribution cannot be claimed until the settlement has been implemented; in other words, until the sum agreed upon has been paid in full to the plaintiff.'7 Implicitly 'the sum agreed upon’ contemplates less than payment of the full claim. That, as I have endeavoured to show, is exactly what happened here. [14] What Alexander Forbes and the Funds did was to effect a final settlement of the latter's claims against the former. It did not have the effect of settling in full the losses they had suffered pursuant to the Ghavalas fraud. It certainly was not for the full amount claimed – R325 million was the Alexander Forbes total settlement figure, this in relation to claims of some R960 million. In the absence of an enforceable ceded right of recovery in terms of s 2(12) it is doubtful that a settlement could possibly exist as between Alexander Forbes and the Funds. The settlement between them provided for Alexander Forbes to pay R325 million and cede its right of recovery to the Funds. The settlement agreement (clause 4.2) specifically embodies in terms the right which the Act recognises. In argument, much was made of clauses 6 and 7 of the settlement agreement. It goes without saying that the agreement must be read as a whole. It is so that the agreement is rather clumsy and confusing. But, on a reading of the agreement in its entirety it is plain that it sought not just to put to bed the Aquilian action that had been instituted by the Funds against Alexander Forbes, but also to regulate the position of the Funds in respect of other remedies that may have been available to them and to preserve such rights as they may have had to be enforced against the other wrongdoers not party to that agreement. Thus clause 10 for example clearly distinguishes between the claims ceded by Alexander Forbes to the Funds and those referred to in clause 6. The ceded claims, as clause 4.2 makes plain, are those in respect of which the respondents were given notice in terms of s 2(2)(b) of the Act – in other words those deriving from the Aquilian action – whilst the claims referred to in clause 6 include the return of assets, such as shares and the like. In respect of the Aquilian action: if the question postulated 7 R G McKerron Law of Delict 7 ed (1971) at 317. earlier, namely whether finality has been reached, is posed, the answer in my view has to be an unequivocal ‘yes’. That that is so emerges from clause 9.1 of the agreement which records that that action (namely the Aquilian action) has been withdrawn. Were the Funds, notwithstanding that settlement, to proceed under the lex Aqulia against the respondents they would require leave of the court in terms of s 2(4) of the Act. Whether leave is granted will depend upon good cause being shown (Wapnick & another v Durban City Garage & others 1984 (2) SA 414 (D); Lincoln v Ramsaran & others 1962 (3) SA 374 (N)). [15] Here judgment was not granted by a court against Alexander Forbes for the full amount of the damages suffered by the Funds. One wrongdoer, Alexander Forbes paid a sum of money in full settlement of the Funds' claims in the Aquilian action instituted by the Funds against it. The payment of that sum has been received. In other words the settlement was thus final against Alexander Forbes but not for the full extent of the loss suffered by the Funds pursuant to the Ghavalas fraud. The effect of s 2(13) is thus to extinguish any further liability towards the Funds by Alexander Forbes in respect of their delictual claim. Professor McKerron observed: 'The subsection would appear to be merely a restatement of the common-law rule that payment in full by one co-debtor, or the receipt of a discharge which is intended to operate as a complete discharge of the whole obligation, releases the other or others.'8 The settlement agreement here, read with s 2(13), does not dis-entitle the Funds from taking cession of Alexander Forbes' right of recourse and suing on that or for that matter suing the other wrongdoers ex contractu, ex condictione or by way vindicatio or quasi vindicatio. The Act does not seek to give the other wrongdoers impunity either in respect of a ceded right of recourse or any other claim not subject to the first proceedings or settlement or judgment. [16] In that way a victim can settle with a prudent wrongdoer and then proceed against the other joint wrongdoers. Thus if Alexander Forbes, in due course (in the proceedings against the other wrongdoers), is held to be only 20 per cent liable for the harm inflicted by the Ghavalas scheme, the Funds ought to be able to retain the Alexander Forbes payment and recover 80 per cent (in whatever percentages, 8 R G McKerron Law of Delict 7 ed (1971) at 318. depending on the relative co-liability of each of the other joint wrongdoers) from the others. If the high court's approach is to be endorsed it would mean that a victim may not settle with a decent or prudent wrongdoer in an amount that may represent all that the latter can pay, and then proceed against the other wrongdoers (by means of cession of the prudent wrongdoer's right of recourse) on the basis of their liability to the prudent wrongdoer for the amount capped by the settlement agreement, with a view to recovering from each according to its proportionate liability (perhaps tempered by ability to pay). It needs to be added that in terms of s 2(6)(c) any joint wrongdoer from whom a contribution is claimed may raise against the joint wrongdoer who claims the contribution any defence which the latter could have raised against the plaintiff. The former need obviously not actually be a joint wrongdoer – indeed he is entitled to plead and show that neither he nor the other were in fact wrongdoers despite whatever conclusion may have been reached in the earlier action (South African Railways and Harbours v South African Stevedores Services Co Ltd 1983 (1) SA 1066 (A) at 1089H-1090A). [17] It must follow that the claims were, as pleaded, in law properly ones within the purview of s 2(12) read with s 2(6). This is so because in my view the settlement agreement is at least capable of an interpretation which sustains a claim based on s 2(12) (read with 2(6)). For, as De Villiers JA put it in Shill v Milner 1937 AD 101 at 105: '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 a wide discretion. For pleadings are made for the Court, not the Court for pleadings." ' It may well be that the agreement upon which the Funds’ case is based, is, in the words of Schreiner JA, ‘a wretched example of the draftsman’s art’ (Cairn (Pty) Ltd v Playdon & Co Ltd 1948 (3) SA 99 (A) at 110). But, it is by no means clear to me that on the documents standing alone the interpretation of them should favour the excipients. Indeed, on the view that I take of the matter, the high court would have been justified in declining to decide the matter on exception. Although I have endeavoured to give the documents a sensible meaning it is neither necessary nor desirable that I come to a final conclusion on the matter. It suffices for present purposes to say that I am driven provisionally to accept that the Funds have surpassed the threshold set on exception. It may be that at the trial stage the court may, from such evidence as to context (KPMG Chartered Accountants (SA) v Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39) as is permissible to be adduced, be in a better position than I am to finally determine the matter. Moreover, as this court held in Louw v WP Koöperatief Bpk & andere 1994 (3) SA 434 (AA) at 445: 'Uit die stukke blyk dit dat die Koöperasie en die Landbank dit eens is oor watter vertolking aan die sessieakte geheg moet word. In die verband is dit gepas om te let op wat Stratford AR in Breed v Van den Berg and Others 1932 AD 283 op 292 gesê het, naamlik: "If one of two parties to a contract asserts that it has a certain meaning and the other agrees that that is the meaning to be given to it, a court of law will give effect to that meaning. If this mutually accepted meaning is in conflict with the clear construction of the contract, we have all the requisites for rectification of the document." Dat 'n hof uitvoering sal gee aan die betekenis wat partye tot 'n ooreenkoms gesamentlik aan hulle ooreenkoms heg (al weerspreek dit die letterlike betekenis van die woorde wat gebruik is), blyk ook uit die beslissing in Shill v Milner 1937 AD 101 op 110-11. (Kyk ook Christie The Law of Contract 2de uitg 250-L.)' [18] In the result I would allow the appeal with costs and alter the judgment appealed from to one dismissing the exception with costs, such costs, in each instance, to include those consequent upon the employment of two counsel. _________________ V PONNAN JUDGE OF APPEAL PLASKET AJA (CACHALIA JA AND MBHA AJA concurring): [19] I have read the judgment of my brother Ponnan JA and am unable to agree with the conclusion reached by him. I am consequently of the view that the appeal should fail. These are my reasons for that outcome. I have found it necessary, for the flow of my judgment, to repeat certain matter that is to be found in Ponnan JA’s judgment but I have endeavoured to keep the repetition to a minimum. [20] The essential facts are that seven pension funds – the appellants in this appeal – sued Alexander Forbes Financial Services (Pty) Ltd (AF), in a cause of action founded in delict, for damages arising from an unlawful scheme – the Ghavalas option, as it was termed by the parties9 – in terms of which over R900 million in assets had been stripped from the funds, resulting in them being placed under curatorship or being wound-up. (The total amount claimed by the funds was R936 781 216.) [21] After service of summons on it, AF gave notice to the various respondents in this matter in terms of s 2(2)(b) of the Apportionment of Damages Act 34 of 1956 (the ADA). This section provides that a joint wrongdoer who is sued may, at any time before the close of pleadings, give notice of the action to ‘any joint wrongdoer who is not sued in that action, and such joint wrongdoer may thereupon intervene as a defendant in that action’. None of the parties to whom notice was given by AF intervened as defendants as they were entitled to do. [22] In due course, the funds settled the matter with AF. I shall return to the terms of the settlement agreement below. Suffice it to say that AF paid the funds R325 9 The name given to the scheme was explained as follows by Sutherland J in the court below (para 1): ‘Peter Ghavalas wrote his name in the history books as the financial wizard who devised a scheme, with others, to redeploy the actuarial surplus from several pension and provident funds to the benefit of persons other than the beneficiaries of those funds. In this case, that scheme has been called the “Ghavalas option” which involved a series of ruses to simulate certain ostensibly innocent transactions to conceal the misappropriation. In due course, when these schemes were unmasked, a process to recover the diverted funds began.’ million and ceded to the funds a right to proceed against its co-joint wrongdoers in terms of the ADA. [23] On the strength of the cession, the funds instituted actions against the respondents as joint wrongdoers for the recovery of those joint wrongdoers’ individual contributions towards the loss suffered by the funds. The cause of action was said to be s 2(12) of the ADA. This section provides as follows: ‘If any joint wrongdoer agrees to pay to the plaintiff a sum of money in full settlement of the plaintiff's claim, the provisions of subsection (6) shall apply mutatis mutandis as if judgment had been given by a competent court against such joint wrongdoer for that sum of money, or, if the court is satisfied that the full amount of the damage actually suffered by the plaintiff is less than that sum of money, for such sum of money as the court determines to be equal to the full amount of the damage actually suffered by the plaintiff, and in the application of the provisions of paragraph (b) of the said subsection (6), any reference therein to the date of the judgment shall be construed as a reference to the date of the agreement.’ [24] Section 2(6) deals with the determination of a claim against a joint wrongdoer by a court, as opposed to settlement by the parties. Only s 2(6)(a) is relevant for present purposes. Shorn of its proviso, which is not relevant, it states: ‘If judgment is in any action given against any joint wrongdoer for the full amount of the damage suffered by the plaintiff, the said joint wrongdoer may, if the judgment debt has been paid in full, subject to the provisions of paragraph (b) of subsection (4), recover from any other joint wrongdoer a contribution in respect of his responsibility for such damage of such an amount as the court may deem just and equitable having regard to the degree in which that other joint wrongdoer was at fault in relation to the damage suffered by the plaintiff, and to the damages awarded . . . .’ [25] The exception in this appeal concerns the settlement agreement, its interpretation and its implications for the right of one joint wrongdoer to claim a contribution from other joint wrongdoers in terms of s 2(12) of the ADA. It boils down to this: because, in terms of the settlement agreement, the funds settled only AF’s share of the total liability arising from the Ghavalas option, AF did not acquire, on the basis of s 2(12) of the ADA, a statutory right of recourse against the other joint wrongdoers and it consequently had no rights to cede to the funds. That being so, the funds’ particulars of claim, predicated as they are on the cession of a right of recourse arising from s 2(12) of the ADA, discloses no cause of action. [26] It is necessary first to say something about the proper approach to issues such as these on exception. In Lewis v Oneanate (Pty) Ltd & another10 Nicholas AJA stated that an excipient bears the burden of persuading the court that ‘upon every interpretation which the particulars of claim’ and any agreement on which they rely ‘can reasonably bear, no cause of action is disclosed’. And, in Sun Packaging (Pty) Ltd v Vreulink,11 Nestadt JA confirmed that there is no hard and fast rule that the interpretation of agreements is to be avoided on exception. He said: ‘As a rule, Courts are reluctant to decide upon exception questions concerning the interpretation of a contract. But this is where its meaning is uncertain . . . In casu, the position is different. Difficulty in interpreting a document does not necessarily imply that it is ambiguous . . . Contracts are not rendered uncertain because parties disagree as to their meaning.’ [27] What these authorities mean in this case is that if the relevant clauses of the settlement agreement (for it is its terms that make or break the funds’ cause of action for purposes of the exceptions) can reasonably bear any meaning that supports a cause of action in terms of s 2(12) of the ADA, the exceptions must fail – and the appeal must succeed. If, on the other hand, the relevant clauses of the settlement agreement can only reasonably bear the meaning attributed to them by the respondents, and they are incapable of sustaining a cause of action based on s 2(12) of the ADA, the exceptions must be upheld – and the appeal must fail. [28] The crisp issue for determination is therefore simply whether, on any reasonable interpretation of the relevant clauses of the settlement agreement, the jurisdictional requirements of s 2(12) of the ADA have been activated. [29] I turn now to a consideration of the particulars of claim and the settlement agreement. In so doing, I shall quote from the pleadings in SGHC case number 10 Lewis v Oneanate (Pty) Ltd & another 1992 (4) SA 811 (A) at 817F-G. See too First National Bank of Southern Africa Ltd v Perry NO & others 2001 (3) SA 960 (SCA) para 6; Theunissen & andere v Transvaalse Lewendehawe Koöp Bpk 1988 (2) SA 493 (A) at 500E-F. 11 Sun Packaging (Pty) Ltd v Vreulink 1996 (4) SA 176 (A) at 186J-187B. 16213/2011, Picbel-Groep Voorsorgfonds (in liquidation) v William Vass Graham Somerville. (The pleadings in all of the cases are essentially similar.) [30] Paragraph 4 of the particulars of claim summarise the nature of the claim as follows: ‘The plaintiff seek[s] enforcement of the ceded rights of contribution in terms of section 2(2)(b) read with 2(12) of the Apportionment of Damages Act 34 of 1956 (“the Apportionment Act”) against the defendant jointly or severally, the one paying the other to be absolved, for payment of the entire amount of damages paid to the plaintiff, alternatively such lesser amount to be determined by the court.’ [31] Having set out the details of the claim against AF, the fact that AF gave notice to the defendant in terms of s 2(2)(b) of the ADA, the settlement of the claim, payment by AF to the plaintiff of the amount agreed and the cession of AF’s right to contributions from those to whom it had given notice, the particulars of claim then state: ‘Accordingly, pursuant to section 2(12) read with s 2(6)(a) of the Apportionment [Act] the plaintiff qua cessionary of Alexander Forbes’ rights to contribution as aforesaid, is entitled to claim and recover from the defendant such a contribution in respect of his responsibility for the amounts referred to in paragraph 14 [being the settlement amount] as the court may deem just and equitable.’ [32] The particulars of claim then proceed to detail what is headed the ‘THE CEDED CLAIM FOR CONTRIBUTION’. It is not necessary to consider those provisions in this judgment because they are irrelevant to the anterior question of whether, on the pleadings, AF acquired a cause of action through s 2(12) of the ADA which it was able to cede to the funds. That requires, in the first instance, a consideration of the settlement agreement. [33] The parties to the settlement agreement were AF, which is referred to as ‘the company’, and the funds. Clause 4 of the settlement agreement records that AF would: ‘4.1 without admission of liability pay to AL Mostert & Company, the attorneys for the Funds, the sum of R325 million, plus interest at prime rate from 21 January 2010 (“the payment”); and 4.2 cede to Mostert on behalf of the Funds the claims against all third parties to whom the company has given notice in terms of section 2(2)(b) of the Apportionment of Damages Act, arising in terms of the Act as a result of this settlement or howsoever arising.’ [34] Clause 5 required payment of the R325 million to be made within 28 days of the date of the signing of the agreement. Clauses 6 and 7 then record: ‘6. The Funds record that the payment does not reflect the full loss sustained by the Funds resulting from the Ghavalas option. Consequently one or more of the Funds are pursuing other remedies, including the return of assets or their proceeds. The payment serves to discharge only that portion of the loss for which the Funds regard the company liable. 7. The payment, determination and allocation as aforesaid shall operate in full and final settlement of the company’s share of the amounts claimed in the action and the Funds shall thereupon have no further claims against the company and related entities, and shall discharge the company and related entities from all present and future liability to each of the Funds inclusive of all legal costs and costs orders.’ (The agreement defines ‘related entities’ to mean ‘the company, its holding company and all subsidiaries of the holding company, all current and former employees, directors and non-executive directors’.) [35] Finally, for what it is worth, clause 10 provides that AF undertakes ‘to provide all reasonable assistance to the Funds for the purpose of enforcing the claims ceded by the company to the Funds and the claims referred to in clause 6 above’. [36] As is pointed out by Ponnan JA, the cause of action that the funds rely on is unknown to the common law and is a creature of the ADA. The jurisdictional requirements of the cause of action must, therefore, be determined from the terms of s 2(12) of the ADA and s 2(6) to the extent that it is incorporated by reference into s 2(12). [37] Section 2(12) read with s 2(6) requires the following in order for a cause of action to arise in respect of a claim for a contribution by one joint wrongdoer against another: (a) an agreement between a plaintiff and a joint wrongdoer; (b) in terms of which the joint wrongdoer agrees to pay a sum of money to the plaintiff; (c) the payment agreed to is in full settlement of the plaintiff’s claim; and (d) payment of the money is made in full. In other words, when notice has been given in terms of s 2(2)(b), a right of recourse against a joint wrongdoer in terms of s 2(12) will only arise if and when these four jurisdictional requirements have been satisfied. [38] The particulars of claim allege that an agreement was reached between the funds and AF to the effect that AF would pay an amount of money to the funds to settle the funds’ claims and that the money was duly paid to the funds. Then followed the conclusion that the plaintiff, as cessionary, was entitled to ‘claim and recover from the defendant such a contribution in respect of his responsibility for the amounts referred to in paragraph 14 as the court may deem just and equitable’ and that this entitlement arose from s 2(12), read with s 2(6)(a) of the ADA. [39] The only outstanding issue is whether the settlement agreement contemplated a full settlement, as required by s 2(12), as this is not expressly pleaded. In order to determine this, it is necessary (and permissible) to interpret the settlement agreement that is relied on in the particulars of claim, and which is ‘a link in the chain of [the funds’] cause of action’.12 In Dettmann v Goldfain & another,13 this court stated that courts are, in some instances, reluctant to ‘decide upon exception questions concerning the interpretation of a contract’. Those circumstances are, first, where the entire contract is not before the court; and secondly, where it appears from the contract or the pleadings that ‘there may be admissible evidence which, if placed before the Court, could influence the Court’s decision as to the meaning of the contract’, provided that this possibility is ‘something more than a notional or remote one’. [40] In this case, the entire settlement agreement is before the court and there has been no suggestion, either in the pleadings or in argument, of the meaning of the settlement agreement being influenced by admissible evidence being led in the trial. Indeed, the parties are ad idem as to what the relevant clauses of the agreement mean14 and I am of the view that that meaning is the only reasonable meaning that 12  Van Tonder v Western Credit Ltd 1966 (1) SA 189 (C) at 193H; South African Railways and Harbours v Deal Enterprises (Pty) Ltd 1975 (3) SA 944 (W) at 953A; Moosa & others NNO v Hassam & others NNO 2010 (2) SA 410 (KZP) para 17. 13 Dettmann v Goldfain & another 1975 (3) SA 385 (A) at 400A-B. See too Davenport Corner Tea Room (Pty) Ltd v Joubert 1962 (2) SA 709 (D) at 715G-716E. 14 In paragraph 28 of the appellants’ heads of argument, the following is stated: those clauses can have. The parties differ only in respect of what the legal consequences may be as far as a cause of action based on s 2(12) of the ADA is concerned. As it was put in the appellants’ heads of argument, the issue is ‘given the terms of section 2(12), what ex lege is the effect of this settlement agreement?’ [41] Neither in the particulars of claim nor in the agreement is the settlement described as a full settlement – the term used in s 2(12) – of the funds’ losses resulting from the Ghavalas option. The particulars of claim simply speak of a settlement. Clause 6 of the settlement agreement states that AF’s payment to the funds ‘does not reflect the full loss sustained by the Funds resulting from the Ghavalas option’ and that the settlement discharges ‘only that portion of the loss for which the Funds regard the company liable’. Clause 7 describes the payment, determination and allocation of the amount of R325 million as only being ‘in full and final settlement of the company’s share of the amounts claimed in the action’. [42] It was argued by some of the respondents that a full settlement meant a settlement of the full amount claimed and that any compromise of the amount claimed meant that s 2(12) could not apply. As the funds and AF settled for far less than was claimed, so the argument proceeds, there was in this case no full settlement on this account alone. I am of the view that this argument is unsound because I cannot conceive of a reason why the legislature would wish to discourage the settlement of claims in this way, particularly when the settlement works to the advantage of the joint wrongdoers whose contributions are sought. In the same way that s 2(6) contemplates a judgment for less than the amount claimed as one of the requirements to activate a right to claim a contribution from joint wrongdoers, so s 2(12), in my view, postulates the possibility of a settlement of less than the amount claimed. From a practical point of view, this must be so: very few settlements in delictual claims involve a complete and unconditional surrender on the part of a defendant. ‘The funds and AF palpably did not settle on a basis which resulted in full payment of the funds’ claims for the losses they had suffered through the application to them of the Ghavalas fraud. What AF and the funds did was to effect a final settlement of the funds’ claims against AF. This was not for the full amount claimed . . .”Final settlement” of the “plaintiff’s claim” is expressly evident from clause 7 of the settlement agreement. In summary, and stated most simply, the settlement was, quite permissibly under the Act, final against one wrongdoer, and patently not for the full amount.’ [43] When s 2(12) speaks of a full settlement, it means a complete settlement of the claim – one that extinguishes it completely.15 Even allowing for a claim to be compromised and still be a full settlement, the settlement contemplated by the settlement agreement is not a full settlement. It does not, on its own express terms, settle the claims of the funds completely. Instead it only settles a portion of those claims, namely the portion of the loss for which the funds regarded AF to be liable: it operates, says clause 7, ‘in full and final settlement’ only of AF’s ‘share of the amounts claimed in the action’. [44] The purpose of the ADA is to allow for the recovery of delictual damages by a plaintiff from any, some, or all of those responsible for the harm suffered by him or her and to allow for the adjustment of liability as between the joint wrongdoers after a claim has been finalised by one or more of them, either by judgment or agreement, and the resultant debt has been paid in full. That adjustment is done on the basis of each joint wrongdoer’s ‘responsibility for such damage’ with regard to ‘the degree in which that other joint wrongdoer was at fault in relation to the damage suffered by the plaintiff, and to the damages awarded’.16 Self-evidently, this system for the adjustment of liability can only function if the total claim is settled. What is not contemplated by it is the settlement by a joint wrongdoer of only his or her portion of the total liability. In such an event, the right of recourse created by s 2(12) is not activated and s 2(13) will not come into effect to discharge every joint wrongdoer from liability towards the plaintiff.17 [45] It is my conclusion therefore that because only a portion of the funds’ claims was settled – being only AF’s portion of the total liability – no full settlement of the funds’ claims was reached with AF. This being so, the jurisdictional requirement of the right of action against joint wrongdoers that the claim must have been settled in full was absent. As a result, AF did not acquire a right of recourse, arising from s 15 Karsen v Minister of Public Works 1996 (1) SA 887 (E) at 895G. 16 ADA, s 2(6)(a). 17 Section 2(13) provides: ‘Whenever judgment is in any action given against any joint wrongdoer for the full amount of the damage suffered by the plaintiff, or whenever any joint wrongdoer has agreed to pay to the plaintiff a sum of money in full settlement of the plaintiff’s claim, and the judgment debt or the said sum of money has been paid in full, every other joint wrongdoer shall thereby also be discharged from any further liability towards the plaintiff.’ 2(12), to proceed against the other joint wrongdoers, and consequently had no rights to cede to the funds. That means that the exception was correctly upheld by Sutherland J in the court below and that the appeal must fail. [46] It will be recalled that Nedbank’s cross-appeal in SGHC case number 16215/2011 was withdrawn without a tender of costs. It is therefore necessary also to make a costs order in that respect. [47] The following order is made: (a) The appeal is dismissed with costs, including the costs of two counsel. (b) In SGHC case number 16215/2011(Mitchell Cotts Pension Fund (in liquidation) & another v Nedbank Limited & another), Nedbank Limited is ordered to pay the costs, including the costs of two counsel, of Mitchell Cotts Pension Fund (in liquidation) and of Lucas South Africa Pension Fund (in liquidation) in respect of Nedbank’s withdrawn cross-appeal. ________________________ C PLASKET ACTING JUDGE OF APPEAL APPEARANCES: For Appellants: J J Gauntlett SC (with him L J van Tonder) Instructed by: A L Mostert & Company Inc, Johannesburg Matsepes Inc, Bloemfontein For Appellant in Cross-Appeal P T Rood SC (with him G W Girdwood) (Nedbank) Instructed by: Cliffe Dekker Hofmeyr Inc, Sandton Webbers, Bloemfontein For First Respondent: B Roux SC (Somerville) Instructed by: Tugendhaft Wapnick Banchetti & Partners, Johannesburg Lovius-Block, Bloemfontein For Second Respondents: B Roux SC (Nash and Midmacor) Instructed by: Cowan Harper Attorneys, Johannesburg Lovius-Block, Bloemfontein For Third & Fourth Respondents: J M A Cane SC (Wynne-Jones & Co Employee Benefits Consultants and Aubrey Wynne-Jones) Instructed by: Rudolph, Bernstein & Associates, Johannesburg Phatsoane Henney, Bloemfontein For Sixth Respondent: H B Marais SC (with him S Strydom) (McEvoy) Instructed by: Kevin Cross & Affiliates, Randburg McIntyre & Van Der Post, Bloemfontein For Fifth Respondent: No Appearance (Roets)

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: 22 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. Picbel Groep Voorsorgfonds v Somerville (405/12) [2013] ZASCA 24 (22 March 2013) The Supreme Court of Appeal (SCA) handed down judgment today in an appeal from the South Gauteng High Court, Johannesburg (High Court). The matter concerned the implications of a settlement agreement for the right of one joint wrongdoer to claim a contribution from other joint wrongdoers in terms of section 2(12) of the Apportionment of Damages Act 34 of 1956 (the Act). The matter arose from a delictual claim instituted by the curators or liquidators of various pension funds (the funds) against Alexander Forbes Financial Services (Pty) Ltd (Alexander Forbes) for losses incurred by the funds as the result of an unlawful scheme known as the Ghavalas Option. Alexander Forbes had been one of several wrongdoers in respect of the harm suffered by those funds. In response, Alexander Forbes had given notice of the action instituted by the funds to the various respondents in this matter, pursuant to section 2(2)(b) of the Act. That provision provides for a notice of such actions to be given to any joint wrongdoers, enabling them to intervene in the action as a defendant. None of the joint wrongdoers to whom Alexander Forbes gave notice chose to intervene in that action. Alexander Forbes then settled the damages claims with the funds pursuant to a settlement agreement. The agreement settled around a third of the total damages claimed by the funds. Moreover, the settlement agreement provided for a cession to the funds of Alexander Forbes’ claims against all joint wrongdoers, a right which arises from section 2(12) of the Act. The funds then instituted an action in the High Court against the respondents for the remainder of the loss suffered, in a purported exercise of the rights which had been ceded to them by Alexander Forbes. The respondents excepted to the summons instituted on various bases. The exception relevant on appeal claimed that only a full settlement of a claim attracted the application of section 2(12) of the Act, which entitled a joint wrongdoer to recover a contribution from other joint wrongdoers, and that as the settlement agreement with Alexander Forbes had not settled the claim in full the section was thus of no application. Alexander Forbes, so the exception claimed, therefore had no right against the respondents which it could cede to the funds, and the funds therefore had no cause of action. In the High Court, Sutherland J upheld that exception, and granted the funds leave to appeal to the SCA. A majority of this court, per Plasket AJA, held that a jurisdictional requirement of s 2(12) read with s 2(6) of the Act is that the settlement must have constituted a full settlement of that claim. In interpreting the relevant clauses of the settlement agreement between the funds and Alexander Forbes, the court held that it did not amount to a full settlement of the funds’ claim, instead serving only to settle that portion of the claim for which the funds regarded Alexander Forbes to be liable. Consequently, a jurisdictional requirement for the application of s 2(12) of the Act remained unfulfilled, and the provision could not be invoked – Alexander Forbes did not acquire any right of recourse against the other joint wrongdoers, and thus could not cede any such right to the funds. The exception was thus upheld, and the appeal dismissed. In a dissenting judgment, Ponnan JA held that the settlement agreement was at least capable of an interpretation, which sustained a claim based on the relevant provisions, as in his interpretation the Act’s requirement that a settlement be in full imposes a standard of finality, regardless of whether the actual amount of the claim is satisfied. In his view, the funds had therefore met the threshold set on exception – namely that upon every interpretation which the particulars of claim can reasonably bear, no cause of action is disclosed. He would have upheld the appeal.

2757

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 511/2011 REPORTABLE In the matter between: Stellenbosch Farmers’ Winery Limited Appellant and Commissioner for the South African Revenue Service Respondent Case no: 504/2011 In the matter between Commissioner for the South African Revenue Service Appellant and Stellenbosch Farmers’ Winery Limited Respondent Neutral citation: Stellenbosch Farmers’ Winery v Commissioner for SA Revenue Service (511/2011 and 504/2011) [2012] ZASCA 72 (25 May 2012) Coram: Brand, Van Heerden and Tshiqi JJA and Kroon and Boruchowitz AJJA Heard: 2 May 2012 Delivered: 25 May 2012 Summary: Revenue – whether receipt by taxpayer of a sum of money of a capital or a revenue nature - whether interest on alleged underpayment of provisional tax in respect of the receipt should have been levied in terms of s 89quat(3) of the Income Tax Act 58 of 1962 – whether receipt attracted value added tax in terms of s 7 of the Valued-Added Tax Act 89 of 1991 or zero rate applicable in terms of s 11(2)(l)(ii). ____________________________________________________________________ ORDER On appeal from: Tax Court, Cape Town (Louw J with Messrs P Ranchod and B Nduna as assessors, sitting as a court of first instance). Case no. 511/2011: 1 The main appeal is upheld with costs, including the costs of two counsel. 2 The additional assessment of the taxpayer in respect of the 1999 tax year is set aside. 3 The cross-appeal is dismissed with costs, including the costs of two counsel. Case no. 504/2011: The appeal is dismissed with costs, including the costs of two counsel. __________________________________________________________________ JUDGMENT __________________________________________________________________ KROON AJA (BRAND, VAN HEERDEN et TSHIQI JJA and BORUCHOWITZ AJA concurring): [1] Before us are two matters that emanated from, and were heard simultaneously in, the Tax Court sitting at Cape Town (Louw J with Messrs P Ranchod and B Nduna as assessors). Leave to appeal to this court was granted by Louw J. [2] In the main appeal in case no. 511/2011,, Stellenbosch Farmers‟ Winery Limited (the taxpayer) seeks to attack the finding of the court a quo that the receipt by the taxpayer of the sum of R67 million during the 1999 tax year had correctly been included by the Commissioner for the South African Revenue Service (the Commissioner) in the taxpayer‟s gross income in the assessment for that tax year, and had accordingly correctly been assessed to tax. The taxpayer‟s contention is that the receipt was of a capital nature and had therefore attracted no tax liability. [3] In the cross-appeal the Commissioner seeks to assail the order of the court a quo setting aside the refusal by the Commissioner to direct, in terms of s 89quat(3) of the Income Tax Act 58 of 1962, that interest not be paid by the taxpayer on the unpaid provisional tax assessed to have been payable in respect of the sum of R67 million (as part of the taxpayer‟s gross income), and the direction of the court a quo that such interest not be paid. [4] In case no. 504/2011 the Commissioner appeals against the order of the court a quo setting aside the assessment by the Commissioner that the taxpayer‟s receipt of the sum of R67 million was subject to value-added tax (VAT) at the rate of 14 per cent in terms of s 7 of the Value-Added Tax Act 89 of 1991, ie in the sum of R9 380 000 (and that in addition the taxpayer was liable to pay a penalty of R938 000 and interest in the sum of R7 804 274,09), and the court a quo‟s declarator that the receipt by the taxpayer of the sum of R67 million was subject to VAT at the rate of zero per cent in terms of s 11(2)(l)(ii) of the Act. The dispute between the parties centres around the issue whether the receipt of R67 million related to „services‟, as defined in s 1, supplied by the taxpayer to a non-resident and not „directly in connection with movable property situated inside the Republic of South Africa‟, as envisaged in s 11(2)(l)(ii). [5] Both matters find their origin in related sets of facts (as set out in the paragraphs that follow), many of which were common cause or not in dispute. Background [6] The taxpayer was a wholly owned subsidiary of Stellenbosch Farmers‟ Winery Holdings Limited. The latter was in turn wholly owned by Stellenbosch Farmers‟ Winery Group Limited. In the judgments of the court a quo the last mentioned entity was referred to as „SFW Group‟, and the present judgment will follow suit. [7] At all material times the taxpayer carried on business as a producer and importer of liquor products, and as a wholesaler of a range of spirits, wine and other liquor products to retailers. In contradistinction, SFW Group was exclusively a holding company, and did not conduct other operational business activities. Since the 1970s the taxpayer had inter alia imported and distributed Bells whisky (together with Dimple and Haig whiskies – hereinafter collectively referred to as Bells). [8] On 1 February 1991 United Distillers plc (UD), a subsidiary of Guinness plc, both based in the United Kingdom, concluded a joint venture agreement (the JV agreement) with SFW Group and Distillers Corporation (SA) Ltd (Distillers). This agreement led to the formation of United Distillers Imports (Pty) Limited (UDI) in which SFW Group and Distillers each held a 25 per cent shareholding and UD the remaining 50 per cent. [9] Clause 3.1 of the JV agreement provided that UD would enter into distribution agreements with the entities in South Africa appointed by UDI as distributors of UD‟s products (which included Bells). It was further recorded, in respect of SFW Group and Distillers, that the intention was that as far as possible the only distributors would be the marketing companies/divisions of those two entities. Clause 3.4 reflected that the envisaged distributor of Dimple/Haig would be Monis while Sedgwick Taylor would distribute Bells. As a fact both these entities were divisions of the taxpayer. [10] As foreshadowed in the JV agreement, a further written agreement relating to the distribution of Bells in South Africa (the distribution agreement) was concluded on 12 May 1992 between UD and an entity styled simply „Stellenbosch Farmers‟ Winery‟. In terms of the agreement this entity was appointed as the exclusive distributor of Bells in South Africa and surrounding territories. On the other hand, the entity undertook not to sell competing products in the area in question. The period of the distribution agreement was ten years, with effect from 1 February 1991, whereafter the agreement was terminable on 12 months‟ notice. Accordingly, and notwithstanding that extensions of the agreement was contemplated, it would, depending on when notice of termination was given, terminate on 31 January 2002 or on a date subsequent thereto. [11] The Tax Court accepted, for purposes of its judgment, but without so finding, that the taxpayer was the entity which was a party to the distribution agreement. I will later return to this issue. [12] It may be recorded at this stage however that the taxpayer did in fact undertake the role of exclusive distributor of Bells in terms of the agreement, and continued therewith until, as set out later, the distribution agreement was terminated on 28 August 1998. The venture proved to be extremely profitable for the taxpayer. Over the decades the taxpayer built up the Bells brand to the position of a pre-eminent asset in South Africa, which it did not occupy anywhere else in the world. Bells sales contributed between 18 per cent and 25 per cent of the taxpayer‟s profit or „bottom line‟. This was significant for the taxpayer as the sale of spirits delivered the real profit margins (as opposed to other products). As the volumes of spirit sales was small compared to those of other products ,a significant reduction in spirit sales would not bring about a significant reduction in costs, but only affect the „bottom line‟. In South Africa Bells acquired the reputation of a „Known Value Item‟, which the taxpayer‟s other international spirit brands did not achieve. As it was put, the Bells brand „brought feet into the retail stores‟ and was a valued asset to the retailer. This in turn gave the taxpayer substantial leverage and bargaining power in its dealings with retailers, and enabled it to induce them to stock, and give „forward space‟ to, other products of the taxpayer (at the expense of products of competitors). After the loss of the distribution rights for Bells (as to which, see below) the taxpayer‟s trading income dropped very significantly, by many millions of rand, during the ensuing two financial years (whereafter the taxpayer was forced to merge with another entity to avoid bankruptcy). [13] During 1997 certain corporate structural changes in the form of company mergers took place in the United Kingdom and Europe, involving inter alia Guinness plc and UD. One result was the formation of an entity styled Diageo Nederland BV (Diageo). The changes effected the union of the spirit and wine businesses of inter alia UD and UDI, and the distribution network of another distributor in South Africa, Gilbeys, also accrued to Diageo. The above changes entailed consequences for the liquor market in South Africa. UD accordingly sought to extract itself prematurely from the distribution agreement, and negotiations towards that end were set in train. [14] In the result, a written agreement (the termination agreement) was concluded on 27 August 1998. Reflected as a party to the agreement was SFW Group (referred to in the body of the agreement as „SFW‟). The effective date of the agreement was 28 August 1998, ie some three years and five months before the earliest date on which the distribution agreement could have been terminated by UD giving notice as envisaged therein. [15] Clause 4.1 of the termination agreement provided inter alia that in consideration of payment by Indivined BV (another party to the agreement) of the sum of R67 million to „SFW‟, the latter and UD agreed that certain agreements would terminate. These included the JV agreement and what was referred to as the „SFW Distribution Agreement‟, defined in clause 2.1 as: „an agreement dated 12th May 1992 between UD and SFW relating to distribution by SFW of the Products in terms of which SFW was granted sole and exclusive rights to distribute the Products in the Territory‟. Also included were any other arrangements relating to the distribution of the products between UD or its affiliates and SFW or its affiliates. In terms of clause 2.1 the term „affiliate‟ included a subsidiary of any party to the agreement. [16] Clause 4.5 of the termination agreement read as follows: „For the avoidance of doubt:- (a) Neither SFW nor UDI will have any claim against UD or Indivined; and (b) SFW will have no claim against UDI for compensation for loss of distribution rights, loss of goodwill or any other loss of any kind arising from the terminations provided in this agreement and SFW acknowledges that the payments to be made to it under this Agreement represent full compensation for the closure of SFW‟s business relating to the Products as a consequence of the termination of the distribution rights relating to the Products.‟ [17] The amount of R67 million was in due course paid to the taxpayer and its receipt was reflected in its financial statements for the 1999 tax year. It is this receipt that is the subject of the issue in the main appeal in case no. 511/2011. Onus [18] In terms of s 82 of the Income Tax Act, the onus (in the Tax Court and on appeal to this court) was on the taxpayer to establish that the receipt of the R67 million was of a capital nature and that it should not have been assessed to tax as part of the taxpayer‟s gross income, as was directed by the Commissioner. Did the taxpayer acquire distribution rights and did it surrender them against payment of the sum of R67 million? [19] A stance adopted by the Commissioner was the following. The taxpayer was not a party to the distribution agreement; it therefore acquired no rights under that agreement to distribute any products. It was therefore similarly not a party to the termination agreement and it was not paid anything in respect of the termination of the distribution rights provided for in the termination agreement. Its receipt of the sum of R67 million must accordingly have been in terms of a further agreement. What that agreement was, was not disclosed. Accordingly, there could not be any talk of the taxpayer having discharged the onus of proving that the Commissioner had erred in including the sum of R67 million as part of the taxpayer‟s gross income for the 1999 tax year. I did not understand Mr Emslie (who, with Mr Sholto-Douglas, appeared for the Commissioner) to press this contention. That attitude of counsel was correct. [20] I do not think that it is necessary, as regards the distribution agreement, to consider the argument of Mr Cilliers (who, with Mr Louw, appeared for the taxpayer) that the reference to „Stellenbosch Farmers‟ Winery‟ in the agreement was ambiguous, and therefore that evidence of identification of the entity intended was admissible, and that the evidence disclosed that the intention was to refer to the taxpayer. [21] The following considerations dictate a finding that the taxpayer did acquire the exclusive rights of distribution provided for in the distribution agreement: (a) SFW Group was solely a holding company, and did not carry on any operational business activities. (b) The taxpayer was an operational company that was capable of implementing the distribution provisions of the agreement; indeed, it had been conducting activities of the nature in question for decades. (c) The JV agreement envisaged that marketing companies/divisions of SFW be appointed as distributors of the products in question. The taxpayer was such an entity. (d) The taxpayer did in fact assume the role of exclusive distributor of certain products as envisaged in the agreement and that regime governed the relationship between all the role players in question until the termination agreement came into effect. [22] The judgment of the Tax Court proceeded on the premise that it was the taxpayer that surrended the distribution rights in question, and in consideration thereof received payment of the sum of R67 million. It could suffice to comment that the premise was the corollary of the finding referred to in the previous paragraph. It may be added however that the evidence disclosed that the party with which negotiations were held in respect of the termination of the distribution rights was in fact the taxpayer. I refer specifically to the evidence of Mr Stroebel, the managing director of the taxpayer (and of SFW Group as well), Mr van der Watt, the corporate strategy and planning manager of the taxpayer, and Mr Cardwell, the managing director of UDI. The evidence was not challenged. Was the receipt of the sum of R67 million of a capital or a revenue nature? [23] While the Act, in s 1, contains a definition of „gross income‟, which excludes receipts or accruals of a capital nature (save for certain exceptions which are not relevant for present purposes), there is no definition of „receipt or accrual of a capital nature‟. There is no single criterion for determining whether a receipt or accrual is to be categorised as capital or income. The question falls to be decided on the facts of each particular case: see Bourke’s Estate v Commissioner for Inland Revenue.1 In Commissioner for Inland Revenue v Pick ’n Pay Employee Share Purchase Trust2 Smalberger JA expressed himself as follows: „There are a variety of tests for determining whether or not a particular receipt is one of a revenue or capital nature. They are laid down as guidelines only – there being no single infallible test of invariable application. In this regard I agreed with the following remarks of Friedman J in ITC 1450 (at 76): “But when all is said and done, whatever guideline one chooses to follow, one should not be led to a result in one‟s classification of a receipt as income or capital which is, as I have had occasion previously to remark, contrary to sound commercial and good sense” ‟. 1 Bourke’s Estate v Commissioner for Inland Revenue 1991 (1) SA 661 (A) at 671I-J ; 53 SATC 86 at 93. 2 Commissioner for Inland Revenue v Pick ’n Pay Employee Share Purchase Trust 1992 (4) SA 39 (A) at 56G-I. [24] The judgment of the Tax Court sets out a tabulation of a number of the guidelines which have been recorded in previous decisions of the courts. It is not necessary in the present judgment to repeat the tabulation, and I will content myself in the discussion that follows with a reference only to those guidelines that appear to be appropriate for a resolution of the issue on hand. [25] The starting point in my view is the finding of the court a quo that the exclusive distribution rights held by the taxpayer in terms of the distribution agreement, was a capital asset. That was the argument of Mr Cilliers in the Tax Court and the correctness thereof was conceded by Mr Emslie. In this court that common approach was persisted in. It was clearly correct and nothing more requires to be said on that score. It follows that, consequent upon the termination agreement, the taxpayer lost an asset. [26] Non constat however, so the court a quo approached the matter, that the R67 million payment was of a capital nature. The approach was in keeping with the approval by Franklin J in ITC 12593 of the following dictum in the English case of Inland Revenue v Fleming & Co (Machinery) Ltd (3):4 „The sum received by a commercial firm as compensation for the loss sustained by the cancellation of a trading contract or the premature cancellation of an agency agreement may in the recipient‟s hands be regarded either as a capital receipt or a trading receipt forming part of the trading profit. It may be difficult to formulate a general principle by reference to which in all cases the correct decision will be arrived at since in each case the question comes to be one of circumstance and degree.‟ 3 ITC 1259 39 SATC 65 at 68-69. 4 Inland Revenue v Fleming & Co (Machinery) Ltd (3) 33 TC 33 at 63. [27] The Tax Court held that the question to be answered was whether the tax- payer was compensated for the capital value of the exclusive distribution right, ie whether the compensation of R67 million paid for the early termination of the distribution right was paid as compensation for the loss of the value of the capital asset, the distribution right, and therefore destined to fill a hole in the taxpayer‟s assets, or whether it was paid as compensation for a loss of profits in the sales of Bells, which would be the result of the early termination of the distribution right. [28] The first comment that falls to be made on the ruling of the Tax Court against the taxpayer on this score is that it implies that the receipt of the R67 million by the taxpayer was „a gain made by an operation of business carrying out a scheme for profit-making’, a well established guideline test considered by Smalberger JA to be the appropriate one in Pick ’n Pay.5 That would mean however that in the present matter the taxpayer, admittedly in possession of a capital asset and treating it as such, changed its intention in respect thereof, and decided to convert its use of the capital asset (part of its income-producing structure) to use thereof as trading stock (part of its income-producing activities). For the reasons that follow I am unable to align myself with that proposition. [29] It was held in the court a quo that in order to determine the nature of the amount paid to the taxpayer for the early termination of the exclusive distribution right, it was important to look at the bargaining position of the taxpayer and what the amount was paid for. It was pointed out that come what may there was no prospect of UD‟s agreeing to the extension of the agreement beyond the remaining 41 months. The 5 Fn 2 above at 56I-G. See too SIR v The Trust Bank of Africa Limited 1975 (2) SA 652 (A); 37 SATC 87 at 101-102. parties therefore negotiated, and ultimately reached agreement, upon the compensation for a wasting asset with a finite lifespan. It is not clear to me however how this consideration bears on the nature of a payment admittedly made in respect of an asset. [30] The judgment of the court a quo sought to lay emphasis on what was referred to as the taxpayer‟s calculations in preparing for the negotiations. The reference was to the evidence of Van der Watt, who stated during examination-in-chief that he was asked to negotiate on behalf of the taxpayer „an amount for the termination of the contract as it had a period to run and we clearly needed to be compensated for that if it was terminated early‟. [31] That statement, so it was held, required to be seen in the context of an „internal document‟ of the taxpayer, which reflected that the starting point of the taxpayer at the envisaged negotiations was to be its calculation of its loss of profits over the remaining 41 months in respect of Bells sales, plus the profits from other products associated with the sales of Bells. The judgment continues as follows: „The final agreed compensation of R67 million mirrors this. It was made up of R42 117 000 which compensated [the taxpayer] for the projected loss of profit for the remaining 41 months. The rest of the R67 million was made up as compensation for the loss of profit from other products which [the taxpayer] would have been able to “bundle” with or “piggy-back” on the sales of Bells and R7 million, which was expressly attributable to the risk that income tax would be payable.‟ [32] The above reasoning misinterpreted the evidence. (a) While the figure reflected in the document in respect of Bells sales (excluding VAT) was R42 117 000, the total figure reflected for all sales including VAT (and inclusive of the addition of a 35 per cent premium in respect of “piggy-back” sales) was R64 818 000. Moreover, it was reflected in the document that if, despite the manner in which the transaction (ie the compensation transaction) was structured, the tax authorities were to seek to tax the proceeds, the tax liability would be R14,5 million. The amount of R67 million mirrors neither the total figure of R64 818 000 nor the tax figure of R14.5 million. (b) In fact, the document in question, although drawn up by Van der Watt, was not produced during the negotiations nor disclosed to the other side. (c) On the contrary, the evidence of Stroebel was that his initial offer to the other side was the sum of R100 million (the basis of this sum will be discussed below). The counter offer was R60 million. To this figure R7 million was subsequently added as a compromise sum in respect of contingent tax liability. [33] In any event, the judgment of the Tax Court recognised that in the valuation of a capital asset it is not inappropriate to have regard to the profits anticipated from the use of the capital asset. Para 32 of the judgment (which follows on the comments about the internal document) reads as follows: „While the method of calculation of the amount of compensation is an important factor, it is not determinative of the nature of the receipt. This is so because: “[I]t is a normal principle of valuation of a capital asset, whether it be land or the goodwill of a business or otherwise, to use the profits expected to be earned from the utilisation of the asset as a basis or starting point for the relevant calculations” per McEwan J in ITC 1341 (1980) 43 SATC 215 at 224; and see Taeuber and Corssen (Pty) v CIR (1975) 37 SATC 129 at 140; and see CIR v Illovo Sugar Estates Ltd (1950) 17 SATC 387 at 394.‟ [34] The judgment of the court a quo then referred to what were stated to be indicators of how the taxpayer, at the time, saw and treated the amount of R67 million it received. The first were entries in the taxpayer‟s financial statements for the tax year in question. Two items were relevant. First, in the statement headed „CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1999‟, the R67 million was reflected as an „exceptional item‟ under „cash flow from operating activities‟ and not under „cash flow from investing activities‟. [35] In my judgment, counsel for the taxpayer validly argued that the nature of a receipt (ie whether it is capital or revenue) for income tax purposes, is not determined by how it is subsequently treated for accounting purposes. Reference (by analogy) was made to the decision in Secretary for Inland Revenue v Eaton Hall (Pty) Ltd6 where it was held that accounting practice cannot override the correct interpretation of the provisions of the Act and their application to the facts of the matter. As appears from the present judgment the facts favour a finding of a capital nature. Second, not only did the financial statement reflect that the receipt of the R67 million was an „exceptional item‟, but note 4 to the statement specifically recorded that the receipt was „compensation for the cancellation of the exclusive distribution rights‟, which points rather to a receipt of a capital nature. [36] The second item in the financial statements referred to by the Tax Court was an entry reflecting that a dividend of some R88 million was declared, notwithstanding that, although the taxpayer had the reserves to declare the dividend it did not have the cash on hand to meet the dividend. The point (which had not featured in the 6 Secretary for Inland Revenue v Eaton Hall (Pty) Ltd 1975 (4) SA 953 (A) at 958 B-D. Commissioner‟s pleadings) was however adequately met by counsel‟s submission that the manner in which a taxpayer deals with a receipt, after it has received it, cannot determine the nature of the receipt, eg the capital nature of the receipt of the proceeds of the sale of a building is not affected by the utilisation of the proceeds to pay a dividend. [37] The court a quo also placed reliance on the fact that the R67 million was initially paid into a dividend account of SFW Group. On the evidence of Van der Watt this was done as a matter of convenience as the taxpayer could then earn interest on the net amount in the account. The aspect is not of assistance to the Commissioner. [38] A further ground for the finding of the Tax Court was founded on a passage in the taxpayer‟s statement of its grounds of appeal to the Tax Court. It read as follows: „It was commercially more sensible for the [taxpayer] to have the [distribution] agreement terminated in 1998 upon compensation for the termination of its rights, than to have the agreement run its full term and then not have it renewed. If it became apparent, in 1998, that the [taxpayer‟s] right to distribute Bells . . . would not have been renewed in January 2002, this would have had a serious detrimental effect on the motivation of sales staff, leading to a reduction in income. Furthermore, the [taxpayer] had to give itself time to attempt to limit the damage that would have been caused by the loss of its distribution rights by attempting to garner other business in place of the lost products.‟ Suffice it to say that this passage speaks to an intention to receive compensation for the loss of an asset, which would be used in an endeavour to replace that asset with another income-producing structure. [39] The above paragraph leads to a consideration of earlier paragraphs in the judgment of the court a quo reading as follows: „The loss of the Bells distribution rights resulted in insignificant changes to [the taxpayer‟s] physical business infrastructure. But a few personnel (three to four out of 3200 employees) were laid off. Bells was fully imported in bottled form and the litreage of the Bell‟s products sold amounted to only 1,45 per cent of the total litreage handled by [the taxpayer]. [The taxpayer‟s] infrastructure regarding production and distribution therefore remained virtually intact . . . . [The taxpayer‟s] existing income-earning structure was rendered less profitable, but it remained virtually unchanged and was not removed.‟ [40] However, one of the guideline tests adverted to in the court a quo, borrowed from the decision in ITC 1341 (1980) 43 SATC 215, was whether a substantial part of the income-producing structure of the taxpayer had been sterilised by the transaction in question. It was held in that case that the impairment of 20 per cent of the taxpayer‟s business was material, and compensation for such impairment by the withdrawal of a party from a joint venture agreement was held to be of a capital nature. See too the further remarks following on the quotation from Fleming set out in para 26 above, reading as follows: „When the rights and advantages surrendered on cancellation are such as to destroy or materially to cripple the whole structure of the recipient‟s profit-making apparatus, involving the serious dislocation of the normal commercial organisation and resulting perhaps in the cutting down of the staff previously required, the recipient of the compensation may properly affirm that the compensation represents the price paid for the loss or sterilisation of the capital asset and is therefore a capital and not a revenue receipt.‟ [41] In Silke on South African Income Tax, 2010 service 41,Vol 1 p 3-51, para 2.23 3.23 the following passages appear: „An amount received by way of damages or compensation for the loss, surrender or sterilisation of a fixed capital asset or of a taxpayer‟s income-producing machine is a receipt of a capital nature. . . . In order for compensation for the cancellation of a trading contract to constitute a sum of a capital nature, it is sufficient if the contract constitutes a substantial part of the business, and the cancellation need not have the effect of destroying or materially crippling the whole of the taxpayer‟s income producing structure.‟ See too Commissioner of Inland Revenue v Illovo Sugar Estates Limited 1951 (1) SA 306 (N) at 310-311. [42] Counsel therefore correctly submitted that the court a quo‟s reasoning reflected that it erroneously focussed on only physical assets, instead of the much more valuable incorporeal assets constituted by the exclusive distribution rights (the loss of which, consequent upon the termination of the distribution agreement, brought in its train the disastrous consequences referred to earlier in this judgment). The compensation for the impairment of the taxpayer‟s business constituted by that loss is properly to be viewed as a receipt of a capital nature. [43] In amplification of the findings of the court a quo as to the calculations that founded the settlement of the compensation to be paid, it was subsequently added that, as was admitted by Van der Watt, a notional purchaser of the distribution rights (to endure for a further 41 months) would not have paid R67 million therefor, or even R42 million. But, as against this feature is a consideration of what the negotiating parties wished to secure by settling the terms of the termination agreement. A prospect faced by UD was that during the remaining 41 months that the distribution agreement had to run the value of the Bells brand would be seriously compromised as a result of the manner in which the taxpayer, either of its own accord or forced by circumstances, exercised the distribution right. The value of the distribution right, an asset, would be safeguarded in UD‟s hands. That was something worth paying for. [44] On the other hand, Stroebel, the managing director of the taxpayer, and not Van der Watt, was the person who had finally to determine and approve the settlement. As recorded earlier, he conveyed to UD that he wanted a payment of R100 million (his main purpose being to ensure that capital was available for the acquisition of a new whiskey brand). In the result, he approved the counter offer of R60 million as supplemented by the sum of R7 million, the compromise figure in respect of a contingent tax liability. The figures were cognisably less than the projected sales profits and the contingent tax liability (if the Commissioner sought to assess any such liability). The circumstance that in the result Stroebel‟s endeavours to acquire a substitute brand to replace Bells met with minimal financial success is neither here nor there. [45] Finally, it should be emphasised that clause 4.5 of the termination agreement7 referred to payment of full compensation for the closure of the taxpayer‟s business relating to the exercise of the distribution rights (an asset). There was no reference in the termination agreement to a payment for loss of profits. There is no suggestion that the termination agreement did not reflect the intention of the parties or that it was in any way simulated. It need hardly be added that any suggestion that the taxpayer, faced with the option of concluding a capital transaction with no tax implications or an 7 Para 16 above. income transaction with such implications, would chose the latter, is, to say the least, an unconvincing one. [46] I find accordingly that the taxpayer, which did not carry on the business of the purchase and sale of rights to purchase and sell liquor products, did not embark on a scheme of profit-making, and that it did discharge the onus of establishing that the receipt of R67 million was of a capital nature. The Commissioner erred in including the receipt in the taxpayer‟s gross income and assessing same to tax. The taxpayer is accordingly entitled in the main appeal to the relevant orders set out at the end of this judgment. The Cross-Appeal [47] The issue in the cross-appeal would only have remained alive had the Commissioner been successful in resisting the main appeal. The Commissioner‟s failure therein renders the issue in the cross-appeal moot. The dismissal of the cross- appeal is accordingly appropriate. The appeal in case no. 504/2011 [48] As recorded in para 4 above, the Commissioner determined that the receipt of R67 million by the taxpayer (a registered vendor for VAT purposes in terms of the Value-Added Tax Act 89 of 1991) was subject to VAT at the rate of 14 per cent in terms of s 7(1) of the Act. The taxpayer‟s appeal to the Tax Court against that determination was successful. The present appeal by the Commissioner is against the substituted order of the Tax Court that the receipt of R67 million is subject to VAT at the rate of zero per cent in terms of s 11(2)(l) of the Act. [49] Section 7(1) of the Act provides as follows: „Subject to the exemptions, exceptions, deductions and adjustments provided for in this Act, there shall be levied and paid for the benefit of the National Revenue Fund, a tax, to be known as the value-added tax: (a) on the supply by the vendor of goods or services supplied by him . . . in the course or furtherance of any enterprise carried on by him; . . . .‟ [50] It was correctly common cause both in the Tax Court and before us that the matter concerned the issue of the supply of services in the course of an enterprise, and not the supply of goods. As will appear below the issue was finally of narrow ambit. [51] Relevant definitions in s 1 are the following: (a) Enterprise includes: „any enterprise or activity which is carried on continuously or regularly . . . and in the course or furtherance of which . . . services are supplied to any other person for a consideration . . . .‟ (b) A proviso to the definition of „enterprise‟ provides that „anything done in connection with the commencement or termination of any such enterprise or activity shall be deemed to be done in the course or furtherance of that enterprise or activity.‟ (c) Supply includes: „all . . . forms of supply, whether voluntary, compulsory or by operation of law, irrespective of where the supply is effected . . . .‟ (d) Services include: „anything done or to be done, including the granting, assignment, cession or surrender of any right or the making available of any facility or advantage . . . .‟ [52] Section 11(2)(l)(ii) provides as follows: „Where, but for the section, a supply of services would be charged with tax at the rate referred to in section 7(1), such supply of services shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where – . . . .‟ (l) the services are supplied to a person who is not a resident in the Republic; not being services which are supplied directly – . . . . (ii) in connection with movable property . . . situated inside the Republic at the time the services are rendered . . . .‟ [53] The Tax Court found that, by agreeing to the early termination of the distribution right, the taxpayer surrendered the remaining portion of the right, and that such surrender constituted the supply of services in the course of an enterprise by the taxpayer to UD. There can be no quarrel with the correctness of these findings. . [54] The argument of Mr Emslie was essentially the following. Accepting that UD was a non-resident of the Republic, counsel submitted that the services supplied by the taxpayer were constituted by the act of surrender and that the movable property in connection with which those services were directly supplied by the taxpayer was the exclusive distribution right provided for in the distribution agreement, now coming to an end in terms of the termination agreement, which right was situated within the Republic where it was being exercised. [55] The argument cannot be upheld. In the first place, the distinction sought to be drawn by counsel between the act of surrender and the right surrendered is not a valid one. The question was dealt with by the Tax Court as follows: „. . . I do not agree with the submission that the exclusive distribution right held by the [taxpayer] can constitute the movable property as contemplated in s 11(2)(l). The services supplied by the [taxpayer] consisted of the surrender of the exclusive right. These services must be supplied directly in connection with movable property situated inside the Republic at the time the services are rendered. Logically there must be two separate entities: the services being supplied and the movable property which stand in direct connection with the services being supplied. I fail to see how the right which is being surrendered, the surrender of which constitutes the supply of the services, and is thus a constituent part of the services being supplied, can at the same time constitute the movable property which is required by section 11(2)(l) to be in direct connection with the very services being supplied.‟ (Emphasis in original) I align myself with this reasoning and do not feel called upon to add anything thereto. [56] That conclusion renders it unnecessary to consider the second leg of the inquiry. I will however make the following brief comments. I agree with the finding of the Tax Court that the exclusive distribution right, which was incorporeal property, was not situated in the Republic. The situs of an incorporeal right is where the debtor resides. MV Snow Delta: Serva Ship Ltd v Discount Tonnage Ltd8. In this case the place of residence of the debtor, UD, was the United Kingdom, where it was registered. The matter therefore fell squarely within the purview of s 11(2)(l)(ii). 8 MV Snow Delta: Serva Ship Ltd v Discount Tonnage Ltd 2000 (4) SA 746 (SCA) paras 9-10. [57] The taxpayer accordingly discharged the onus resting on it in terms of s 37 of the Act to establish that the supply in question was subject to value-added tax at the rate of zero per cent, and that the contrary decision of the Commissioner was wrong. Orders [58] The following orders will accordingly issue: (a) Case no: 511/2011: (1) The main appeal is upheld with costs, including the costs of two counsel. (2) The additional assessment of the taxpayer in respect of the 1999 tax year is set aside. (3) The cross-appeal is dismissed with costs, including the costs of two counsel. (b) Case no: 504/2011 The appeal is dismissed with costs, including the costs of two counsel. __________________ F Kroon Acting Judge of Appeal APPEARANCES: Cases: 511/2011 and 504/2011 FOR APPELLANT: SA Cilliers SC (with him C Louw) Instructed by Edward Nathan Sonnenbergs , Cape Town, Symington & de Kok, Bloemfontein. FOR RESPONDENT: T S Emslie SC (with him A R Sholto-Douglas SC) Instructed by The State Attorney, Cape Town, The State Attorney, 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 25 May2012 STATUS: Immediate Stellenbosch Farmers’ Winery v Commissioner for SA Revenue Service 511/2011and 504/2011 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 upheld an appeal from the Tax Court, Cape Town setting aside the additional assessment of the taxpayer, Stellenbosch Farmers’ Winery, in respect of the 1999 tax year. The cross-appeal of the respondent, the Commissioner of the Revenue Service, relating to interest on the assessed tax, was dismissed and the appeal in the second case, heard simultaneously, which related to value-added tax (VAT), was also dismissed. The taxpayer was a wholesaler that imported and distributed Bells whiskey in South Africa. It concluded a 10 year agreement relating to this distribution which was prematurely cancelled more than three years before the earliest date on which the distribution agreement could be terminated. As a result, the tax payer received the sum of R67 million from United Distillers, a United Kingdom (UK) based company with which the tax payer had concluded the distribution agreement. The Commissioner of the Revenue Service included the receipt of this payment as part of the taxpayer’s gross income in the assessment for tax. This was upheld by the tax court. On appeal, the issue before the SCA was the taxpayer’s contention that the payment was of a capital nature which attracted no tax liability. The Commissioner’s cross- appeal related to the tax court’s decision not to allow interest on the unpaid provisional tax while the appeal in the second case related to whether VAT was payable on the payment received because the payment allegedly related to services supplied by the taxpayer to a non-resident of South Africa but directly connected to movable property situate in South Africa. The SCA held that the tax court misinterpreted the evidence where it reasoned that the payment received arose out of a calculation by the taxpayer of its future loss of profits, and therefore the payment was part of gross income. Evaluating the evidence in the case, the SCA found that the taxpayer did not carry on the business of the purchase and sale of rights to purchase and sell liquor products, did not embark on a scheme of profit making, and discharged the onus of establishing the payment was of a capital nature. The cross-appeal was dismissed since the issue became moot once the SCA found that the provisional tax was not payable. The appeal with regard to VAT was dismissed on the bases that the services in question, compositely the surrender of rights, were not connected to any movable property, and on the basis that in any event the exclusive distribution right held by the taxpayer was an incorporeal right not situated in South Africa since United Distillers was registered in the UK, which meant VAT was to be charged at zero per cent in terms of s 11 (2) (I) (ii) of the Valued Added Tax Act. -- ends --

3387

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1284/2017 In the matter between: MADIBENG LOCAL MUNICIPALITY APPLICANT and DDP VALUERS (PTY) LTD FIRST RESPONDENT ACTIVA VALUATION SERVICES (PTY) LIMITED SECOND RESPONDENT Neutral citation: Madibeng Local Municipality v DDP Valuers and Another (1284/2017) [2020] ZASCA 70 (18 June 2020) Coram: PONNAN, VAN DER MERWE and MOKGOHLOA JJA and GORVEN and MATOJANE AJJA Heard: 13 May 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 18 June 2020. Summary: Appeal – application for leave to appeal to Supreme Court of Appeal referred for oral argument in terms of s 17(2)(b) of Superior Courts Act 10 of 2013 (the Act) – judges considering application should not refer it to the court for determination of whether or not proposed appeal would have practical effect or result within meaning of ss 16(2)(a) and 17 (1)(b) of the Act – matter moot and raised no legal issue requiring adjudication. _____________________________________________________________________ ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Pretorius J sitting as court of first instance): The application for leave to appeal is dismissed with costs. JUDGMENT Van der Merwe JA (Ponnan and Mokgohloa JJA and Gorven and Matojane AJJA concurring) [1] This application for leave to appeal was referred to the court for oral argument, in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. However, as shall presently become apparent, the first order of business is to determine whether a decision on the proposed appeal would have any practical effect or result, within the meaning of s 16(2)(a)(i) of the Superior Courts Act. This question must be answered against the background that follows. [2] Section 229(1)(a) of the Constitution empowers a municipality to impose rates on property. Section 30 of the Local Government: Municipal Property Rates Act 6 of 2004 (the Rates Act) provides that a municipality intending to levy a rate on property must cause a general valuation to be made of all rateable properties in the municipality and a valuation roll to be prepared in respect of all those properties. Section 31 of the Rates Act obliges a municipality to determine a date of valuation that may not be more than 12 months before the start of the financial year in which the valuation roll is to be first implemented. In terms of s 32, the valuation roll takes effect from the start of that financial year and remains valid for such subsequent financial years as the municipality may decide, but in total for not more than five financial years. [3] Section 33 provides that a municipality must before the date of valuation designate a person as municipal valuer. It may designate a person in private practice, after having followed an open, competitive and transparent process in accordance with Chapter 11 of the Local Government: Municipal Finance Management Act 56 of 2003 (the MFMA). Section 34 of the Rates Act sets out the functions of a municipal valuer. Subsections 34(a)-(d) provide for the valuation of all rateable properties within a municipality, as well as for the preparation and submission of the general valuation roll. In terms of subsec 34(e)-(i), a municipal valuer has additional subsidiary duties (residual services). These include: to consider and decide on objections to the valuation roll; to attend meetings of an appeal board and to prepare a supplementary valuation roll whenever this becomes necessary. [4] During May 2013 the applicant, the Madibeng Local Municipality (the Municipality) invited tenders for the compilation of a new valuation roll and residual services in respect of the period from 1 July 2014 to 30 June 2018 (the tender). Bidders were required to tender a fixed price for the compilation of the valuation roll, as well as fees to be charged per individual item of residual services required. Amongst the 15 bids submitted in response to the invitation to tender, were those of the first respondent, DDP Valuers (Pty) Ltd (DDP) and the second respondent, Activa Valuation Services (Pty) Ltd (Activa). [5] The Municipality awarded the tender to an entity known as Dijalo Property Valuers (Dijalo), despite the fact that the fixed price tendered in its bid had been approximately three times that of DDP and twice that of Activa. The Municipality appointed Dijalo to render the services envisaged in the tender in terms of a service level agreement entered into during September 2013. [6] DDP approached the Gauteng Division of the High Court, Pretoria (the high court) for the review and setting aside of the Municipality’s decision to award the tender to Dijalo. The Municipality and Dijalo opposed the application. The matter came before Makgoba JP. After hearing full argument, he upheld a point in limine to the effect that DDP had failed to exhaust its internal remedies prior to approaching the court. He dismissed the application with costs. DDP successfully appealed against this order to this court. This court substituted the order of Makgoba JP with an order dismissing the point in limine with costs and remitted the matter for a decision on the merits.1 Upon a consideration of the merits, Makgoba JP held that the evaluation of the bids had been affected by material irregularities. On 13 November 2015 he made an order reviewing and setting aside the decision to award the tender to Dijalo and remitting the matter to the Municipality ‘for reconsideration in terms of section 8(1)(c)(i) of the Promotion of Administrative Justice Act 3 of 2000’. He directed the Municipality and Dijalo to pay the costs of the application jointly and severally. [7] In the meantime, the Greater Taung Local Municipality (Taung Municipality) also invited tenders to compile a valuation roll. The tender was awarded to Activa. In terms of a service level agreement entered into on 21 June 2013, Taung Municipality appointed Activa to provide the services ‘detailed in Schedule 1 hereto and in the Service Provider’s submission attached hereto as Annexure “A”’. No Annexure ‘A’ was, however, attached to the agreement. According to Schedule 1 to the agreement, Activa only had to compile a valuation roll in respect of the period from 21 May 2013 to 30 June 2018, at a fixed price. [8] By the date of Makgoba JP’s remittal order, Dijalo had submitted the valuation roll to the Municipality. Thus, the latter only required residual services for the remaining period of the tender, that is until 30 June 2018. In these circumstances, so the Municipality said, it decided to cancel the tender and to invoke reg 32 of the Municipal Supply Chain Management Regulations promulgated in terms of s 168 of the MFMA under GN R868, GG 27636, 30 May 2005 in respect of residual services. [9] Regulation 32 provides: ’32. Procurement of goods and services under contracts secured by other organs of state (1) A supply chain management policy may allow the accounting officer to procure goods or services for the municipality or municipal entity under a contract secured by another organ of state, but only if – (a) the contract has been secured by that other organ of state by means of a competitive bidding process applicable to that organ of state; (b) the municipality or entity has no reason to believe that such contract was not validly procured; 1 DDP Valuers (Pty) Ltd v Madibeng Local Municipality [2015] ZASCA 146. (c) there are demonstrable discounts or benefits for the municipality to do so; and (d) that other organ of state and the provider have consented to such procurement in writing. (2) Subregulation (1)(c) and (d) do not apply if – (a) a municipal entity procures goods or services through a contract secured by its parent municipality; or (b) a municipality procures goods or services through a contract secured by a municipal entity of which it is the parent municipality.’ [10] In terms of ss 111 and 112 of the MFMA each municipality must have and implement a supply chain management policy which must be fair, equitable, transparent, competitive and cost-effective. Regulation 32 gives effect to s 110(2)(c) of the MFMA. This section exempts a municipality from following a competitive tender process if a municipality ‘contracts with another organ of state for . . . the procurement of goods and services under a contract secured by that other organ of state, provided that the relevant supplier has agreed to such procurement.’ [11] The Municipality obtained documentation from Taung Municipality in respect of the tender process that had been followed prior to the appointment of Activa, as well as the service level agreement with Activa. The Municipality said that there was no reason to believe that the contract with Activa had not been validly procured by Taung Municipality in accordance with its supply chain management policy. Per letter dated 24 February 2016, the Municipality appointed Activa to perform residual services for the period from 25 February 2016 to 30 June 2018. According to the appointment letter, Activa would be remunerated in accordance with the service level agreement between it and Taung Municipality. As I have said, this agreement did not provide for fees for residual services. Activa accepted the appointment in writing on 29 February 2016. This appointment took place with the consent of Taung Municipality, but no contract was entered into in respect thereof between it and the Municipality. [12] When the Municipality’s appointment of Activa became known, DDP again approached the high court. It essentially contended that Makgoba JP’s order had obliged the Municipality to reconsider the award of the tender and that the Municipality failed to do so. It also argued that, in any event, the appointment of Activa could not validly have been made under reg 32. It accordingly sought the review and setting aside of the ‘failure to reconsider the awarding’ of the tender and of the decision to appoint Activa to execute the tender. DDP also claimed an order that the tender be awarded to it. The Municipality opposed the application mainly on the basis that the tender had been cancelled and that Activa had been validly appointed under reg 32 to perform only residual services. [13] The court a quo (Pretorius J) held, in essence, that the tender had not been cancelled, that the award thereof had to be reconsidered by the Municipality and that it had failed to do so. In respect of the Municipality’s reliance on reg 32 it held, inter alia, that the services that Activa had to provide to the Municipality fell outside the scope and ambit of its service level agreement with Taung Municipality. It held that in terms of the service level agreement with Taung Municipality, Activa only had to compile a valuation roll whereas in terms of its appointment by the Municipality, it had to render only residual services. The court a quo declined to award the tender to DDP and on 19 September 2017 ordered the following, with costs to be paid by the Municipality: ‘2. The first respondent’s failure to reconsider the awarding of Tender Number RFT 10/3/2013 for the Compilation of a New General and Supplementary Valuation Roll for the period 2014-2018 (hereinafter “the Tender”) is reviewed and set aside; 3. The first respondent’s decision to appoint the second respondent as Municipal Valuer and/or to execute the Tender is reviewed and set aside; 4. The awarding of the tender is remitted to the first respondent for reconsideration in terms of section 8(1)(c)(i) of the Promotion of Administrative Justice Act 3 of 2000.’ [14] Pretorius J dismissed the Municipality’s application for leave to appeal. The order of the judges that considered its petition to this court included the following: ‘2. The application for leave to appeal is referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. 3. At the hearing of the application for leave to appeal, the parties must, apart from other issues, address with reference to s 16(2) of the Act, the question (a) whether a decision on appeal would have any practical effect or result; (b) if not, whether the application for leave to appeal should be dismissed on this ground. (c) The parties must be in a position to argue the appeal itself if the court hearing the application for leave so directs.’ [15] As the appointment of Activa expired on 30 June 2018, the matter is now clearly moot. With reference to the decisions of this court in Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and Others [2012] ZASCA 166; 2013 (3) SA 315 (SCA) paras 5-6 and Centre for Child Law v The Governing Body of Hoërskool Fochville [2015] ZASCA 155; [2015] 4 All SA 571; 2016 (2) SA 121 (SCA) paras 11-14, the Municipality urged us to nevertheless determine the appeal. These decisions state that despite the mootness of a matter, this court has a discretion to determine it where such matter presents a discrete legal issue of public importance that would affect matters in the future and on which the adjudication of this court is required. [16] During argument counsel for the Municipality experienced considerable difficulty in formulating the legal issues that would require determination under this test and, in the process, deviated from the heads of argument. As I understood the argument, however, the determination of the following legal points was proposed: (a) whether an organ of state’s decision to cancel a tender is reviewable under the Promotion of Administrative Justice Act 3 of 2000 (PAJA); (b) whether, after the cancellation of a tender that had been awarded, an organ of state may procure the same goods or services under reg 32; (c) the proper interpretation of the phrase ‘under a contract secured by another organ of state’ in reg 32, particularly whether the first organ of state had to be a party to a contract with the second organ of state; (d) the proper interpretation of the phrase ‘demonstrable discounts or benefits’ in reg 32(1)(c). [17] In respect of (a) the Municipality argued that divergent views had been expressed by this court, on the one hand, in Head of Department, Mpumalanga Department of Education v Valozone 268 CC and Others [2017] ZASCA 30 and on the other, in City of Tshwane Metropolitan Municipality and Others v Nambiti Technologies (Pty) Ltd [2015] ZASCA 167; [2016] 1 All SA 332 (SCA); 2016 (2) SA 494 (SCA) and SAAB Grintek Defence (Pty) Ltd v South African Police Service and Others [2016] ZASCA 104; [2016] 3 All SA 669 (SCA). This is not correct. The question cannot be determined in the abstract. In Nambiti and SAAB this court held that the cancellation of a tender by an organ of state prior to its adjudication does not constitute administrative action under PAJA. The ratio common to these judgments was that in such circumstances, the cancellation of the tender constitutes the exercise of executive authority. The court reasoned that the decision of an organ of state to procure goods or services is an executive act and the reversal of that decision, without more, is of the same nature. (See Nambiti paras 25 and 31 and SAAB paras 18-21.) Both these judgments recognised, however, that the position would be different when a public tender is cancelled during the tender process, as would be the case on the Municipality’s version. On its case, the Municipality cancelled the tender after the award thereof had been set aside and it was ordered to reconsider the matter. This was also the factual position in Valozone. In such a case ‘principles of just administrative action are of full application’ (Nambiti para 32) or, put differently, principles of administrative justice continue to govern the relationship between the organ of state and the tenderers (SAAB paras 16-18 with reference to Logbro Properties CC v Bedderson NO and Others [2003] 1 All SA 424 (SCA); 2003 (2) SA 460 (SCA)). Thus, a decision of an organ of state to cancel a tender after it was awarded, would generally be reviewable under PAJA. [18] The point mentioned in (a) also does not arise on the factual findings of the court a quo. It held, rightly or wrongly, that as matter of fact, the tender had not been cancelled. The same applies to (b), which is also premised on a cancellation of the tender. In addition, the court a quo held on the facts that Activa was not appointed to render the same services to the Municipality as those that it had been contracted to render to Taung Municipality. It is not controversial that on the latter factual finding, reg 32 could find no application. It follows that the interpretation of reg 32 envisaged in (c) and (d), is not implicated. [19] For these reasons the application for leave to appeal falls to be dismissed with costs. There is, however, a further aspect that I am constrained to address. [20] As I have mentioned at the outset, s 16(2)(a)(i) of the Superior Courts Act provides that 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 that ground alone. In terms of s 16(2)(a)(ii) this question must be determined without reference to any consideration of costs, save in exceptional circumstances. Subsections 16(2)(b)-(d) are aimed at eliminating appeals that would have no practical effect or result, where leave to appeal has already been granted.2 [21] Section 17(1), in turn, reads as follows: ‘17. Leave to appeal. (1) Leave to appeal may only be given where the judge or judges concerned are of the opinion that— (a) (i) the appeal would have a reasonable prospect of success; or (ii) there is some other compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration; (b) the decision sought on appeal does not fall within the ambit of section 16(2)(a); and (c) where the decision sought to be appealed does not dispose of all the issues in the case, the appeal would lead to a just and prompt resolution of the real issues between the parties.’ In terms of s 17(1)(b) therefore, the judges considering the application for leave to appeal are required to satisfy themselves that the proposed appeal would have a practical effect or result. Subsections 17(2)(b)-(f) deal specifically with applications for leave to appeal directed to this court.3 2 Superior Courts Act 10 of 2013 s 16(2)(b)-(d): ‘(b) If, at any time prior to the hearing of an appeal, the President of the Supreme Court of Appeal or the Judge President or the judge presiding, as the case may be, is prima facie of the view that it would be appropriate to dismiss the appeal on the ground set out in paragraph (a), he or she must call for written representations from the respective parties as to why the appeal should not be so dismissed. (c) Upon receipt of the representations or, failing which, at the expiry of the time determined for their lodging, the President of the Supreme Court of Appeal or the Judge President, as the case may be, must refer the matter to three judges for their consideration. (d) The judges considering the matter may order that the question whether the appeal should be dismissed on the ground set out in paragraph (a) 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 Superior Courts Act s 17(2)(b)-(f): ‘(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. (c) An application referred to in paragraph (b) must be considered by two judges of the Supreme Court of Appeal designated by the President of the Supreme Court of Appeal and, in the case of a difference of opinion, also by the President of the Supreme Court of Appeal or any other judge of the Supreme Court of Appeal likewise designated. (d) 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, [22] These provisions give effect to a principle of long standing. See Coin Security Group (Pty) Ltd v SA National Union for Security Officers and Others 2001 (2) SA 872 (SCA) para 7. This court has said that the object of the principle is to reduce the heavy workload of appeal courts. See Premier, Provinsie Mpumalanga, en ‘n Ander v Groblersdalse Stadsraad 1998 (2) SA 1136 (SCA) at 1141D. I venture to say that the principle also serves another equally important purpose, namely to ensure that matters that truly deserve the attention of appeal courts, especially of this court, are not delayed by the burdening of these courts with matters that fall within the ambit of s 16(2)(a)(i) of the Superior Courts Act. [23] It goes without saying that these objects would be defeated when an application for leave to appeal is referred to the court for determination of the question of whether or not the contemplated appeal would indeed have any practical effect or result. And such a referral would negate the safety net provided for in subsec 16(2)(b)-(d). As a general rule the judges of this court that consider an application for leave to appeal should have little difficulty in determining whether the appeal would have any practical effect or result. And in terms of the rules of this court they could, in case of doubt, request that the record of the court below or any part thereof be placed before them.4 Finally, s 17(2)(d) provides the judges with the option to order that this question be argued before them at a time and place appointed, if they are of the opinion that the circumstances so require. Save in exceptional circumstances, therefore, an application for leave to appeal should not be referred to the court under s 17(2)(d) for it to determine whether an appeal would have any practical effect or result. As I have said, that is an issue that the two judges should first satisfy themselves of before either granting leave 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.’ (e) Where an application has been referred to the court in terms of paragraph (d), the court may thereupon grant or refuse it. (f) The decision of the majority of the judges considering an application referred to in paragraph (b), or the decision of the court, as the case may be, to grant or refuse the application shall be final: Provided that the President of the Supreme Court of Appeal may in exceptional circumstances, whether of his or her own accord or on application filed within one month of the decision, refer the decision to the court for reconsideration and, if necessary, variation.’ 4 SCA rule 6(6): ‘Request for further documents. - (6) The judges considering the application may call for (a) submissions or further affidavits; (b) the record or portions of it; and (c) additional copies of the application.’ or referring the application for leave to the court for determination. To refer that anterior question to five judges of this court for determination, as occurred here, is plainly counter-intuitive. For, as Navsa JA observed in Radio Pretoria v Chairperson of the Independent Communications Authority of South Africa and Another [2004] ZASCA 69; [2004] 4 All SA 16 (SCA) para 41: ‘Courts of appeal often have to deal with congested court rolls. They do not give advice gratuitously. They decide real disputes and do not speculate or theorise (see the Coin Security case, supra, at para [7] (875A-D)).’ [24] The application for leave to appeal is dismissed with costs. _______________________ C H G VAN DER MERWE JUDGE OF APPEAL APPEARANCES For applicant: L Kutumela (heads prepared by T Motau SC and L Kutumela) Instructed by: Gildenhuys Malatji Attorneys, Pretoria Honey Attorneys, Bloemfontein For 1st respondent: B C Stoop SC Instructed by: Kotze & Roux Attorneys, Pretoria Botha De Jager 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 June 2020 STATUS Immediate Madibeng Local Municipality v DDP Valuers and Another (Case no 1284/2017) [2020] ZASCA 70 (18 June 2020) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Today the Supreme Court of Appeal (the SCA) dismissed the application for leave to appeal by the applicant, the Madibeng Local Municipality (the Municipality), against the decision of the Gauteng Division of the High Court, Pretoria (the high court). The Municipality invited tenders for the compilation of a new valuation roll and the performance of residual services in respect of the period ending 30 June 2018 (the tender). Bidders were required to tender a fixed price for the compilation of the valuation roll, and the fees to be charged per individual residual service required. The first respondent, DDP Valuers (Pty) Ltd (DDP), and the second respondent, Activa Valuation Services (Pty) Ltd (Activa) submitted bids. The Municipality awarded the tender to an entity known as Dijalo Property Valuers (Dijalo), despite the fact that the price tendered in its bid had been approximately three times that of DDP and twice that of Activa. DDP approached the high court to review and set aside the Municipality’s decision to award the tender to Dijalo, which application was dismissed on the basis that DDP had failed to exhaust internal remedies. DDP successfully appealed against this order to the SCA, which remitted the matter to the high court for a decision on the merits. On the merits, the high court (per Makgoba JP) held that the evaluation of the bids had been affected by material irregularities, ordered the review and setting aside of the decision to award the tender to Dijalo; and remitted the matter to the Municipality for reconsideration. Prior to this order, the Greater Taung Local Municipality (Taung Municipality) had awarded a tender to Activa, which culminated in a service level agreement that set out a fixed price for the compilation of a new valuation roll. By the date of the remittal order, Dijalo had submitted the valuation roll to the Municipality. Thus the Municipality only required residual services for the remaining period of the tender. The Municipality decided to cancel the tender and to invoke reg 32 of the Municipal Supply Chain Management Regulations in appointing Activa to perform the residual services based on the contract secured by Taung Municipality. DDP again approached the high court, to review and set aside the Municipality’s failure to reconsider the tender and the decision to appoint Activa to execute the tender. The high court (per Pretorius J) dismissed the review, inter alia, on the basis that the tender had not been cancelled and that the services that Activa had to provide to the Municipality fell outside the scope and ambit of its service level agreement with Taung Municipality. The high court also dismissed the Municipality’s application for leave to appeal. In the application for leave to appeal before the SCA, the issue was whether a decision on the proposed appeal would have any practical effect or result. The SCA held that as the appointment of Activa expired on 30 June 2018, the matter was clearly moot. However, despite the mootness of a matter, the SCA has a discretion to determine a matter where it presents a discrete legal issue of public importance that would affect matters in the future and on which the adjudication of the SCA is required. In the present circumstances, the SCA was not persuaded that such a legal issue existed, given the factual findings of the court a quo that the tender had not been cancelled and that Activa was not appointed to render the same services to the Municipality as those that it had been contracted to render to Taung Municipality. The SCA held that s 16(2)(a)(i) of the Superior Courts Act 10 of 2013 provides that 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 that ground alone. The SCA said that the object of the principle is to reduce the heavy workload of appeal courts and to ensure that matters that deserve the attention of appeal courts are not delayed by the burdening of these courts. In the circumstances, the application was dismissed.

2343

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 615/2008 In the matter between: HAWEKWA YOUTH CAMP FIRST APPELLANT THE MINISTER OF EDUCATION FOR THE WESTERN CAPE SECOND APPELLANT and GARY MICHAEL BYRNE RESPONDENT Neutral citation: Hawekwa Youth Camp v Byrne (615/2008) [2009] ZASCA 156 (27 November 2009) CORAM: Brand, Mlambo, Malan, Bosielo JJA et Griesel AJA HEARD: 6 November 2009 DELIVERED: 27 November 2009 SUMMARY: Claim in delict against Minister of Education – loss resulting from injuries sustained by child during school excursion under control of his teachers – held that injuries caused when child fell from top part of double bunk bed because of insufficient barrier on bunk – further held that resulting loss caused by wrongful and negligent omissions on the part of teachers – Minister vicariously liable. ORDER On appeal from: High Court, Cape Town (Le Grange J sitting as court of first instance). The appeal is dismissed with costs. JUDGMENT BRAND JA (Malan et Bosielo JJA concurring): [1] The respondent, Mr Gary Byrne, is the father and natural guardian of Michael Byrne, who was born on 15 June 1995. In March 2004, when Michael was almost nine years old and a grade 3 learner at the Durbanville Preparatory School, he accompanied a school group under the control of his teachers on a two day excursion to the Hawekwa Youth Camp site outside Wellington. The group arrived at the camp on 3 March where they were accommodated in bungalows. During the early hours of the next morning Michael was found on the cement floor of his bungalow. No-one saw how he ended up there, but he was unconscious and appeared to be having convulsions. He was taken to hospital where medical examinations revealed that he had suffered a fractured skull with underlying brain injuries which led to some degree of permanent brain damage. [2] In the event, the respondent instituted action against the first and second appellants in the Cape High Court for the damages that he and Michael had suffered as a result of these injuries. The nub of his case was that Michael's injuries could have been prevented by the employees of the two appellants, who had wrongfully and negligently failed to do so. The first appellant ('Hawekwa') is a company not for gain incorporated in accordance with s 21 of the Companies Act 61 of 1973. In March 2004 it was the owner of the Hawekwa Youth Camp site where the incident occurred. The second appellant is the Minister of Education in the Western Cape (‘the Minister’) who was cited in his capacity as employer of teachers at Government schools within his area of jurisdiction, including the Durbanville Preparatory School. In his plea the Minister admitted that he would indeed be vicariously liable in delict if Michael's injuries were attributable to the wrongful and culpable acts or omissions of his teachers. [3] At the commencement of the trial the parties agreed to and the court a quo (Le Grange J) ordered a separation of issues. In terms of the separation order the issues relating to the liability of the appellants were to be decided first, while those pertaining to the quantum of the damages claimed stood over for later determination. The preliminary issues were decided in favour of the respondent. Hence the court declared the two appellants liable, jointly and severally, for the loss resulting from Michael’s injuries. Leave to appeal to this court against that judgment was then sought and obtained by both appellants from the court a quo. After the appeal was noted, a settlement was, however, reached between the respondent and Hawekwa with the result that it played no further part in the appeal. But, proceedings between the Minister and the respondent continued. [4] It is not in dispute that during the night of 3 March 2004 Michael slept on the upper portion of a double bunk. Likewise it is common cause that he was not assigned to that bunk but chose to sleep there. From the outset, the respondent’s contention as to how Michael ended up on the floor of the bungalow was that he had rolled from the upper bunk in his sleep because there was no barrier – or, at best for the appellants, a barrier which was ineffective – to prevent him from doing so. The Minister’s response in his plea was that he had no knowledge as to how Michael landed on the floor where he was found. But, during the course of the proceedings, various alternative suggestions were made on his behalf as to how the incident might have occurred. To these suggestions I shall presently return in more detail. Pertinent for present purposes, however, is that they gave rise to the major issue at the trial, that is: how did Michael come to land on the floor where he was found? The other issues at the trial resulted from the denial by the Minister of the respondent’s further contention that Michael’s fall could have been prevented if not for the (a) wrongful and (b) negligent omissions on the part of the teachers who accompanied and were thus responsible for the safety of the group. The court a quo decided all these issues against the Minister. Hence they were again presented, albeit in somewhat different form, for determination on appeal. The exact nature of these issues will best be understood in the light of the background facts that are to follow. [5] The bungalow where the incident occurred was divided by cupboards and lockers that ran up to the roof beams along the middle of the room. On the right-hand side of the bungalow – as one entered through the doorway – there were two double bunks and on the left side there were three. During the night of the incident the five double bunks were occupied by nine boys and one adult, referred to as the volunteer bungalow parent, Mr Moosa Raise. Though it was his daughter who accompanied the group, he had voluntarily undertaken to look after the nine boys in the bungalow during that night. Michael slept on the top bunk in the far right-hand corner of the bungalow while Mr Raise occupied one of the bottom bunks on the left. Hence his view to where Michael slept was obstructed by the room divider of cupboards. The three teachers who accompanied the group on their excursion were Ms Solomons, Ms Range and Ms Trollip. They slept in a separate bungalow on their own. [6] Mr Raise was called to testify on behalf of the Minister. Two other volunteer parents who were in charge of other bungalows also gave evidence: Mr Roland Oelofse who was called on behalf of the respondent and Mr Kevin Coetzee on behalf of the Minister. It appears to be common cause between the three of them that the boys retired to their bungalows between 9 and 10 pm and that by all accounts they were asleep before midnight on 3 March 2004. According to Mr Raise, he was awoken at or shortly after 4 am the next morning by what he described as a 'growling' noise. It was dark in the bungalow and the boys were asleep. He turned on the light to find Michael lying on the floor. Michael was unconscious and incontinent of urine. Foam was coming from his mouth and it appeared as though he was having an epileptic seizure. Mr Raise called Mr Coetzee and left him with Michael while he went to the bungalow of the teachers to alert them. The time when Michael was discovered is confirmed by Mr Coetzee as well as by Mr Oelofse, who testified that he had been woken up, in turn, by Mr Coetzee. [7] Two of the teachers, Ms Trollip and Ms Ranger, also testified on behalf of the Minister. The third one, Ms Solomons, had apparently emigrated in the interim and was not available to give evidence. Ms Trollip testified that she was summoned to the bungalow by Mr Raise where she also saw Michael lying on the floor. Ms Range accompanied Mr Raise and Mr Coetzee when they took Michael to the hospital. Between these witnesses who saw Michael in his injured state, there was no significant difference as to the condition he was in. Moreover, not one of them drew any conclusion other than that Michael had rolled off the upper bunk in his sleep. [8] The plea advanced on behalf of the Minister was that he had no knowledge of the plaintiff's allegation that Michael fell from the upper bunk while sleeping. Shortly before the trial, however, the Minister delivered an expert notice to which was annexed a report prepared by a neurologist, Dr Johan Reid, who assessed Michael for purposes of the litigation nearly four years after the event. The contents of the report – and particularly the thesis advanced therein – came to serve as the basis for a positive proposition advanced on behalf of the Minister during the trial, namely that Michael had not fallen as a result of rolling out of the bunk bed during his sleep, but because he had suffered an epileptic seizure. [9] The conclusion reached by Dr Reid and his recommendation that Michael be placed on anti-convulsive medication caused the respondent and his wife to seek a second opinion from another neurologist, Dr James Butler, whose main interest is in epilepsy. Dr Butler examined Michael and subjected him to 48 hours of continuous EEG recordings in order to ascertain the presence or absence of interictal (between convulsions) epileptiform discharges. His evidence was that in a population of people who have epilepsy, 90 per cent or more of such people will demonstrate interictal epileptiform discharges on such EEG recordings. Since Michael showed none of these symptoms, Dr Butler concluded that Michael did not suffer from epilepsy – either before or after the event. He also pointed out that Michael had no history of clinical seizures in his entire life. These considerations and others led Dr Butler to decide that there was no evidence to support the conclusions arrived at by Dr Reid and accordingly he expressed the view that it was more likely that the convulsions observed by Ms Raise and others when they found Michael on the floor were caused by his brain injury, rather than the cause of it. [10] There is, however, no need to analyse the difference between Dr Reid and Dr Butler any further. The court a quo subjected the testimony of both doctors to close scrutiny. It then accepted the evidence of Dr Butler and rejected the thesis advanced by Dr Reid as unimpressive and implausible. There is no attack on these findings. On the contrary, at this stage the Minister had distanced himself from the conclusions of Dr Reid. Another thesis as to how it happened that Michael ended up on the floor, which the Minister did persist in on appeal, also emanated from the testimony of Dr Reid. According to this part of Dr Reid's evidence he asked Michael, when he assessed him in February 2008, how the incident happened. Michael then told him, so Dr Reid said, that he and the other boys in the bungalow were up until about 3 o'clock in the morning; that they were boisterously swinging from the open rafters in the bungalow; that there was no adult present at the time; and that in fact, the adult person assigned to their room slept elsewhere. [11] Counsel for the Minister sought to find support for Michael’s account in the fact that the roof beams of the bungalow were not covered by the ceiling and that they passed between the left and right walls above the bunk where Michael slept at about the height of the cupboard divider in the room. In addition counsel sought to rely on the evidence of Dr Butler that, though Michael's memory 'going forward' from the time of the incident could be expected to be poor, the presence of retrograde amnesia was unlikely. Finally, counsel found support for his argument in the evidence by Mr Coetzee that immediately after the incident, a mattress was found lying on the floor next to Michael. To my way of thinking, however, these are no more than indications that, when considered in isolation, Michael's version, that he was swinging from the roof beams when he fell to the floor, could theoretically be true. [12] But as I see it, sight should not be lost of the fact that Michael told this story four years after an event which occurred when he was eight years old. Moreover, according to Dr Reid’s own evidence, individuals who suffered the same type of brain injury as Michael, are known to be manipulative and, in Dr Reid’s words, ‘to have us on’. What the court a quo found decisive, however, and, to my mind, rightly so, is that the theory based on Michael's report to Dr Reid is simply not to be reconciled with the evidence of the Minister’s own witness, Mr Raise. It will be remembered that according to Mr Raise he was fast asleep in a dark bungalow when he was woken up by a growling noise at about four o’clock in the morning. When he switched on the light all the other boys were asleep. The proposition that he slept elsewhere or even that he was out of the bungalow when the incident occurred, was never put to Mr Raise. Nor was it suggested to him that he might not have woken up when the boys in his bungalow were boisterously swinging from the open rafters above him. To me it seems that the last mentioned suggestion would, in any event, border on the ludicrous. [13] Another scenario proposed on behalf of the Minister for the first time on appeal was that Michael fell to the floor while he was voluntarily alighting from the upper bunk in order to visit the bathroom. In support of this theory counsel sought to rely on the evidence of some of the witnesses who found Michael on the floor, that he was without his sleeping-bag and that there was urine around him, coupled with the evidence of his mother that when his sleeping- bag was returned to her it was wet and smelled of urine. One of the conclusions to be drawn from this, so the Minister’s counsel contended, was that Michael had wet himself during the night before alighting from the upper bunk in order to visit the bathroom. The first problem I have with this scenario proposed by counsel is that other explanations present themselves for the facts on which it relies. So for example, it is equally possible that Michael had wet himself after he sustained his head injury. His sleeping-bag could then have been dropped in the urine at any time before or after he had been taken to the hospital and so on and so forth. [14] My further problem with the proposed scenario is that it was never raised and hence not properly explored at the trial. Even so, I believe there is sufficient evidence to remove this thesis from the realm of probabilities. First, there is the uncontested evidence of Michael’s mother that he had been sleeping on the top part of a double bunk from the age of two until the accident occurred and that he had never fallen off the bunk before. Her explanation for this was, of course, that his bunk at home had a proper railing which prevented him from rolling off. But the railing would obviously not protect him from a fall while he was voluntarily alighting. This means that Michael must have fallen off for the first time while alighting from his bunk when he was nearly nine. In short, I find it inherently unlikely that a nine year old boy who regularly slept on a top bunk would fall on his head while trying to alight from his bunk. As I see it, the proposed scenario should also be considered in the light of the evidence to which I shall presently return, that the barrier on the bunk used by Michael would as a fact not be able to prevent him from rolling off in his sleep, which lends support to the inference that this is exactly what happened. [15] I therefore agree with the conclusion arrived at by the court a quo, that the most likely conclusion to be drawn from the available evidence is the one which occurred to all those present at the time, namely that Michael landed on the floor because he rolled out of the top part of the double bunk in his sleep. This leads me to consider the next step in the progression of the respondent’s case, namely, his allegation that the direct cause of Michael’s fall was the absence of an effective railing or barrier on the upper bunk which he occupied to prevent him from rolling off in his sleep. [16] According to the respondent’s particulars of claim his main contention in this regard was that the bunk used by Michael had no railing or barrier at all. This contention was supported by the evidence of Mr Oelofse who saw nothing of this kind. It was, however, in direct conflict with the evidence of Mr and Mrs Enslin, who both at various times held the position of manager of the first appellant's Hawekwa Camp. Their version, which must, in my view, be accepted, was that there was some kind of barrier on the bunk that Michael occupied. The reason for the barrier, so the Enslins explained, was that they actually foresaw the possibility of children rolling from unguarded upper bunk beds and injuring themselves. In an attempt to prevent such an occurrence, they had affixed planks of wood to these bunks. Photographs depicting such planks were handed in at the trial as Exhibit A. Mrs Enslin testified, however, that the planks depicted in Exhibit A were those present in the girls’ bungalows at the time of Michael’s injuries. The planks affixed to the bunks in the boys’ bungalows, she said, were smaller. Indeed, Mrs Enslin sought to explain the fact that some witnesses were unsure as to whether or not there were any planks on the boys’ bunks at all on the basis that they might have failed to observe these planks because they were so small. [17] Mr Enslin’s version was somewhat different from that of his wife. According to his evidence, all the planks were of the same size. However, so he testified, the planks on some of the bunks in the boys’ bungalows had been fixed in such a manner that the portion extending above the mattress, which actually afforded the protection, was lower than their counterparts in the girls’ bungalows that are depicted in Exhibit A. However, be that as it may, whatever the exact position might have been, I find the bottom line to all this in the concession by Mr Enslin that even the planks depicted in Exhibit A were insufficient as safety railings or barriers to prevent a child from rolling off. Hardly surprising, in the circumstances, was the evidence that after Michael’s injury, new, substantially larger planks were installed on the upper bunks in the boys’ rooms. What is more, it appears that when the camp site came under new management, the barriers on the top bunks were once again upgraded. [18] The fact that the planks depicted in Exhibit A were ineffective as a barrier to prevent someone from rolling off the upper bunk was confirmed by the respondent’s expert witness, Ms Du Toit. She is a medical social worker employed by the Child Accident Prevention Foundation at the Red Cross Hospital. She concluded from a study that she did between 1989 and 1993 that bunk bed injuries are sufficiently common to merit preventative strategies in the form of protective railings that complied with safety specifications. Apart from the fact that the planks depicted in Exhibit A did not comply with these specifications, so she testified, they were obviously not suitable to serve the purpose for which they were intended, ie to prevent someone from rolling off the bunk. In the light of all this I agree with the finding by the court a quo that, on the probabilities Michael rolled off the top bunk in his sleep because there was no effective barrier to prevent him from doing so. [19] It was not disputed by counsel for the Minister, as I understood him, that, with the benefit of hindsight, the teachers in charge of Michael's group could and should have prevented the injuries that he suffered by not allowing him to sleep on a top bunk which had no effective barrier to prevent him from rolling off in his sleep. But, as we all know, hindsight does not establish negligence. The question remains – can the teachers' omission be characterised as negligent? And, if so, can their negligent omission be characterised as wrongful? In this court there was some debate as to whether the teachers in charge of Michael's group assumed the role in loco parentis and what that would entail. I do not believe, however, that it takes the matter any further. In my view the issues of wrongfulness and negligence can be approached from a position which is not in dispute, namely, that these teachers took responsibility for the safety of the group that included Michael. [20] A substantial portion of the written heads of argument on behalf of the Minister had been devoted to the element of wrongfulness. Contentions in support of the proposition that omissions on the part of Michael's teachers to prevent his injuries would not be wrongful, included the following: '[The Minister] does not dispute that [the teachers] owed Michael a duty of care, viz, to take reasonable measures to ensure that the environment in which he was to be accommodated as a learner participating in a school excursion would be free from risks and dangers such as could reasonably be expected to lead to him suffering harm or injury. . . .' And: 'The duty of care upon [the teachers] arose from the school's assumption of a role in loco parentis. The school was bound to exercise the same foresight and care as a reasonably careful parent in relation to her own children. To that end, it is submitted, the school took every step that a reasonable parent would take to assess the risk to Michael while he was at the camp; and furthermore, the school's staff acted reasonably to prevent any harm to Michael.' Further arguments were thereupon advanced to support the submission in the last sentence of the quotation. [21] As I see it, the quoted contentions are indicative of a confusion between the delictual elements of wrongfulness and negligence. This confusion in turn, so it seems, originated from a further confusion between the concept of 'a legal duty', which is associated in our law with the element of wrongfulness, and the concept of 'a duty of care' in English law, which is usually associated in that legal system with the element of negligence (see eg Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 27B-G; Local Transitional Council of Delmas v Boshoff 2005 (5) SA 514 (SCA) para 20). Warnings against this confusion and the fact that it may lead the unwary astray had been sounded by this court on more than one occasion (see eg Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 14; Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) para 11). Nonetheless, it again occurred in this case. [22] The principles regarding wrongful omissions have been formulated by this court on a number of occasions in the recent past. These principles proceed from the premise that negligent conduct which manifests itself in the form of a positive act causing physical harm to the property or person of another is prima facie wrongful. By contrast, negligent conduct in the form of an omission is not regarded as prima facie wrongful. Its wrongfulness depends on the existence of a legal duty. The imposition of this legal duty is a matter for judicial determination involving criteria of public and legal policy consistent with constitutional norms. In the result, a negligent omission causing loss will only be regarded as wrongful and therefore actionable if public or legal policy considerations require that such omission, if negligent, should attract legal liability for the resulting damages (see eg Telematrix (Pty) Ltd supra para 14; Local Transitional Council of Delmas supra paras 19-20; Gouda Boerdery Bk v Transnet 2005 (5) SA 490 (SCA) para 12). [23] The separate test for the determination of negligence is the one formulated by Holmes JA in Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-G. According to this test, negligence will be established if: '(a) a diligens paterfamilias in the position of the defendant – (i) would foresee the reasonable possibility of his conduct injuring another in his person or property and causing him patrimonial loss; and (ii) would take reasonable steps to guard against such occurrence; and (b) the defendant failed to take such steps.' This has been constantly stated by this Court for some 50 years. Requirement (a)(ii) is sometimes overlooked. Whether a diligens paterfamilias in the position of the person concerned would take any guarding steps at all, and, if so, what steps would be reasonable, must always depend upon the particular circumstances of each case.' [24] Depending on the circumstances, it may be appropriate to enquire first into the question of wrongfulness in which event it may be convenient to assume negligence for the purpose of the inquiry. On the other hand, it may be convenient to assume wrongfulness and then consider the question of negligence first (see eg Gouda Boerdery Bpk para 12; Local Transitional Council of Delmas para 20). [25] In this case I find it convenient to deal with the question of wrongfulness first, primarily because I believe the answer to be self-evident. Properly formulated the enquiry under this rubric is this: on the assumption that the teachers in charge of the group could have prevented the harm that Michael suffered and that they had negligently failed to do so, should they – and by vicarious extension, the Minister – as a matter of public and legal policy, be held liable for the loss resulting from such harm? But for the confusion between wrongfulness and negligence which transpires from the Minister's heads of argument, it appears to me that wrongfulness had in fact been conceded. What is in effect disputed is negligence. However, be that as it may, I am satisfied that wrongfulness had been established. In this regard I am in full agreement with the following statement by Desai J in Minister of Education v Wynkwart NO 2004 (3) SA 577 (C) at 580A-C: 'It was not in dispute that [the respondent's minor son] R was injured at school while under the control and care of the appellants' employees and it was fairly and properly conceded that teachers owe young children in their care a legal duty to act positively to prevent physical harm being sustained by them through misadventure. It was submitted that in this instance, as in many other delict cases, the real issue is "negligence and causation and not wrongfulness".' [26] Reverting to the issue of negligence, the first question – in accordance with Kruger v Coetzee – is one of foreseeability. Was it reasonably foreseeable by Michael’s teachers who were in charge of the group that the upper bunk which he was supposed to occupy, posed the danger that he may roll off in his sleep and injure himself? In support of the proposition that it was, the respondents adduced the expert evidence of Ms Nelmarie du Toit. According to her testimony, studies at the Red Cross Hospital and elsewhere had shown that the use of upper bunks as beds for children without the provision of adequate railings is notoriously dangerous in that children frequently roll off these bunks in their sleep in which event they often suffer serious injuries which may even be fatal. She also testified that a considerable amount of publicity had been given to these studies in various media. Though the danger related predominantly to children under the age of five, a good proportion of occurrences involved children of about ten. [27] The Minister’s answer to Ms Du Toit’s testimony was essentially that she was an expert whose knowledge and experience could not be attributed to teachers in general. This response is, of course, not without validity. Yet, I do not see it as a complete answer. What Ms Du Toit’s evidence shows is that as an objective fact unprotected bunk beds posed the risk of serious and even fatal injuries to children. The only question is whether her knowledge can be limited to those who share her expertise. I think not. Both Mr and Mrs Enslin, for example, testified that they actually foresaw the possibility of children falling from unguarded bunk beds and injuring themselves. The very purpose of affixing the (inefficient) barriers to the bunks at the camp site was to guard against such an occurrence. That raises the question why a reasonable teacher would not foresee the danger actually foreseen by the Enslins. To this question no answer was put forward on behalf of the Minister and I can think of none. It strikes me as a matter of general knowledge that children frequently roll off their beds in their sleep. In this light common sense dictates, in my view, if one should put your mind to it, that if the fall occurs from the top part of a double bunk, as opposed to a normal bed, the risk of serious injury is exponentially increased simply because of the significant additional height involved. [28] What is more, both Ms Trollip and Ms Range testified that to their knowledge some parents of children attending these camps refused to allow their children to sleep on the upper bunks. As to the reason for this, Ms Range was unfortunately somewhat evasive. To the reasonable teacher, the answer would be obvious: these parents did not wish their children to sleep on upper bunk beds because they thought it to be dangerous. As I see it, that would cause reasonable teachers to apply their minds as to why these parents regarded upper bunks as dangerous. Once they did so, even those reasonable teachers who had failed to realise the inherent danger before, would then appreciate the risk of a child rolling off an unprotected top bunk. In this regard, counsel for the Minister sought to rely on concessions by individuals such as the respondent’s expert, Dr Butler, and Ms Range herself, that they had in the past allowed their own children to sleep on upper bunks without safety rails. To my way of thinking, this attitude is probably attributable to a failure on the part of these individuals to apply their minds. The same can, in my view, be said of parents who attended the camp and did not object to the bunks as being unsafe. As I have said, I believe that once a person of average intelligence applies his or her mind to the situation, the danger posed by an unprotected bunk becomes quite plain. Particularly when that reasonable observer is alerted by the concern of parents who refuse to allow their children to sleep on upper bunks because they regard them as dangerous. [29] Another argument raised on behalf of the Minister was that the Durbanville Preparatory School had previously used the same campsite for ten years; that the teachers involved had not been informed of any reported incident where a child had fallen off an upper bunk; and that they therefore had no reason to think that it would happen on this occasion. Though this argument might be superficially attractive, I believe it is flawed. Firstly, the reasonable teacher would appreciate that incidents might have gone unreported. Secondly, logic dictates that once a risk has been recognised as inherently foreseeable, such as, for example, the one created by an unfenced swimming-pool, the reasonable person will not disregard that risk simply because it had never materialised before. [30] In sum, I therefore find that Michael's teachers should reasonably have foreseen that in the absence of an adequate barrier affixed to the upper bunk which Michael occupied, there was the real risk that he may roll off in his sleep and injure himself. In this light, the next question, according to the Kruger v Coetzee approach, is what steps, if any, the reasonable teacher would have taken to guard against this foreseeable danger? As I see it, the answer is that the reasonable teacher would examine the beds and consider whether it afforded effective protection to prevent children from rolling off in their sleep. I say that because the obligation imposed on the teacher would require very little effort which should be weighed up against the seriousness of the foreseeable harm that could result from a failure to do so. [31] Ms Trollip and Ms Range could not give any clear evidence as to the nature of the planks on the beds. The inference is inescapable that they simply did not look. If these two teachers had looked, like the reasonable teacher would, they would have realised that the planks on the beds did not offer sufficient protection to prevent a child from rolling off. That much appears to be virtually common cause. Apart from Ms Du Toit's evidence and the concession by Mr Enslin to that effect, Ms Trollip accepted, albeit with the benefit of hindsight, that the protection offered by the planks was 'ten to one' not enough. [32] The final enquiry is what the reasonable teacher would have done once he or she realised that the upper bunk offered no sufficient protection. The answer is, I think, that there were many possible solutions, but, failing all of these, he or she would have instructed the children destined to sleep on the upper bunks to put their mattresses on the floor. That, incidentally, is exactly what Ms Range did at the excursions she arranged at the same venue after the incident where Michael was injured. I do not propose to introduce this evidence as the wisdom of hindsight, but to illustrate that the suggested solution would be adopted by the reasonable teacher, because it could be implemented without any difficulty. In the event, I agree with the court a quo's finding that the harm suffered by Michael could have been prevented by the teachers in charge of his group, who had wrongfully and negligently failed to do so. This inevitably leads me to the order that follows. [33] The appeal is dismissed with costs. ………..…………….. F D J BRAND JUDGE OF APPEAL GRIESEL AJA (Mlambo JA concurring): [34] The evidence has been fully summarised in the judgment of my colleague Brand JA. I agree with his conclusion that, on the circumstantial evidence, the most probable inference is that Michael rolled off the top bunk in his sleep and fell because there was no effective barrier to prevent him from falling.1 However, I respectfully disagree that, on those facts, the Minister should be held liable to the respondent. [35] In my view, the present appeal affords a classic example of wisdom after the event. The proper approach to questions of reasonable foresight has been formulated by Nicholas AJA in S v Bochris Investments (Pty) Ltd & another2 and followed by this court on many subsequent occasions.3 He put it as follows: ‘In considering this question, one must guard against what Williamson JA called “the insidious subconscious influence of ex post facto knowledge” (in S v Mini 1963 (3) SA 188 (A) at 196E–F). Negligence is not established by showing merely that the occurrence happened (unless the case is one where res ipsa loquitur), or by showing after it happened how it could have been prevented. The diligens paterfamilias does not have “prophetic foresight”. (S v Burger (supra at 879D).) In Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound) 1961 AC 388 (PC) ([1961] 1 All ER 404) Viscount Simonds said at 424 (AC) and at 414G–H (in All ER): “After the event, even a fool is wise. But it is not the hindsight of a fool; it is the foresight of the reasonable man which alone can determine responsibility.”’ [36] A number of the appellant’s witnesses fairly and candidly conceded that, with hindsight, it was perhaps unsafe to allow children of Michael’s age to sleep on upper bunks without adequate safety railings. Faced with the stark reality of what had happened to Michael, it would have been surprising had their attitude been any different. However, the fact that none of those witnesses thought, before the event, that it was necessary to take any precautions is significant. 1 Paras 15 and 18 above. 2 1988 (1) SA 861 (A) at 866J–867B. 3 See eg Sea Harvest Corporation (Pty) Ltd & another v Duncan Dock Cold Storage (Pty) Ltd & another 2000 (1) SA 827 (SCA) para 27; Minister of Safety and Security and another v Carmichele 2004 (3) SA 305 (SCA) para 45; Minister of Safety and Security & another v Rudman & Another 2005 (2) SA 16 (SCA) para 67. [37] The plaintiff relied heavily on the evidence of Mrs Du Toit, as does my colleague.4 Her opinion was based largely on the results gathered at the Child Accident Prevention Foundation at the Red Cross Children’s Hospital in Cape Town over a five-year-period, from January 1989 to December 1993. The statistics show that a total of approximately 58 000 children were seen at the trauma unit of Red Cross Children’s Hospital during the relevant period. Of these, falls accounted for 24 980, of which falls from beds were 3 160 and falls from bunk beds only 400. She was unable to state how many of those 400 falls occurred while the child was asleep; nor did she know in how many cases the falls occurred despite a safety railing, eg because the child was playing. We do know, however, that one of the falls was fatal. In my view, Mrs Du Toit’s evidence falls short of establishing that the use of upper bunk beds without safety railings is ‘notoriously dangerous’, nor does it establish that children ‘often suffer serious injuries’ as a result of falls from bunk beds. As I read the results of the survey, almost 80% of the injuries resulting from falls from bunk beds were ‘minor in nature, ie lacerations, contusions and abrasions’. In short, her evidence does not assist the respondent in proving that the risk of harm to Michael should have been reasonably foreseeable to the Minister’s employees before the occurrence. [38] Be that as it may, even if it were to be accepted that the possibility of harm to the children due to the absence of a proper safety railing was reasonably foreseeable, this is not sufficient to saddle the Minister with liability. What is required, is the reasonable foreseeability of ‘a possibility of harm to another against the happening of which a reasonable man would take precautions’.5 This was echoed 25 years later in the second requirement laid down by Holmes JA in Kruger v Coetzee, which has been followed ever since.6 4 Paras 18 and 26 above. 5 Joffe & Co Ltd v Hoskins & another 1941 AD 431 at 451. 6 Quoted in para 23 above. See also Boberg The Law of Delict vol I at p 275; Bolton v Stone [1951] 1 All ER 1078 (HL) at 1080 and 1084; The Council of the Shire of Wyong v Shirt & others 146 CLR 40 (HC of A) at 47; Barnard v Santam Bpk 1999 (1) SA 202 (SCA) at 213H–J; Mukheiber v Raath & another 1999 (3) SA 1065 (SCA) para 31. [39] In considering whether any steps ought to have been taken by the appellant’s employees, the standard of care required of them and other persons in loco parentis is that of ‘a reasonably careful parent in relation to his own children’.7 Although it has been suggested during argument before us (albeit somewhat tentatively) that the standard of care required of a teacher or someone else in loco parentis should actually be higher than the standard required of a reasonably careful parent in respect of his or her own child, we have not been referred to any authority in support of such a proposition, nor am I aware of any such authority. In my view, the test enunciated in the authorities referred to above correctly states the position in our law. The position in English law is the same, where the Court of Appeal has held that it would be ‘neither just nor reasonable to impose on the school a greater duty than that which rests on a parent’.8 I do not read the dictum of Desai J in Wynkwart’s case, referred to with approval by my colleague,9 to state anything different. [40] In essence, therefore, the issue can be reduced to the question whether a reasonably careful and prudent parent would allow his or her 8- or 9-year-old child to sleep on an upper bunk bed without an adequate safety railing. In the present case, we do not have to speculate about the answer: the record shows that a number of parents did just that. According to the evidence, quite a few parents accompanied the school group on this particular outing – as they did on similar outings during ten previous years. A supervising parent slept in each of the bungalows with nine of the children. Such parent was entrusted with full responsibility for the well-being of the children while under his or her care. Obviously this fact could not absolve the teachers from their primary responsibility for the care and safety of the group of children. What is significant in the present context, though, is that there is no evidence that any of those parents found it necessary in relation to the children under their supervision – including their own children – to prevent 7 Broom & another v The Administrator, Natal 1966 (3) SA 505 (D) at 518F–519A and the English authorities referred to therein. See also Rusere v The Jesuit Fathers 1970 (4) SA 537 (R) at 539C–D. 8 Van Oppen v Clerk to the Bedford Charity Trustees [1989] 3 All ER 389 (CA) at 412; Charlesworth & Percy on Negligence 11ed (2006) paras 8–179; 8–193. 9 Quoted in para 25 above. them from sleeping on the upper bunks. The high-water mark for the respondent was the evidence of one of the parents, Mr Oelofse, who testified that he ‘felt a bit nervous’ because of the absence of adequate safety railings. Yet even he did not find it necessary to take any steps to guard against the foreseeable risk of harm. Must each and every one of those supervising parents now be held to have been guilty of negligence? What about all the other parents who accompanied similar groups from Michael’s school (and countless other schools and youth organisations) to the same venue during the preceding ten years and who permitted the children to sleep on the same bunk beds? Must they now also be branded irresponsible and negligent parents? I think not. And if the failure in this case of the parents to take any preventative steps is not to be regarded as blameworthy, why should the duty resting on the teachers be more onerous? [41] My colleague refers to the fact that, prior to the outing, some parents refused to allow their children to sleep on the upper bunks and concludes that this was so ‘because they thought it to be dangerous’.10 In my respectful view, however, this merely illustrates that some parents are by nature more cautious and nervous than others. This fact cannot serve to establish negligence on the part of those parents who did not take any steps to prevent their children from sleeping on the upper bunks. After all, we know that the reasonable parent is not a timorous faint heart, always in trepidation lest she or others suffer some injury.11 For the same reason, parents falling into the more ‘cautious’ category will probably also forbid their children to take part in more robust forms of sport, such as rugby, where a risk of serious injury is certainly not unforeseeable.12 Will teachers coaching and supervising rugby matches and practices and the parents allowing their children to participate therein in future be held liable for damages every time a player should get injured in the course of the game? If not, why should the position 10 Para 28 above. 11 Cf Herschel v Mrupe 1954 (3) SA 464 (A) at 490E–F. 12 See eg Van Oppen v Clerk to the Bedford Charity Trustees, footnote 10 above, at 392a, where rugby football was described as ‘the most dangerous activity in schools’. be any different with regard to the teachers in the present scenario? As it was put by Singleton LJ in Wright v Cheshire County Council:13 ‘There may well be some risk in everything one does or in every step one takes, but in ordinary everyday affairs the test of what is reasonable care may well be answered by experience from which arises a practice adopted generally, and followed successfully over the years so far as the evidence in this case goes.’ [42] I have come to the conclusion that the kind of harm that occurred in this case, even though perhaps reasonably foreseeable, is not such that a reasonable parent would have taken steps to guard against such risk. While one obviously has a great deal of sympathy with Michael and his parents for the consequences suffered as a result of the incident, I am not persuaded that the Minister’s employees have been guilty of any culpable act or omission in this case. In the result, they cannot be held legally liable for such consequences. Accordingly I would have allowed the appeal with costs and would have amended the order made by the high court so as to dismiss the respondent’s action with costs. B M GRIESEL Acting Judge of Appeal 13 [1952] 2 All ER 789 (CA) at 792.

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 2009 Status: Immediate HAWEKWA YOUTH CAMP FIRST APPELLANT THE MINISTER OF EDUCATION FOR THE WESTERN CAPE SECOND APPELLANT and GARY MICHAEL BYRNE RESPONDENT Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal On Friday, 26 November 2009, the Supreme Court of Appeal dismissed the appeal in Hawekwa Youth Camp and another v G M Byrne. The appeal originated from an action instituted by the respondent, Mr Gary Byrne, in the High Court, Cape Town, on behalf of his minor son, Michael, who was born on 15 June 1995. In March 2004, when Michael was almost nine years old and a grade 3 learner at the Durbanville Preparatory School, he accompanied a group under the control of his teachers on a two day excursion to the Hawekwa Youth Camp site outside Wellington. The group arrived at the camp on 3 March where they were accommodated in bungalows. During the early hours of the next morning Michael was found on the cement floor of his bungalow. No-one saw how he ended up there, but he was unconscious and appeared to be having convulsions. He was taken to hospital where medical examinations revealed that he had suffered a fractured skull with underlying brain injuries which led to some degree of permanent brain damage. In the event, the respondent instituted action against the first and second appellants in the Cape High Court for the damages that he and Michael had suffered as a result of these injuries. The nub of his case was that Michael's injuries could have been prevented by the employees of the two appellants, who had wrongfully and negligently failed to do so. The first appellant was the owner of the Hawekwa Youth Camp site where the incident occurred. The second appellant is the Minister of Education in the Western Cape who was cited in his capacity as employer of teachers at Government schools within the area of jurisdiction, including the Durbanville Preparatory School. The Cape High Court declared both appellants liable, jointly and severally, for the loss resulting from Michael's injuries. After the appeal was noted, a settlement was reached between Mr Byrne and the first appellant, with the result that it played no further part in the appeal. But proceedings between the Minister and Mr Byrne continued. It was not in dispute that during the night of 3 March 2004 Michael slept on the upper portion of a double bunk. From the outset, Mr Byrne’s contention as to how Michael ended up on the floor of the bungalow was that he had rolled from the upper bunk in his sleep because there was no barrier – or, at best for the Minister, a barrier which was ineffective – to prevent him from doing so. During the course of the proceedings, various alternative suggestions were made on behalf of the Minister as to how the incident might have occurred. This was one of the issues at the trial. On that issue the Cape High Court found in favour of Mr Byrne. The further issue was whether the teachers accompanying the group were negligent in allowing Michael on an upper bunk which proved to be unsafe. On this issue the Cape High Court found that a reasonable teacher would foresee the danger and would have told Michael to sleep on the floor. The Supreme Court of Appeal confirmed the findings of the trial court on both these issues and thus the Minister's appeal was dismissed with costs.

3768

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 53/2021 In the matter between: SIBONGILE LUPUMLO MPUQE APPELLANT and THE STATE RESPONDENT Neutral Citation: Sibongile Lupumlo Mpuqe v The State (53/2021) [2022] ZASCA 37 (4 April 2022) Coram: MOLEMELA, MBATHA and CARELSE JJA and SMITH and WEINER AJJA Heard: 15 February 2022 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the website of the Supreme Court of Appeal and release to SAFLII. The date and time for hand-down are deemed to be 11h00 on 4 April 2022. Summary: Criminal Law and Procedure – appellant indicted for murder under s 51(2) of the Criminal Law Amendment Act 105 of 1997 – convicted and sentenced under s 51(1) of the Criminal Law Amendment Act – sentence of life imprisonment confirmed; sentence relating to possession of firearms and ammunition under s 51(2) of the Criminal Law Amendment Act confirmed; appellant convicted for attempted murder under common law – sentence of 15 years’ imprisonment set aside – reduced to 10 years – to run concurrently with other sentences. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Davis, Goliath and Henney JJ, sitting as court of appeal): The appeal against the sentences imposed in respect of counts two, four and five is dismissed. The appeal against the sentence of 15 years’ imprisonment, imposed in respect of count three, is upheld. The sentence is set aside and substituted with the following: ‘The accused is sentenced to ten (10) years’ imprisonment on count 3 for attempted murder.’ The sentence set out in para 2 above is antedated to 15 December 2010 and is to run concurrently with the sentences imposed in respect of counts one, two, four and five. ________________________________________________________________ JUDGMENT ________________________________________________________________ Mbatha JA (Molemela and Carelse JJA and Smith and Weiner AJJA concurring) [1] The appellant, Mr Sibongile Lupumlo Mpuqe and his erstwhile co-accused were arraigned in the Western Cape Division of the High Court, Cape Town, on a charge of robbery with aggravating circumstances (count one), murder (count two), attempted murder (count three), possession of unlicensed firearms (count four) and illegal possession of ammunition (count five). The provisions of the Criminal Law Amendment Act 105 of 1997 (the CLAA) applied to counts one, two and four. [2] Despite the appellant’s plea of not guilty, he was convicted as charged. The trial court found no substantial and compelling circumstances that warranted a deviation from the minimum sentences than the ones prescribed in terms of the CLAA, in respect of counts one, two and four. The appellant was accordingly sentenced to 15 years’ imprisonment in respect of count one, life imprisonment in respect of count two, 15 years’ imprisonment in respect of count three, and 15 years’ imprisonment on counts four and five, which were taken together for purposes of sentence. In respect of the attempted murder conviction in count three, which did not fall under the purview of the CLAA, a sentence of 15 years’ imprisonment was imposed. All the sentences were ordered to run concurrently. [3] Aggrieved by this result, the appellant applied for leave to appeal against both convictions and sentences to the full court. The trial court granted him leave to appeal against the sentences, but denied him leave against the convictions. His appeal on sentences to the full court failed. Subsequently, the appellant was granted special leave to appeal to this Court only in respect of sentence, hence the present appeal. Both parties agreed that the matter may be disposed of in terms of s 19(a) of the Superior Courts Act 10 of 2013, without hearing any oral argument. [4] The appellant also applied in terms of rule 12 of the Rules of the Supreme Court of Appeal (the Rules) for condonation for failure to comply with rule 7(b) of the Rules, by not filing the notice of appeal within the prescribed one month period from the date of granting leave to appeal. The application was unopposed. This Court having satisfied itself that a proper case for condonation was made out, granted condonation. [5] A summary of the relevant evidence adduced at the trial is as follows. On 18 December 2007, two unsuspecting security officers, deployed to collect cash from a Pick n Pay Supermarket to an Absa Bank in Hermanus, came under fire from a group of robbers. The robbers ordered them to drop the money bags on the floor. Eventhough they complied with the orders, the robbers shot at them at close range. One of the security officers, Mr Norawuzana (the deceased), succumbed to his injuries and died on the scene, and the other, Mr Mabhikwana, was saved by the metal lining of his bulletproof vest. This enabled him to run away and seek cover in one of the shops. [6] Having committed these brazen acts, the robbers took the money bags and drove off in a getaway motor vehicle. As they sped off at high speed, their motor vehicle collided with a kerb a few kilometres from the crime scene. The motor vehicle was abandoned by the robbers, who fled on foot in different directions. As they fled from the crashed motor vehicle, they were spotted and pursued by civilians who kept them in sight at all times. Upon the arrival of the police, the robbers were arrested in the immediate vicinity of the abandoned motor vehicle. The bags containing the money were recovered as well as the firearms. The appellant was amongst those arrested by the police in close proximity to the getaway motor vehicle and the firearms, which were recovered by police officers. [7] It is apparent to this Court that on the day of the incident the appellant and his co-accused were on a mission to commit a crime in Hermanus, a very busy holiday town in the Western Cape. Such an inference can be drawn from the following objective facts: they had organised a getaway motor vehicle; they were armed with semi-automatic firearms; the robbery was executed after a long weekend during a very busy period of the year and they shot at the security officers several times to further their intention of committing a robbery. The aforementioned objective facts constituted sufficient evidence to conclude that the offences committed were premeditated and committed by a group of persons in furtherance of a common purpose. [8] I now turn to the question of law raised by the appellant, which impacts on the sentences imposed by the trial court and confirmed by the court a quo. It is trite that an appeal court will interfere with sentencing only if there is a misdirection with regard to the sentence. However, a misdirection alone does not suffice for a court of appeal to interfere, save where it is material.1 1 S v Sadler [2000] ZASCA 13; [2000] 2 All SA 121 (A) para 8. [9] In respect of the murder conviction, the appellant was sentenced to life imprisonment in terms of s 51(1) of the CLAA. The indictment only referred to s 51(2) of the CLAA. In dismissing the appeal against the appellant, the court a quo found that he was correctly sentenced in terms of s 51(1) of CLAA and that there was no infringement of his right to a fair trial. The court a quo stated that the trial court had enquired from counsel for the appellant’s erstwhile co-accused number one, if he had apprised his client of the minimum sentence legislation and its application to the counts that were relevant thereto. The response was that counsel for the then-accused number one had not done so, as he had focused on the merits of the case. The trial court afforderd him an opportunity to explain the CLAA provisions and their implications to his client. On that basis, the court a quo found that it was implausible that the rest of the legal team, including counsel for the appellant, would not have taken advantage of that opportunity to explain to their clients, including the appellant, what the CLAA entailed and its consequences. This was in line with the principle that the trial court was enjoined to satisfy itself on this aspect before the commencement of the proceedings. [10] The indictment, in this case, referred to the applicability of the CLAA, but wrongly referred to s 51(2), which attracts a sentence of 15 years’ imprisonment for the first offender. Notably, the prosecutor, defence counsel and the court made reference to the sentence of life imprisonment throughout the hearing. Had it been a misdirection on the part of the court, objections would have been raised by any of the defence counsel representing the accused. [11] This Court held in S v Legoa2 (Legoa) that sentencing in lieu of a conviction must encompass all the elements of the offence set out in the Schedule. 2 S v Legoa [2002] ZASCA 122; [2002] 4 All SA 373 para 14. Schedule 2 to the CLAA reflects those specific serious offences where the legislature has ordained the prescribed minimum sentences. The murder count faced by the appellant involved multiple accused, which was premeditated and planned. This occurred during the robbery and was committed by persons acting in furtherance of a common purpose. Therefore, such a murder falls under the provision of s 51(1) and attracts a sentence of life imprisonment. The fate of this appeal hinges in considerable measure on whether the sentence of life imprisonment was correctly imposed. Therefore, it is appropriate for this court to consider the record in its entirety, particularly before conviction, to determine if such a material defect occurred and if it led to an unfair trial. [12] This appeal is distinguishable from Ndlovu v S3 (Ndlovu), where the appellant had been erroneously sentenced to life imprisonment instead of 15 years in line with the charges against him in terms of s 51(2) of CLAA. When the regional court found Ndlovu guilty as charged, it was aware that he was charged in terms of s 51(2) and not s 51(1) of CLAA. Accordingly, when the regional court imposed a sentence of life imprisonment, it exceeded its jurisdiction. Hence, the Constitutional Court had to decide whether the imposition of a harsher sentence than that envisaged in the indictment infringed Ndlovu’s right to a fair trial. [13] In Ndlovu, the Constitutional Court affirmed that s 35(3) of the Constitution guarantees the right to a fair trial, which includes the right to be informed of the charge with sufficient detail to answer it.4 An accused person’s 3 Ndlovu v S [2017] ZACC 19; 2017 (10) BCLR 1286 (CC). 4 Ibid para 2 at fn 1. right to a fair trial has been the subject of various decisions of this Court.5 For example, in the case of S v Makatu6 (Makatu) the court held that: ‘Following Legoa this Court in Ndlovu held that the relevant sentence provisions of the Act must be brought to the attention of an accused in such a way that the charge can be properly met before conviction.’ (Footnotes omitted.) [14] In Mashinini and Another v S,7 the appellants were erroneously charged with rape, read with the provisions of s 51(2) instead of s 51(1) of the CLAA. The sentence was set aside by this Court. In casu, the court held that: ‘[17] In this matter, the State decided to restrict itself to s 51(2), where Part III of Schedule 2 prescribes a sentence of ten years’ imprisonment. This is what was put to the appellants and to which they pleaded guilty. It was not thereafter open to the court to invoke a completely different section which provides for a more severe sentence unless the State had sought and been granted an amendment of the charge sheet in terms of s 86 of the Criminal Procedure Act prior to conviction. The State did not launch such an application. The magistrate was therefore bound to impose a sentence in terms of s 51(2) read with Part III of Schedule 2. (Footnote omitted.) [18] In my view, the fact that the proceedings had been stopped and referred to the high court for sentencing cannot be regarded as a ground to deprive the accused of his constitutional right to fair trial. This is akin to allowing the State to benefit from its own mistakes. In the result, I find there was a misdirection which vitiates the sentence. The misdirection lies in the fact that the appellants were sentenced for an offence different to the one for which they were convicted. There was therefore no need for this matter to be referred to the high court as the regional magistrate had the competence to sentence the appellants. Undoubtedly, the judge below erred in sentencing the appellants in terms of s 51(1) instead of s 51(2) read with Part III of Schedule 2 of the Act. The appeal against sentence has to succeed.’ 5 See Mashinini and Another v S [2012] ZASCA 1; 2012 (1) SACR 604 (SCA); Machongo v S [2014] ZASCA 179 ; Tshoga v S [2016] ZASCA 205; 2017 (1) SACR 420 (SCA); Kolea v S [2012] ZASCA 199; 2013 (1) SACR 409 (SCA) (Kolea); S v Makatu [2006] ZASCA 72 (SCA); [2007] 1 All SA 470 (SCA) (Makatu). 6 Makatu para 5. 7 Footnote 5. [15] The question that arises in this case is whether there was a failure to apprise the appellant of the provisions of the CLAA, which vitiated his right to a fair trial. This Court settled this issue in Kolea v S,8 where the court emphatically stated that the CLAA does not create new offences. The fact that the charge sheet is not amended does not translate to invalid proceedings. A formal application to amend the charge is not always required. The test is whether the accused suffered any prejudice. In this case, it is clear that it was always uppermost in the mind of the trial court that it was dealing with the murder in terms of s 51(1) of the CLAA. As a matter of fact, the pertinent issues relating to the elements of the conviction in terms of s 51(1) were conclusively proved by evidence. [16] In this case, the odds are heavily stacked against the appellant. As a result, I agree with the conclusion of this Court in Makatu where the court confirmed the dictum in Legoa and held that: ‘there is no general rule that the indictment must “recite either the specific form of the scheduled offence with which the accused is charged, or the facts the State intends to prove to establish it”.’9 The overriding factor will always be whether there has been unfairness or prejudice. I, therefore, conclude that the appellant’s right to a fair trial was not vitiated by any irregularity, as the trial court afforded him the appropriate protection. [17] I endorse the findings by the court a quo that there were no substantial and compelling circumstances that could have persuaded the trial court to depart from imposing the prescribed minimum sentences. The trial court aptly summarised the conduct of the appellant and his erstwhile co-accused as follows: ‘The success 8 Kolea para 17. 9 Makatu para 4. of the plan depended upon the killing of the guards because the accused knew they were armed. This conclusion is drawn from the fact that the robbers armed themselves with firearms and shots were fired at the deceased and his colleague in the parts of the body where death would be instant.’ [18] The convictions on possession of illegal firearms and ammunition were treated as one for purposes of sentencing. The provisions of Part II of Schedule 2 of the CLAA were applicable to the firearm charges and provided a minimum sentence of 15 years’ imprisonment. A sentencing court is obliged to apply the prescribed minimum sentence unless there are substantial and compelling circumstances that would persuade it from imposing the prescribed sentences. As a final string on the bow, it was contended on behalf of the appellant that the 15 years imposed by the trial court should have been regarded as a maximum sentence instead of the minimum sentence. This was attributed to the alleged conflict between the Firearms Control Act 60 of 2000 (the FCA) and the CLAA, which have different sentencing regimes. [19] In terms of s 3 of the FCA, possession of a firearm, including a semi- automatic firearm, attracts a maximum sentence of 15 years. This is distinct from the provisions of s 51(2)(a) of the CLAA which imposes a minimum sentence of 15 years’ imprisonment to a first offender, 20 years to a second offender and 25 years to a third offender. The indictment pertinently referred to s 51(2), hence the appellant was sentenced in terms of the CLAA. This was difficult for the appellant to reconcile, and various conflicting decisions on the subject at hand were referred to. The court in Swartz v S10 (Swartz) held that when s 51 of the CLAA was substituted in terms of s 1 of the Criminal Law (Sentencing) Amendment Act 38 10 Swartz v S [2014] ZAWCHC 113; 2016 (2) SACR 268 (WCC) at 273. of 2007, the legislature’s use of the phrase ‘notwithstanding any other law’ meant that the minimum sentences were intended to supersede the general penalty provisions of the FCA. The finding in Swartz, is in line with the decision of this Court in S v Thembalethu,11 where this Court held that the opening words in s 51(2) namely, ‘notwithstanding any other law’ meant that the sentencing regime in the CLAA took precedence over that laid down in the Arms and Ammunition Act 75 of 1969. [20] In S v Baartman12 the court held a different view. It held that the phrase ‘notwithstanding any other law’ in s 51(2) of the CLAA could not have been intended to override a future law which introduced its own regulatory and sentencing regime.13 The same view was held by the WCC in S v Mentoor14 in that it did not refer to the FCA. [21] Section 3(1) of the FCA provides that: ‘No person may possess a firearm unless he or she holds for that firearm – (a) a licence, permit or authorisation issued in terms of this Act; or (b) a licence, permit authorisation or registration certificate contemplated in item 1, 2, 3, 4, 4A or 5 of Schedule 1.’ Similarly, s 90 of the FCA prohibits possession of ammunition without a licence. Within the prescripts of the FCA, where the accused person was found in possession of a firearm or ammunition without a licence, the court must impose an appropriate sentence. This court in Nkabinde and Others v S15 held that ‘sentencing lies in the discretion of the trial court’.16 11 S v Thembalethu 2009 (1) SACR 50 (SCA). 12 S v Baartman 2011 (2) SACR 79 (WCC). 13 Ibid para 34. 14 S v Mentoor case A395/2013. 15 Nkabinde and Others v S [2017] ZASCA 75; 2017 (2) SACR 431 (SCA). 16 Ibid para 51. [22] On the other hand, s 51 of the CLAA provides for minimum discretionary sentences for certain serious offences. Important in this case is s 51(2)(a) of Part 2 of Schedule 2, which provides as follows: ‘Notwithstanding any other law but subject to subsections (3) and (6), a regional court or a High Court shall sentence a person who has been convicted of an offence referred to in — (a) Part II of Schedule 2, in the case of— (i) a first offender, to imprisonment for a period not less than 15 years; (ii) a second offender of any such offence, to imprisonment for a period not less than 20 years; and (iii) a third or subsequent offender of any such offence, to imprisonment for a period not less than 25 years.’17 According to Netshivhodza v S18 (Netshivhodza), ‘[t]he minimum sentence has been set as a benchmark prescribing the sentence to be ordinarily imposed for specific crimes and should not be departed from for superficial reasons.’19 Netshivhodza’s finding was in line with the principle set out in Centre for Child Law v Minister for Justice and Constitutional Development.20 Relying on various cases,21 the Constitutional Court in Centre for Child Law v Minister for Justice and Constitutional Development held that: ‘. . . the starting point for a sentencing court is the minimum sentence, the next question being whether substantial and compelling circumstances can be found to exist. This is answered by considering whether the minimum sentence is clearly disproportionate to the crime.’22 17 Although this is not the only offence covered there, part II of Schedule 2 of the CLAA refers to any offence relating to possession of an automatic or semi-automatic firearms which is dealt with in this case. 18 Netshivhodza v S [2014] ZASCA 145. 19 Ibid para 8. 20 Centre for Child Law v Minister for Justice and Constitutional Development and Others [2009] ZACC 18; 2009 (2) SACR 477 (CC). 21 S v Malgas 2001 (1) SACR 469 (SCA) (Malgas); S v Dodo [2001] ZACC 16; 2001 (3) SA 382 (CC); Vilakazi v S [2008] ZASCA 87; [2008] 4 All SA 396 (SCA). 22 Footnote 20 para 39. [23] According to S v Malgas, s 51 of the CLAA ‘has limited but not eliminated the courts' discretion in imposing sentence in respect of offences referred to in Part 1 of Schedule 2 (or imprisonment for other specified periods for offences listed in other parts of Schedule 2)’.23 [24] On the other hand, s 121 of the FCA provides for penalties in respect of any person convicted of a contravention of or a failure to comply with various sections mentioned there. In the case of any contravention of sections 3 and 90 of the FCA, the Act provides that the maximum period of the conviction is 15 years. This clearly shows that there are two different regimes in respect of the latter section and to s 51 of the CLAA . [25] In the absence of a material misdirection by the trial court, an appellate court cannot approach the question of sentence as if it were the trial court and then substitute the trial court’s sentence simply because it prefers to.24 The same would apply to an accused who cannot choose the sentencing regime that he prefers. In addition, this Court in Nkabinde and Others v S25 (Nkabinde) held that where the Court a quo had: ‘imposed the minimum sentences prescribed in the Criminal Law Amendment Act 105 of 1997 in respect of the charges of murder, robbery with aggravating circumstances, possession of semi-automatic and automatic firearms . . . After considering the factors required to be taken into account in the imposition of sentence, including the appellants’ personal circumstances, the Court a quo came to the conclusion that there were no substantial and compelling circumstances to deviate from the prescribed minimum sentences.’ 26 (Emphasis added.) 23 Malgas para 25. 24 Ibid para 12. 25 Nkabinde and Others v S [2017] ZASCA 75; 2017 (2) SACR 431 (SCA). 26 Ibid para 52. This clearly sets out the intention of the legislature to give severe punishment to those who commit crimes with semi-automatic firearms or possess them for criminal purposes. The FCA caters only for possession of any firearm or ammunition without a licence. This was endorsed in Nkabinde as follows: ‘. . . the prescribed minimum sentences should not be departed from lightly and for flimsy reasons. The legislature has ruled that these are the sentences that ordinarily, and in the absence of weighty justification, should be imposed for the specified crimes, unless there are truly convincing reasons for a different response.’27 [26] The sentence imposed was in line with the prescripts of s 51(2)(a) of the CLAA. There was no error or misdirection on the part of the trial court in sentencing the appellant as indicated. There is no reason for this Court to interfere with the sentence in counts four and five. [27] It is now convenient to deal with the charge of attempted murder. The appellant’s challenge to the attempted murder charge is that it was inappropriate for the court a quo to confirm the sentence of 15 years’ imprisonment for this conviction as if it was akin to the sentence for murder in terms of s 51(2) of CLAA. It bears mentioning that the attempted murder conviction was in terms of the common law and not the CLAA. I re-iterate that sentencing is pre-eminently within the discretion of the trial court. A correct synopsis of the law with regard to the limited point of interference was set out in Hewitt v S28 as follows: ‘It is a trite principle of our law that the imposition of sentence is the prerogative of the trial court. An appellate court may not interfere with this discretion merely because it would have imposed a different sentence. In other words, it is not enough to conclude that its own choice of penalty would have been an appropriate penalty. Something more is required; it must 27 Ibid para 54. 28 Hewitt v S [2016] ZASCA 100; 2017 (1) SACR 309 (SCA). conclude that its own choice of penalty is the appropriate penalty and that the penalty chosen by the trial court is not. Thus, the appellate court must be satisfied that the trial court committed a misdirection of such a nature, degree and seriousness that shows that it did not exercise its sentencing discretion at all or exercised it improperly or unreasonably when imposing it. So, interference is justified only 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. And in such instances the trial court’s discretion is regarded as having been unreasonably exercised.’29 (Footnotes omitted.) [28] It was contended on behalf of the appellant that the sentence imposed for attempted murder was more severe than what the high courts had in the past held to be appropriate in cases of this kind. Courts must be cautious of such comparisons with other cases as each case must be decided on its merits. I have taken into account that the security guard did not sustain any injuries. I am of the view that there exists a striking disparity between the sentence imposed by the trial court in respect of the charge of attempted murder and the sentence that another court would impose on appeal. This leads me to conclude that the trial court’s sentencing discretion was not reasonably exercised. This court is therefore at large to consider sentence in respect of the attempted murder charge afresh. [29] I have considered the sentence in line with the principles set out in S v Zinn.30 The offence committed by the appellant remains a serious offence. These kind of violent crimes should be visited with sentences that should deter not only the appellant, but others from committing them. These factors need to be considered together with the nature and seriousness of the offence, interests of society and interests of the accused persons. In this regard, I am of the view that the sentence of 15 years’ imprisonment is disproportionate under the 29 Ibid para 8. 30 S v Zinn 1969 (2) SA 537 (A). circumstances and ought to be set aside and be replaced with the sentence of 10 years’ imprisonment. [30] Accordingly, I make the following order: The appeal against the sentences imposed in respect of counts two, four and five is dismissed. The appeal against the sentence of 15 years’ imprisonment, imposed in respect of count three, is upheld. The sentence is set aside and substituted with the following: ‘The accused is sentenced to ten (10) years’ imprisonment on count 3 for attempted murder.’ The sentence set out in para 2 above is antedated to 15 December 2010 and is to run concurrently with the sentences imposed in respect of counts one, two, four and five. _______________________ Y T MBATHA JUDGE OF APPEAL APPEARANCES: For Appellant: J Van Der Berg Instructed by: Mathewson Gess Inc., Cape Town Symington & De Kok, Bloemfontein For Respondent: G D Wolmarans 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: 4 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 Sibongile Lupumlo Mpuqe v The State (53/2021) [2022] ZASCA 37 (4 April 2022) Today the Supreme Court of Appeal (SCA) upheld an appeal from the Western Cape Division of the High Court, Cape Town (high court), in respect of the sentence imposed on the appellant for a charge of attempted murder, and substituted the sentence with one from 15 years’ imprisonment to 10 years. The appellant was charged with robbery, murder, attempted murder, possession of unlicenced firearms and illegal possession of ammunition. These charges were in connection with a robbery of money that was transported by security officers. The appellant murdered one of the officers while the second officer was saved by his protective clothing and was sentenced by the trial court to life imprisonment for the murder and 15 years’ imprisonment for attempted murder. The appellant was granted leave to appeal his sentence. This appeal revolved around the question whether section 51(2) of the Criminal Law Amendment Act 105 of 1997 (CLAA) was correctly referred to. The appellant had been sentenced to life imprisonment for the murder in terms of section 51(1) whereas the indictment only referred to section 51(2), which attracts a sentence of 15 years for first offenders. This raised the question whether the appellant’s trial had been fair. The SCA was, however, satisfied that the appellant’s right to a fair trial had not been violated as there was no failure by the court a quo to appraise the appellant of the content of the CLAA. The court a quo, from the matter’s inception, had been dealing with murder in terms of section 51(2). With regards to the convictions on possession of illegal firearms and ammunition was treated as one for the purpose of sentencing. A prescribed minimum sentence of 15 years applied, unless it could be proven that exceptional circumstances exist which would persuade the Court to impose a lesser sentence. In light hereof, the SCA found that South Africa’s jurisprudence clearly indicated that the starting point for a sentencing court is the minimum sentence. The next question is to consider whether substantial and compelling reasons exist which could possibly alter the minimum sentence. This is answered by considering whether the sentence is disproportionate to the crime. The SCA found that the sentence imposed was in line with the prescripts of section 51(2) of the CLAA and saw no reason to interfere with the sentence imposed regarding the charges of firearms and ammunition. However, this Court did find that the sentence imposed in terms of the charge of attempted murder was disproportionate and that the trial court did not exercise its sentencing discretion reasonably. In the result, the SCA upheld the appeal in respect of the sentence imposed on the appellant, and substituted the sentence with one from 15 years’ imprisonment to 10 years in respect of the charge of attempted murder. --------oOo--------

514

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 157/15 In the matter between: THOBANI NOTSHOKOVU APPELLANT and THE STATE RESPONDENT Neutral citation: Notshokovu v S (157/15) [2016] ZASCA 112 (7 September 2016) Coram: Shongwe, Seriti, Petse and Mathopo JJA and Potterill AJA Heard: 22 August 2016 Delivered: 7 September 2016 Summary: Reconsideration of an order refusing special leave by two judges of the SCA: test has stringent requirements as the threshold is now higher: whether the courts below, including the decision of the two SCA judges, ought to have granted leave or not: appellant failed to show special circumstances: special leave refused. ORDER ________________________________________________________________ The decision of this court dated 9 February 2015 dismissing the applicant’s application for special leave to appeal is referred to the court for reconsideration and, if necessary, variation in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 (Mpati P) The application for special leave to appeal is refused. JUDGMENT ________________________________________________________________ Shongwe JA (Seriti, Petse, Mathopo JJA and Potterill AJA concurring) [1] This appeal is a result of an order made by the President of this court on 30 July 2015, in terms of the provisions of s 17(2)(f) of the Superior Courts Act 10 of 2013 (the Act). The appellant was convicted by the Regional Court (East London) on one count of rape and sentenced to 6 years’ imprisonment. An application for leave to appeal against conviction and sentence was refused – so was a subsequent petition to the high court. A special leave application to this court, before two judges, suffered the same fate. [2] The appellant brought an application in terms of s 17(2)(f) of the Act, which was granted. What is, therefore, before us for adjudication is the reconsideration and, if necessary, variation of the decision of the two judges who dismissed the application for special leave. In my view, this is not an appeal on the merits against the conviction and sentence but a reconsideration of the decision refusing special leave to appeal. This court has to decide whether or not the courts below, including the two judges of this Court, ought to have found that reasonable prospects of success existed to grant leave or special leave respectively. (See S v Khoasasa [2002] ZASCA 113; 2003 (1) SACR 123 (SCA); S v Matshona [2008] ZASCA 58; 2013 (2) SACR 126 (SCA)). An appellant, on the other hand, faces a higher and stringent threshold, in terms of the Act compared to the provisions of the repealed Supreme Court Act 59 of 1959. (See Van Wyk v S, Galela v S [2014] ZASCA 152; 2015 (1) SACR 584 (SCA) para [14].) [3] The trial court refused leave to appeal because it was satisfied of the complainant’s credibility and more so that it was corroborated by the other state witnesses. On the other hand it found the appellant’s version not to be reasonably possibly true and contradictory. Essentially the refusal of leave was factually based. It concluded that, although the complainant was under the influence of alcohol, she was not drunk. It found that there were no reasonable prospects of success on the merits. [4] In order to understand the motivation of the trial court in refusing leave – it is essential to consider the factual background of what actually happened on that fateful day. On 27 January 2007 the complainant and her boyfriend Muntu Kwela (Kwela) and other people attended a farewell party. The appellant was also present. The complainant was introduced to the appellant by Kwela. She had two sparkling wine drinks for the evening. She also danced with a friend for a few minutes and later around 3am she felt tired and decided to go and sleep. Her boyfriend walked with her to the bedroom and she asked him to lock the door but her boyfriend suggested that he should not lock it because she might want to visit the ladies bathroom later. During her sleep, she heard someone coming into the bedroom, whom she thought was her boyfriend. As a result she did not wake up to see who it was. She felt the person coming on top of her and also realised that the person was penetrating her. She testified that she was on her monthly period that day and she had inserted a tampon to regulate the bleeding. She realised that it was not her boyfriend as the person was lighter than the boyfriend, she woke up screamed and cried and noticed that it was the appellant who penetrated her. Kwela came into the bedroom and other party goers also came. The appellant ran away. She later reported the matter to the police and subsequently also underwent medical examination in the hospital. [5] The appellant admitted having had sexual intercourse with the complainant but said it was consensual. His version is that he danced with the complainant, which she denies, and they touched each other and he put his hands around her waist whilst she put hers on his shoulder. He interpreted her actions and conduct as being relaxed around him and mutually attracted to each other. Later he decided to go and sleep. He went to the room which was identified to him by one Andile, a friend and a person who resided in the particular house. He found the complainant asleep and he moved in next to her and they started kissing each other. He realised that she was naked. He mounted her and had sexual intercourse with her. While busy with the intercourse, the door opened and closed immediately and he could not see who opened the door. Shortly thereafter the door opened again and the lights went on and when he looked he noticed that it was Kwela. The appellant said that she exclaimed and said ‘yoh maybe that was Muntu’. He immediately stood up, and put on his clothes, apologised to Kwela and then Kwela started assaulting him and he ran away. [6] Kwela, also testified, although his version is that when he opened the bedroom door where the complainant was sleeping, he immediately put the lights on and saw the appellant on top of the complainant and was badly shocked. He remained standing at the door. He asked the appellant what was going on, upon which he answered that he thought it was his (appellant’s) girlfriend. [7] His evidence contradicts that of Thembele Maseka (Maseka), also a state witness, in that Maseka said when they got to the complainant’s bedroom door Kwela opened the door, peeped and closed it and followed him (Maseka) to his bedroom – but he (Maseka) asked why Kwela was following him, Kwela turned back to where the complainant was sleeping, opened the door and put the lights on. Maseka also followed Kwela when he turned back. It would appear that Maseka’s version is consistent with that of the appellant when he said that someone opened and closed the door before opening it again and switching on the lights. [8] Be that as it may – it is common cause that there are discrepancies and contradictions in both the State and the defence cases, the question remains whether or not the said discrepancies and contradictions are relevant and material to the issue or issues to be decided by this court. The totality of the evidence ought to be considered holistically. In S v Mkohle 1990 (1) SACR 95 (A) at 98E-F Nestadt JA remarked that: ‘Contradictions per se do not lead to the rejection of a witness’ evidence. As Nicholas J, as he then was, observed in S v Oosthuizen 1982 (3) SA 571 (T) at 576B-C, they may simply be indicative of an error. And at (576G-H) it is stated that not every error made by a witness affects his credibility; in each case the trier of fact has to make an evaluation; taking into account such matters as the nature of the contradictions, their number and importance and their bearing on other parts of the witness’ evidence.’ [9] In Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A) at 564G-H: Corbett JA observed that: ‘The general principle is that an applicant for special leave to appeal must show, in addition to the ordinary requirement of reasonable prospects of success, that there are special circumstances which merit a further appeal to the Appellate Division. This Court will be the arbiter as to whether such special circumstances exist.’ [10] I turn to deal with the appellant’s contentions. The appellant attacked the admissibility of the medical report (J88) contending that it did not comply with the provisions of s 212(4) of the Criminal Procedure Act 51 of 1977 (the CPA). He complained about the procedural acceptance thereof in that the medical report was not properly completed and the qualifications of the doctor were not properly stated. The State conceded the inaccuracies and that it was wrongly admitted. However the State submitted that in view of the nature of the defence advanced by the appellant, the medical report does not take the appellant’s case any further and I agree with the State’s submissions. The medical report simply becomes a neutral fact. The appellant did not dispute sexual intercourse with the complainant but averred that it was consensual, which the complainant denies. Even if one excludes the medical report, the trial court relied on her evidence which was corroborated by other State witnesses. [11] The appellant also contended that schedule 2 of s 68(2) of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, amended the Magistrates’ Court Act 32 of 1944 and provides that a judicial officer must be assisted by two assessors in terms of s 93ter(2) of the Magistrates’ Court Act, in cases of rape. It probably became clear to counsel for the appellant that his interpretation of s 93ter(2) was incorrect. The essence of the State’s contention was that the date of commencement of the amendment of the Act is still to be proclaimed. The present position is that s 93ter(2) of the Magistrates’ Act gives the presiding officer a discretion to use assessors, except where the charge is murder. This court in Gayiya v S [2016] ZASCA 65; 2016 (2) SACR 165 (SCA) referred to Chala & others v Director of Public Prosecutions, Kwazulu-Natal & another 2015 (2) SACR 283 (KZP) and confirmed the position that, the presiding officer is obliged to use assessors in cases where an accused is charged with murder only, unless the accused person elects otherwise. [12] I now turn to discuss the contention that the trial court applied an incorrect test in that the court required the appellant to prove that his version of the facts was probable. It is quite clear from the tenor of the judgment as a whole, that in arriving at her conclusion, the magistrate had had regard to the credibility of all the witnesses. On the contrary the record reveals that the magistrate made a proper assessment and analysis of all the evidence, by amongst other things, weighing the strength and the weaknesses of the State’s case vis-ä-vis that of the appellant, including the probabilities and improbabilities. It is axiomatic that an examination of the probabilities cannot be done in a vacuum. Such an exercise requires an analysis and evaluation of the evidence as a whole. (See S v M 2006 (1) SACR 135 (SCA) para 189.) [13] On the facts of this case, the State proved beyond reasonable doubt that she did not give consent to the intercourse that took place. The evidence is clear that she could not have said that her boyfriend should lock her inside the bedroom, if she had a secret visitor in mind in the person of the appellant. Clearly she did not consent when she realised that it was the appellant on top of her, she screamed and cried prompting the appellant to put his hand on her mouth. She could not have consented to have sexual intercourse when she knew very well that she had a tampon inside her as she was menstruating. She even refused to have sexual intercourse with her boyfriend earlier in the day for the same reason that she was having her period. She immediately reported to her boyfriend and others that she had been raped and reported the matter to the police and was examined by a doctor on the same day. If the version of the appellant, that the consent should be inferred from the time when he got onto the bed next to her, then its improbability becomes glaring because she screamed and cried upon realising that it was the appellant on top of her. [14] It is easy for one to trivialise the shock and trauma that a rape victim experiences and to conclude that she faked a rape. This court should be guided by the facts as played out by the evidence during the trial. On a conspectus of all the evidence including the appellant’s version the complainant could not have consented to have sexual intercourse with the appellant. Her boyfriend was in the house he could have come into the bedroom at any time during the night. [15] Based on the above considerations, I am of the firm view that the appellant failed to demonstrate any special circumstances which merit a further appeal to this Court – therefore special leave to appeal was justifiably refused. There are no reasons to vary the order of the courts below, including the decision of the two judges of the SCA. It is not of great public importance, nor is this a case where without leave a grave injustice would result. [16] The application for special leave to appeal is refused. _______________________ J B Z Shongwe Judge of Appeal Appearances For the Appellant: L Janse Van Rensburg Instructed by: BBM Attorneys, Cape Town; Symington & De Kock, Bloemfontein. For the Respondent: H Obermeyer Instructed by: Director of Public Prosecutions, Grahamstown; 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: 7 September 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. * * * THOBANI NOTSHOKOVU V THE STATE The Supreme Court of Appeal today refused an application for special leave to appeal. The application was in terms of s 17(2)(f) in terms of which the President of this court could in exceptional circumstances refer the decision refusing leave to the court for reconsideration and, if necessary, variation thereof. The SCA decided to refuse the special leave because it was of the view that no special circumstances existed justifying or meriting a further appeal based on the facts of the case. This court was of the view that even the high court and the two judges of the SCA who considered an application for leave to appeal acted correctly. There is overwhelming evidence that the complainant did not give consent to the sexual intercourse. Therefore the State proved beyond reasonable doubt that she was raped and that the appellant’s version was not reasonably possibly true.

3212

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT CASE NO:530/06 Not reportable In the matter between ROGER AINSLEY RALPH KEBBLE 1ST APPELLANT HENDRIK CHRISTOFFEL BUITENDAG 2ND APPELLANT GORDON TREVLYN MILLER 3RD APPELLANT and THE MINISTER OF WATER AFFAIRS AND FORESTRY RESPONDENT CORAM: HARMS ADP, LEWIS, VAN HEERDEN, JAFTA JJA, KGOMO AJA HEARD: 23 AUGUST 2007 DELIVERED: 21 SEPTEMBER 2007 SUMMARY: An order that a person is in contempt of court, which carries with it criminal sanctions, should be made only where the court order allegedly flouted is clear and capable of enforcement. Appeal upheld against an order that former directors of a company that did not comply with a court order were in contempt of court. Neutral Citation: This judgment may be referred to as Kebble v Minister of Water Affairs [2007] SCA 111 (RSA). LEWIS JA [1] The appellants, to whom I shall refer as ‘the directors’, were until 17 June 2005, the directors of Stilfontein Gold Mining Company Limited (‘SGM’). This is an appeal against an order that the directors were in contempt of court for failing to ensure compliance with an order of the Johannesburg High Court. [2] The Regional Director of the Department of Water Affairs and Forestry, Free State (‘the Department’), over a period from April 2005, issued directives to a number of mining companies in the Klerksdorp, Orkney, Stilfontein and Hartebeesfontein area (the KOSH area), including SGM, about the pumping of water from mine shafts. When SGM failed to comply with the directives, the Department applied to the Johannesburg High Court, on an urgent basis, for an order compelling SGM to comply with the Department’s directives. Goldstein J issued an order on the terms requested on 18 May 2005. [3] SGM, through its attorneys, indicated in a letter to the Department dated 9 June 2005, that it could not comply with that order. The Department nonetheless brought another urgent application, on 14 June 2005, this time for an order that SGM and its directors be held in contempt of court. Prior to the hearing of that application the directors all resigned as such. Hussain J, in the Johannesburg High Court, on 15 May 2006, convicted SGM and the directors, and sentenced SGM to pay a fine of R15 000 and the directors to pay fines of R15 000 each, and failing payment to six months’ imprisonment each. It is against the order that they were in contempt of court, and the sentences imposed, that the directors1 appeal to this court, leave having been given by Schwartzman J in the Johannesburg High Court. [4] The directors raise some 11 grounds of appeal against the judgment of Hussain J. I shall not deal with them all in view of the finding which I make that 1 One of the directors, Mr Brett Kebble, died after having been found guilty of contempt of court but before the appeal was noted. the order of Goldstein J, requiring SGM to comply with the directives, was incapable of implementation. However, a very brief history of the matter is necessary.2 [5] The respondent mining companies in the first application owned land in the KOSH area in the North West Province. SGM is on a higher level (upstream) than are the other mines in the area. In a letter written by the department to SGM on 13 April 2005, and in which the first directive is contained, the position is explained as follows (in summary). In order to prevent pollution of ground and surface water in the KOSH area, and to continue the safe operations of the mines, underground water needs to be removed, collected and treated to an acceptable level for use, or discharged in an environmentally acceptable fashion. This must be done at the most beneficial place, before the water becomes exposed to underground workings which may affect its quality. A number of mines are affected, including SGM, DRD Gold Ltd, Anglo Gold Ashanti Limited and Harmony Gold Mining Co Ltd. [6] The KOSH Intermine Water Forum was established in April 2000 to find a ‘negotiated solution’ to the problem of pumping water from underground in the most effective manner. SGM was a member of the forum. By April 2005 no solution had yet been agreed. Hence the Regional Director, Free State, acting under delegated authority from the Minister of Water Affairs and Forestry, issued directives to the mining companies concerned under s 19(3) of the National Water Act 36 of 1998. [7] SGM, like the other companies, was ordered to: 1 ‘collect, remove and contain water arising in the KOSH basin at the most appropriate location, treat it to standards as may be prescribed from time to time, or use or discharge it in a legal manner’ . . . . 2 The background is discussed also in Harmony Gold Mining Co Ltd v Regional Director: Free State, Department of Water Affairs and Forestry [2006] SCA 65 (RSA). 2 ‘ensure the continued operation and maintenance of all infrastructure associated with any aspect of the management of the water found underground and, in this respect, provide the Regional Director with a weekly report regarding the status of such infrastructure, as well as the provisions made to ensure such continued operation and maintenance . . . starting 22 April 2005’. 3 ‘To, before 1 May 2005, provide the Regional Director with the outcome of a determination of your responsibilities with regard to the continued collection, removal, containment, treatment, use and disposal of the water found underground in this area, based on the following: a Stilfontein Gold Mining Co historic contribution to carrying responsibilities relating to the cost for the collection, removal, containment, treatment, use and disposal of such waters; . . . b the underground area exposed by your operations; c the surface area covered by your operations; d your collective earnings to date resulting from your mining activities in the area; e . . . f . . . which determination must be submitted together with audited statements and documentation by suitably qualified persons regarding these aspects.’ 4 ‘To, before 1 June 2005, submit the outcome of an environmental legal compliance audit conducted on your operations . . . . 5 To, before 1 July 2005, based on the outcome of the environmental legal compliance audit, and following approval thereof by the Regional Director, either -- a apply for the necessary authorisations required under Chapter 4 of the NWA for all water uses . . .; or b provide satisfactory documented proof to the Regional Director that such provisions are not applicable to your operations.’ [8] There followed other directives and an account of the consequences of non-compliance. The directive of 13 April was followed by another, dated 15 April, purportedly clarifying the prior directive in regard to the management of water found underground, but expressly not in substitution for it. [9] The attorneys for SGM responded to the first directive on 14 April 2005, pointing out that SGM had closed its mine in 1992 and that the pumping of underground water had since then been undertaken by Hartebeesfontein Gold Mining Co Ltd. They advised further that SGM was not in a financial position to pump and extract underground water from its mine shafts, and that it was accordingly impossible for SGM to comply with the directive or any court order that might follow. They advised also that the shareholders and directors of SGM were considering an application for its winding-up. [10] There followed another letter from the Regional Director, dated 7 May 2005, which again explained the importance of preventing flooding of mine shafts in the area and the dire environmental consequences if underground water were to be contaminated. A third directive was thus issued in the letter, clarifying the requirements relating to the extraction of underground water. The number of litres per day to be extracted from each shaft before 30 June 2005 was specified. And, most controversially, the directive stated: ‘For the interim period, starting from the date of this directive until 30 June 2005, ensure that the cost for taking the measures under clause 2(b) (sc 2(a)), including the cost for ensuring the continued operation and maintenance of all infrastructure associated with any aspect of the management of this water found underground, is shared equally between AngloGold Ashanti Limited, Harmony Gold Mining Company, Stilfontein Gold Mining Company and DRD Gold Limited.’ Again, the implications of non-compliance, including liability to criminal charges under the Act, were set out in full. [11] On 18 May the Department applied on an urgent basis for an order that SGM and Harmony comply with the three directives. Harmony had paid a contribution to the costs referred to in the directive of 7 May under protest and applied for leave to appeal against an order (dated 22 April 2005) that it comply with the Regional Director’s directives. Goldstein J, who heard the urgent application against SGM, had on the same day given Harmony leave to appeal against that order to this court.3 [12] At the hearing of the application against SGM an affidavit (dated 13 May 2005) of one of the SGM directors, Mr G Miller, was handed to the court. It had not been served on the Department. Miller stated that SGM was no longer mining; that the one shaft that was still operative – Margaret Shaft – was being pumped by Hartebeesfontein in accordance with an agreement; that any income from the sale of water obtained was used to defray expenses, and that SGM was unable to contribute to the costs of pumping. Miller stated that if SGM were ordered to contribute to the pumping cost of the KOSH region it would not be able to comply with the order, and might be liquidated. [13] Goldstein J was not impressed with the affidavit handed up. It did not ‘reveal what the assets and liabilities of Stilfontein are, and in my view nothing said in this affidavit constitutes a defence to the claims made . . .’. The learned judge was willing to order SGM to comply with the directives, and did so with minor changes made to accommodate Harmony and the possible success of its appeal to this court. In effect, the court ordered SGM to comply with the three directives issued. [14] On 9 June SGM’s attorneys wrote to the State Attorney (in response to a letter from it demanding compliance with the court order) explaining again SGM’s inability to comply with the directives and thus the court order. But on 14 June 2005 the department brought yet another urgent application, this time against SGM and the directors, for a finding that they were in contempt of the order made by Goldstein J on 18 May. On 17 June, before this application was heard, the directors resigned their offices. The directors had not been parties to the application for compliance with the directives, but were sued in this application as the persons able to ensure compliance by SGM. Nothing, in my view, turns on 3 The appeal was dismissed: Harmony Gold above. their resignation prior to the hearing of the application for an order that they were in contempt of court. [15] The application came before Hussain J on 24 June: he postponed the hearing to 25 and 26 July, and also ordered that the directives be implemented in the interim. As I have said, Hussain J found, almost a year later, that SGM and the directors were in contempt of court. I shall not deal with his reasoning. Nor, as I have said, shall I consider all the grounds of appeal. It should be noted, however, that the contempt alleged was said to have been committed before 30 June 2005, the date given for compliance with the directives by the Department. This is not the least curious feature of the matter. [16] The basis upon which the directors argue that the application should have failed is that the directives were incapable of implementation because they were so vague. This is illustrated by one of the directors’ grounds of appeal: SGM was ordered, in the third directive, to contribute to the costs of pumping water from the shafts in the KOSH area. The directors contend that an order of contempt of court cannot be granted where the judgment is one sounding in money – ad pecuniam solvendam. Where money is payable pursuant to a judgment, enforcement of the order is achieved through a writ of execution. Contempt proceedings are therefore inappropriate. It is only where performance of an act is ordered – ad factum praestandum – that conviction for contempt of court is permitted as a means of enforcing performance (as well, of course, as a means of punishing those who flout court orders). [17] The Department contends, on the other hand, that the distinction is not germane to the order granted. The relationship between the parties is not that of debtor and creditor: the Department is not the judgment creditor. That is clearly so. But it is not necessary even to deal with the distinction. The principal difficulty with the directive in relation to the contribution to the costs of pumping water (with which the court ordered compliance) is that the amount is not determined; the person to whom payment is to be made is not known; and the date by which payment is to be made is not determined. How were the directors to avoid being in contempt of court, and when did their conduct amount to contempt, bearing in mind that SGM had until 30 June 2005 to comply with the third directive? Moreover, no explanation was proffered as to why the application for an order that they were in contempt was brought before performance was due. [18] The response of the Department is that the other mining companies – respondents before Goldstein J – had not had similar doubts: they had made contributions to the costs of pumping. That does not tell us, however, that they were under an obligation in terms of a court order to make payment, nor to whom it should be made. Counsel for the Department was unable to assist the court in this regard. [19] Another directive that the directors complain is unintelligible, and incapable of implementation, relates to the pumping of water, and the maintenance of infrastructure for the management of underground water, in the entire KOSH basin, both of which are largely beyond the control of SGM. Similarly, the requirement that SGM provide the Regional Director with ‘the outcome of a determination’ on its responsibilities in relation to water treatment in the entire KOSH basin is both unclear and similarly largely beyond the control of SGM. [20] Moreover, the Department has failed to respond to the fact that the company secretary to SGM, in an affidavit in the contempt application, pointed out that SGM was no longer functioning, no longer had any directors, and was unable to implement even those parts of the directive that were clear. Mr Roger Kebble, one of the directors, in his answering affidavit, contended that the directors had been forced to resign because the directive was incapable of implementation, and if a contribution to costs were to be made SGM’s ability to pay other amounts required for the rehabilitation of the environment would be jeopardized. All of this had been drawn to the attention of the Department previously. The court order requiring compliance with the directives was thus not wholly ignored. [21] In my view, the directors’ argument that the order, in the form in which it was made, was so lacking in clarity that it was incapable of enforcement, is correct. SGM could not have known precisely what steps it should have taken to comply. And the directive to contribute to the costs of pumping water was imprecise in the respects discussed above. While the directors, before they resigned, undoubtedly should have been more assiduous in seeking clarity – in particular in regard to SGM’s contribution to the costs of pumping – they did not simply flout the order. They advised the Department, through their attorneys and the company secretaries, that they could not comply. [22] However, given my conclusion that the order was so unclear that it could not be implemented, it is not necessary to determine whether the directors deliberately or recklessly flouted it. Nor is there any purpose in labelling their conduct as reckless or contemptible: irresponsible conduct – if that is what their resignations as directors amount to – is not necessarily contemptible and in this case is not contemptuous. [23] An order that a person is in contempt of court, which carries with it criminal sanctions, should be made only where the court order allegedly flouted is clear and capable of enforcement. Where that is not so a court cannot find that a party has deliberately not complied with the order. The order made by Goldstein J that SGM comply with the directives of the Department was unclear because the directives themselves were unintelligible in several respects and to some extent also incapable of implementation. There was not, in the circumstances, any wilful failure to comply with the court order. The appeal must thus succeed. [24] The appeal is upheld with costs, including those of two counsel. The order of the court below is altered to read: ‘The application is dismissed with costs.’ C H Lewis Judge of Appeal Concur: Harms ADP Van Heerden JA Jafta JA Kgomo AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL 20 September 2007 STATUS: Immediate Kebble v Minister of Water Affairs [2007] SCA 111 (RSA) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal today held that Mr Roger Kebble and other former directors of Stilfontein Gold Mining Co Ltd were not guilty of contempt of court when they failed to comply with an order of the Johannesburg High Court which required the company to comply with various directives issued by the Department of Water Affairs in 2005. The directives required that the company (and a number of other mining companies in the area in which it operated) pump water from particular mine shafts in order to prevent flooding and pollution. One directive also required the company to contribute to the costs of pumping but did not specify to whom payment was to be made, how much was to be paid or when payment had to be made. When the company failed to comply with the court order the Department sought an order that the former directors be held in contempt of court. The directors of the company resigned before the application was heard. The Johannesburg High Court found that the directors had been in contempt of court and sentenced them to fines, failing which imprisonment. The Supreme Court of Appeal held, however, that the directives issued by the Department were incapable of enforcement: they were vague, in parts unintelligible, and largely beyond the control of the company. The court order requiring compliance with the directives was thus also incapable of enforcement and the directors were accordingly not in contempt of court. The appeal against the decision of the high court thus succeeded.

4042

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 835/2022 In the matter between: SOUTH AFRICAN NURSING COUNCIL APPELLANT and KHANYISA NURSING SCHOOL (PTY) LTD FIRST RESPONDENT MINISTER OF HEALTH SECOND RESPONDENT Neutral citation: South African Nursing Council v Khanyisa Nursing School (Pty) Ltd and Another (835/2022) [2023] ZASCA 86 (2 June 2023) Coram: DAMBUZA ADP, GORVEN and MEYER JJA and DAFFUE and UNTERHALTER AJJA Heard: 2 May 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website, and release to SAFLII. The date for hand down is deemed to be 2 June 2023 at 11h00. Summary: Interpretation of regulations – meaning of any calendar year in the definition of an academic year – regulations to accredit programmes in terms of the Nursing Act 33 of 2005 – use of dictionaries to attribute meaning – meaning that is functionally satisfactory – meaning within the context of the vocational training of nurses. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Ndlokovane AJ, sitting as the court of first instance): The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT Unterhalter AJA (Dambuza ADP, Gorven and Meyer JJA and Daffue AJA concurring): Introduction [1] The first respondent, Khanyisa Nursing School (Pty) Ltd (Khanyisa), has for many years been accredited to train nurses. Khanyisa does so from its main campus in Johannesburg, and from campuses in other parts of the country. The appellant, the South African Nursing Council (the Council), was established in 1978. It derives its statutory powers from the Nursing Act 33 of 2005 (the Act). The Council’s objects include the establishment of standards for nursing education and training within the ambit of the Act. [2] Khanyisa applied to the Council for accreditation to offer two nursing programmes: a diploma in nursing in the category ‘general nurse’; and a higher certificate in nursing in the category ‘auxiliary nurse’ (the programmes). The approval of these applications was long delayed. On 26 April 2022, following a decision of the Council taken at its meeting on 30-31 March 2022, the Council notified Khanyisa that it had granted Khanyisa full accreditation to offer the programmes at four of its campuses. The letters of accreditation sent by the Council reflected the date of accreditation as 30-31 March 2022. This was made subject to a stipulation, framed as follows: ‘the commencement date of the approved programme should be at the beginning of the academic year 2023 . . .’. I shall refer to this as the contested stipulation. [3] The contested stipulation was not acceptable to Khanyisa. If Khanyisa could have admitted students for the accredited programmes in May 2022, this would have allowed sufficient time to permit students admitted to these programmes to complete the programmes prior to the May 2023 board examinations. If Khanyisa was not permitted to do so, and was required to commence the programmes at the beginning of the following year, in 2023, this would be financially detrimental to it. Khanyisa’s attorneys wrote to the Council. Khanyisa complained that the contested stipulation was unlawful. It sought urgent confirmation that it could commence its first intake in May 2022, failing which, Khanyisa would approach the courts on an urgent basis. [4] The Council was unmoved. It replied that the Council could not accede to Khanyisa’s request because the Council was functus officio. Khanyisa then brought an urgent application in the Gauteng Division of the High Court, Pretoria (the high court) to review and set aside the accreditations, and, in essence, to order the Council to grant Khanyisa the accreditations, shorn of the contested stipulation. The review was predicated upon the proposition that the Council lacked the power to impose the contested stipulation, but if it did not, the contested stipulation was in any event an imposition that is arbitrary, capricious and unlawful. [5] The high court (per Ndlokovane AJ) found that, in terms of the regulations promulgated under the Act, the accreditation of the programmes required that 44 weeks of training must be completed within an academic year, which is defined to mean within a calendar year. A calendar year means ‘a conventional calendar year’, that is from January to December. This, the high court decided, did not conclude the matter. The high court held that as the Council had on previous occasions granted accreditation for programmes to commence in the middle of the year, Khanyisa had a legitimate expectation that the Council would accredit Khanyisa’s programmes to commence on or before 4 July 2022. The Council, the high court reasoned, had unreasonably delayed the accreditation of Khanyisa’s programmes. The high court declared that Khanyisa was permitted to commence the programmes on or before 4 July 2022, and ordered the Council to give full accreditation to Khanyisa to offer the programmes on this basis. The high court also ordered the Council to pay Khanyisa’s costs, including the costs of two counsel, on the scale as between attorney and client. The high court considered that the Council’s dilatory conduct in accrediting the programmes, when access to education is of such importance to the health care system, warranted the imposition of a punitive costs order. Aggrieved by the decision, the Council sought leave to appeal, which the high court granted. Issues [6] The appeal turns on two issues. First, under the regulations that are of application to the accreditation of the programmes, an academic year is defined by reference to ‘any calendar year’. The question therefore is this: Does any calendar year mean a year from 1 January to 31 December? And if it does, was the Council required to attach the contested stipulation to its accreditation of the programmes? If the Council was so required, then the contested stipulation was lawful. That conclusion would then give rise to a second issue. Did Khanyisa nevertheless enjoy a legitimate expectation to commence the programmes by the middle of 2022, given the past conduct of the Council, which had permitted accreditation of like programmes on the basis of commencement by the middle of a given year. This issue engages legal questions of no small complexity. In particular, whether an unlawful or ultra vires representation can found the basis of a substantive legitimate expectation. I need only engage this second issue if the first issue is resolved in favour of the Council. The regulations: what is an academic year? [7] Section 42 of the Act sets out the requirements for an institution, such as Khanyisa, to conduct a nursing education and training programme. Khanyisa was required to apply in writing to the Council for accreditation of the programmes. To obtain accreditation, it had to submit information of the education and training programmes to be provided, and indicate how it would meet the prescribed standards and conditions for education and training. [8] Section 58 of the Act empowers the Minister of Health (the second respondent, who took no part in the proceedings) to make regulations, after consultation with the Council. Among the matters in respect of which the Minister may make regulations, two are here relevant. First, the Minister may determine the qualifications and conditions to be complied with which entitle a person to register to practise in one of the categories set out in s 31. This power is conferred in terms of s 58(1)(f). Section 31 lists five categories of practitioner, among them, a staff nurse and an auxiliary nurse. The programmes for which Khanyisa sought accreditation were, as I have indicated, to train learner nurses to qualify as practitioners in these two categories. Second, s 58(1)(g) gives the Minister the power to make regulations so as to accredit institutions as nursing education institutions. [9] The Minister has made regulations in terms of ss 58(1)(f) and (g). In terms of s 58(1)(f), the Minister made regulations specifying the minimum requirements for the education and training of a learner to register as an auxiliary nurse (regulation R 169 dated 8 March 2013)1 and as a staff nurse (regulation R 171 dated 8 March 2013)2. Regulation 5(3) of R 169 stipulates that the duration of the programme is ‘one (1) academic year of full-time study’. Regulation 5(3) of R 171 stipulates that the duration of the programme is ‘three (3) academic years of full-time study’. The difference of duration reflects the difference in the qualification. Both regulations measure duration by reference to academic year(s) of full-time study. Both regulations define an academic year as ‘a period of at least 44 weeks of learning in any calendar year’. [10] The Minister has also made regulations in terms of s 58(1)(g). Regulation R 173 of 8 March 20133 sets out the conditions for the accreditation of an institution as a nursing education institution. Accreditation means the certification of an institution, for a specified period, as a nursing education institution, with the capacity to offer a prescribed nursing programme. Such programmes are those complying with the Council’s prescribed accreditation requirements. [11] Khanyisa applied for the accreditation of the programmes in terms of regulations R 169 and R 171. This was done on 19 December 2014. After lengthy engagements, the Council, at a meeting on 31 March 2022, decided to grant the accreditation sought. The letters of accreditation were dated 26 April 2022. These 1 Regulations relating to the approval of and the minimum requirements for the education and training of a learner leading to registration in the category Auxiliary Nurse, GN R169, GG 36230, 8 March 2013. 2 Regulations relating to the approval of and the minimum requirements for the education and training of a learner leading to registration in the category Staff Nurse, GN R171, GG 36232, 8 March 2013. 3 Regulations relating to the accreditation of institutions as Nursing Education Institutions, GN R173, GG 36234, 8 March 2013. letters stated that the Council was to issue certificates of accreditation in the following terms (relevant for present purposes): ‘Type of accreditation: Full Accreditation Date of accreditation: 30-31 March 2022, however, the commencement date of the approved programme should be at the beginning of the academic year 2023 considering that the Nursing Education Institution will now commence the process of marketing the accredited programme as well as recruitment and selection process. Duration of accreditation: Five (05) years 1 January 2023 – 31 December 2027.’ I have referred to this as the contested stipulation. [12] Khanyisa objected to the contested stipulation. The contested stipulation carried the consequence that Khanyisa could not commence the programmes and offer them to students to enrol in 2022, and have these students write their examinations in May 2023 (and thereby comply with the 44 weeks of learning prescribed by the regulations). Rather, Khanyisa would have to await the start of 2023. This would not only cause Khanyisa financial harm, it would constrain the training of nurses, when the country suffers from a shortage of qualified nurses. [13] As I have recounted, the Council was unyielding. Khanyisa brought urgent review proceedings to review and set aside the contested stipulation so as to enjoy the accreditation of the programmes, shorn of the contested stipulation. [14] It was common ground between counsel for the parties, who appeared before us, that the question as to whether the Council had the power to impose the contested stipulation turned upon the meaning to be attributed to the definition of an academic year in regulations R 169 and R 171. I recall that these regulations defined an academic year to mean ‘a period of at least 44 weeks of learning in any calendar year’. If a calendar year means a year starting from 1 January and ending on 31 December, then the Council could (and indeed was obliged to) attach the contested stipulation to the accreditation of the programmes because the academic year could only commence, at the earliest, on 1 January 2023. If, however, a calendar year means any one-year period, computed with greater flexibility, then the Council was under no obligation to impose the contested stipulation and should not have done so. [15] The principles that guide our approach to interpretation have often been stated: interpretation is a unitary exercise that takes account of text, context and purpose.4 Frequently, lawyers have recourse to dictionaries as the repository of the ordinary meaning of words. This is often a good starting point. But the lawyer’s reverence for dictionaries has limits. As this Court has observed, to stare blindly at the words used seldom suffices to yield their meaning in a statute or contract.5 Dictionaries record the history of how (often disparate) language communities have used words. There is no straightforward attribution of a dictionary meaning of a word as the word’s ordinary meaning so as to construe a statute, subordinate legislation or a contract. The dictionary meaning of a word will often give rise to further questions: for whom is this the ordinary meaning, as used in which community? And the different shades of meaning with which a word has been used, over time, quite often lead to selectivity bias. That is to say, the interpreter chooses the dictionary meaning that best suits the preferred outcome of the case, rather than the meaning that shows the greatest fidelity to the meaning that best fits what has been written, given what we know as to the institutional originator of the words, what the words are used for, and the larger design of the instrument we are called upon to interpret. 4 Capitec Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. 5 Plaaslike Oorgangsraad, Bronkhorstspruit v Senekal 2001 (3) SA 9 (SCA) at 18J-19A. [16] The case before us well illustrates the risks of using dictionaries to make simplistic attributions of meaning. Many dictionaries record that a calendar year is a period of 365 or 366 days, starting on 1 January and ending on 31 December. In many settings this makes sense. In other settings, this is not so. In astronomy, for example, a calendar year is the time taken by the earth to make one revolution around the sun. What a calendar year means depends upon the function the words are intended to serve. Dictionary entries seldom yield uniform meanings. One reputable dictionary includes this meaning of a calendar year: it is ‘a period of time equal in length to that of the year in the calendar conventionally in use’.6 In an early judgment of this Court, a calendar year was defined as the period from 1 January to 31 December.7 Commentary on the meaning of a calendar year has been less categoric. The learned author of LAWSA writes that the meaning of a calendar year ‘is ambiguous since it may mean one of the cyclical numbered years commencing on 1 January or similar period commencing on any date. What the term “calendar” seems to convey is that the period in question is calculated, not by the enumeration of a special number of days, but by fixing its effluxion by reference to the corresponding date in the succeeding year’.8 [17] What then is the meaning of a calendar year which we find in the definition of an academic year in regulations R 169 and R 171? The function of the definition is to determine the duration of the programmes. In both regulations, regulation 5(3) specifies the duration of the programme, and does so by reference to the number of academic years of full-time study. How long is that? The definition of an academic year tells us that an academic year means 44 weeks of learning. And then the 6 See for example in the Merriam-Webster Dictionary. 7 R v Close Settlement Corporation Ltd 1922 AD 294 at 301. 8 27 Lawsa 2 ed para 298. question is this: 44 weeks of learning, bounded within what time period? The definition goes on to state ‘in any calendar year’. That could mean within a period in any year commencing 1 January and ending on 31 December. And that is what the Council contends for. I am however disinclined to this interpretation, and for these reasons. [18] First, these regulations are concerned to specify the minimum requirements necessary to train nurses in different categories of practice. The regulations thus treat vocational training and the meaning of an academic year within this setting. There is no reason to think that, in a modern era of vocational training, there is any convention that requires an academic year to run from January to December. On the contrary, there are very good reasons to suppose, as the founding affidavit reminds us, that the shortage of qualified nurses requires flexibility as to the period within which an academic year can run. Moreover, since vocational training requires practical training in hospitals and other health care facilities, rigidity as to the time period that may constitute an academic year is not indicated. [19] Second, the function of the definition of an academic year is to demarcate the period within which the minimum of 44 weeks of full-time study must take place. The plain purpose of this demarcation is to ensure that the 44 weeks does not take place over an indeterminate time period, but a calendar year. That function is met if a calendar year means any year, reckoned from a starting month in a given year, and ending a year hence. There is some modest textual support for this, as Khanyisa submitted, by the use of the words ‘any calendar year’ rather than ‘a calendar year’. But the textual nudge is subsumed by the altogether greater weight that would attribute a meaning that is functionally satisfactory, while also allowing for flexibility appropriate to vocational training. [20] Third, the Minister made these regulations, as required by s 58 of the Act, after consultation with the Council. Given that the regulations concern vocational training, in a field of great national need, there is little reason to attribute to the Minister an intention to determine that an academic year must take place within the confines of 1 January to 31 December. [21] This interpretation is strengthened by the following. The regulations were made after consultation with the Council. The affidavits before us make it plain that the Council has, over many years, accredited programmes that were permitted to commence in an academic year that was not bounded by 1 January to 31 December. [22] Of particular salience is the following conduct of the Council. On 22 November 2019, the Minister made regulations in terms of s 58(1)(f) to approve the minimum requirements for the education and training of students to qualify in the category of midwife (regulation No 1497).9 This regulation was made after consultation with the Council. It contains much of what is to be found in R 169 and R 171 (promulgated in 2013). In particular, regulation No 1497 specifies that the duration of the programme is one academic year of full-time study. It defines an academic year in identical terms to the definitions found in regulations R 169 and 171, that is ‘a period of at least 44 weeks of learning in any calendar year’. If the Council, consulted by the Minister, had sought a change to the meaning of an academic year in regulation No 1497 it would no doubt have raised this issue. There is no evidence that it did so, and no change was made. The definition of an academic year was retained. And, both before and after the promulgation of regulation No 1497, the Council continued to accredit programmes with a mid-year intake of 9 Regulations relating to the approval of and the minimum requirements for the education and training of a learner leading to registration in the category midwife, GN 1497, GG 42849, 22 November 2019. students. The Council has plainly conducted itself on the basis that an academic year, and thus a calendar year, does not mean 1 January to 31 December. [23] The conduct of the Council is by no means dispositive of what an academic year must be taken to mean. The Council may have made these accreditations in error. But their conduct is at least indicative of the fact that the vocational training of nurses has not taken place under any convention that connotes an academic year to mean 1 January to 31 December. And further, the Council, having been consulted in the making of the regulations, did not understand the regulations to mean what it now contends for. [24] Fourth, the meaning of an academic year is informed by the timing of the examinations. The examinations of students in the different categories of practice have taken place in May. If the academic year must run for 44 weeks within the period 1 January to 31 December, this would give rise to the wasteful consequence that the teaching of certain programmes will end long before the examinations take place. This would delay students obtaining their qualifications and their entry as qualified practitioners into the health care system, where their services are in short supply. The meaning of an academic year must be understood with practical common sense, given the manner in which vocational training needs to be offered and has been organised. [25] For these reasons, I find that the meaning of ‘any calendar year’ in the regulations means a period that runs from a date of commencement in any given year and extends for 12 months from that date. Once that is so, the Council was not required to impose the contested stipulation, and had no defensible reason to do so, given the extensive time it had taken to decide upon the accreditation of the programmes, and the evident need for the programmes to commence as soon as possible after accreditation. [26] I caution that this conclusion as to the meaning of ‘any calendar year’ is confined to the regulatory setting in which this term is used in the regulations to which I have referred. [27] Given my finding on the first issue in respect of the meaning of ‘any calendar year’, I need not engage the second issue in respect of whether Khanyisa enjoyed a legitimate expectation to commence the programmes by the middle of 2022 in light of the past conduct of the Council. [28] The order made by the high court is accordingly sustained, though for different reasons. As to the costs order imposed by the high court, that order fell within the high court’s discretion, the exercise of which does not warrant our intervention. [29] In the result, the following order is made: The appeal is dismissed with costs, including the costs of two counsel. __________________________ D N UNTERHALTER ACTING JUDGE OF APPEAL Appearances For the appellant: J A L Pretorius and R C Netsianda Instructed by: Maponya Incorporated, Pretoria Phatshoane Henney Attorneys, Bloemfontein For the respondents: E van As and A Basson Instructed by: JJ Jacobs Attorneys Incorporated, Pretoria Pieter Skein Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 7June 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 Association for Voluntary Sterilization of South Africa v Standard Trust Limited and Others (325/2022) [2023] ZASCA 87 (7June 2023) Today, the Supreme Court of Appeal (SCA) dismissed an appeal with costs against the judgment of the Western Cape Division of the High Court, Cape Town (the high court), which dismissed an application for declaratory relief brought by the appellant, the Association for Voluntary Sterilization of South Africa (AVSSA). The declaratory relief sought by the appellant involved the interpretation of a clause in a will executed by a Mr James Scratchley (the testator) on 16 May 1982 (the will). In terms of the will, he bequeathed the residue of his estate to his administrators to be held in a testamentary trust, the James Sivewright Scratchley Testamentary Trust (the trust). The first respondent, Standard Trust Limited, was the sole trustee of the trust. In accordance with the testator’s wishes, a committee was established comprising the Chairman of AVSSA, the Professor of Gynaecology of the Medical Faculty at the University of Cape Town (UCT), the Medical Officer of Health, Cape Town and the Dean of the Medical Faculty at UCT (the committee). The second and third respondents, Professor Matjila NO and Associate Professor Green- Thompson NO of UCT, along with the fourth respondent, Mr Edward Haynes-Smart of AVSSA, made up the committee at the time of the case. AVSSA was a beneficiary of the trust. There was disagreement amongst the members of the committee regarding the meaning of the word ‘planning’ in the phrase ‘Family Limitation and Planning’ in clause 4.3.2.1 of the testator’s will. They were accordingly not in agreement as to who should benefit from the Trust. Before the SCA, the appellant contended that the word ‘planning’ in clause 4.3.2.1 of the will referred to the limiting of births, rather than the spacing and timing of births. It was common cause that the relief sought in the appeal by AVSSA was not directed against any decision taken by the committee. Thus, the SCA directed the Registrar to notify the parties to be prepared to address the Court on the following matters: (i) would the judgment and order sought on appeal have any practical effect or result as contemplated in s 16(2)(a) of the Superior Courts Act 10 of 2013? (ii) whether the order to which the appellant confined itself on appeal was not irredeemably vague? The SCA found that the high court, having examined all the relevant facts, correctly declined to grant the declaratory order sought by the appellant. Thus, the SCA found that it was not simply at large to interfere with the discretion exercised by the high court. The SCA found further that the appellant sought to attribute to the testator’s will an intention equating the use of the word ‘planning’ to ‘limiting of births’, and not family planning in the broader sense. The appellant accepted that its interpretation might have given rise to tautology. The SCA found that the sum effect of what the appellant suggested was that it should not merely interpret the will, but that it ought to put a red line through the relevant provision and substitute in its stead the words ‘limiting of births’. That, the SCA found, would not have been an interpretative exercise, but a recrafting of the will. Thus, the SCA held that, in the circumstances, the high court could not be faulted for declining to issue the declaratory order sought by the appellant. ~~~~ends~~~~

2646

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 763/2013 REPORTABLE In the matter between: HELEN NOKUBONGA JILI APPELLANT and FIRSTRAND BANK LTD t/a WESBANK RESPONDENT Neutral citation: Jili v Firstrand Bank Ltd (763/13) [2014] ZASCA 183 (26 November 2014) Coram: Maya, Shongwe, Leach and Willis JJA and Mocumie AJA Heard: 13 November 2014 Delivered: 26 November 2014 Summary: National Credit Act 34 of 2005 – interpretation of s 88(3) thereof – an original credit agreement is enforceable against a defaulting credit consumer without further notice if the relevant debt re-arrangement order is breached – summary judgment – court to exercise its discretion to refuse it only where there exists a reasonable possibility that an injustice may be caused – no basis to interfere with order of the high court granting summary judgment against the appellant defaulting on her rescheduled repayments on an instalment sale agreement – appeal dismissed. ORDER On appeal from: KwaZulu-Natal High Court, Durban (Kruger J sitting as the court of first instance) The appeal is dismissed, the appellant to pay the respondent’s costs. JUDGMENT Willis JA (Maya and Shongwe JJA and Mocumie AJA concurring): [1] The appellant appeals, with the leave of this court, against the order of summary judgment which was granted against her in the Kwazulu-Natal High Court, Durban (Kruger J). The appellant was ordered to return a motor vehicle, which was a 2007 Volkswagen Jetta 1.6 Trendline, to the respondent (the bank), failing which, the Sheriff was authorized to attach it. The high court postponed, sine die, the question of judgment in respect of the damages which the bank may have suffered. The high court ordered the appellant to pay the costs of the application for summary judgment as well as the costs of the action to the date of the judgment. [2] The National Credit Regulator has been admitted to these proceedings as an amicus curiae. It supports the appellant in her appeal but entered the fray only with regard to the correct interpretation of s 88(3) of the National Credit Act 34 of 2005 (the NCA). [3] In November 2007, the appellant and the bank concluded an instalment (spelt with one l in the NCA and agreement) sale agreement in respect of the motor vehicle. By March 2011, the appellant was experiencing difficulties in meeting her financial obligations to the bank, which had arisen as a result of the instalment sale agreement. The appellant approached a debt counsellor, applying for debt review in terms of s 86(1) of the NCA. The debt counsellor thereupon, in terms of s 84(6) of the NCA, notified all the credit providers to whom the appellant was indebted as well as every registered credit bureau. [4] The debt counsellor found that the appellant was over-indebted and, in April 2011, forwarded a proposal to all the appellant’s creditors, including the bank, for the rescheduling of the repayment of the appellant’s debt. The debt counsellor proposed that the appellant’s repayments in terms of her agreement with the bank be reduced to R1714.44 per month. The bank accepted the proposal. [5] In October 2011, the debt counsellor brought an application, on behalf of the appellant, in the Magistrate’s Court in Pietermaritzburg for an order that she was over-indebted and rescheduling her debt to various credit providers in terms of ss 86(8) and 87(1)(b)(ii) of the NCA. The magistrate granted the order on 4 November 2011. [6] In March and April 2012, the appellant fell into arrears in respect of her rescheduled repayments to the bank but made this default good in July 2012. In the meantime, on 25 May 2012, the bank instituted an action against the appellant for the return of the vehicle and recovery of the debt. The action was defended. On 24 August 2012 the bank applied for summary judgment. The application was opposed. It was common cause that the appellant had not purged her default by the time the application for summary judgment was heard. [7] In her affidavit resisting summary judgment, the appellant said the following: ‘[16] . . .On 11 June 2012 my attorney confirmed in writing a proposal that I would bring the arrears up to date by paying the arrears of R3428.86, and requested the plaintiff’s attorneys to take instructions in this regard… This proposal – which I respectfully submit was a most reasonable proposal – was made in the spirit of keeping alive the rearrangement order that had been made and enabling me ultimately thereby to satisfy in due course all my financial obligations to all of the credit providers concerned, including the plaintiff. However, it was summarily rejected by the plaintiff . . . .’ The appellant’s defence is, in effect, a plea ad misericordiam.1 [8] The bank succeeded. Referring to the provisions of s 88(3) of the NCA, the high court relied strongly on the judgment of Eksteen J in FirstRand Bank Ltd v Fillis & another2 to hold that, once a debtor has defaulted in terms of an order by a magistrate for the re-arrangement of debt, the order is automatically terminated. Correspondingly and simultaneously, in the view of the court, the termination of the order gave rise to the requisite jurisdictional facts that enable a creditor to proceed to obtain judgment against the debtor. The high court found that the appellant had no bona fide defence to the application for summary judgment and, in the result, granted the relief sought by the bank. [9] Counsel for the parties agreed that the case turns on the following points of law: (a) Could the bank rely on the appellant’s default in March and April 2012 to proceed as it did, without first obtaining an order setting aside the magistrate’s order re-arranging the repayment of the appellant’s debt; and (b) If the bank could so rely upon the appellant’s default, did the court have a discretion not to grant judgment in favour of the bank; and (c) In the event that the court had this kind of discretion, did the court exercise it in a judicial manner, having regard to all the circumstances of the case? [10] Counsel for the appellant submitted that, even though the Constitutional Court had pronounced plainly on the interpretation of s 88(3) of the NCA in Ferris & another v FirstRand Bank Ltd3, this was merely obiter and should not be followed. Relying on the Constitutional Court’s judgment in Sebola & another v Standard Bank of South Africa Ltd & another,4 the appellant also submitted that an important purpose of the NCA is to promote non-litigious methods of resolving consumer defaults and that ‘weight must be given to constitutional considerations in assigning meaning to the statute’s provisions. ’The appellant furthermore contended that a 1 See for example Saloojee & another NNO v Minister of Community Development 1965 (2) SA 135 (A) at 141C-D. 2 FirstRand Bank Ltd v Fillis & another 2010 (6) SA 565 (ECP) esp paras 14 and 16. 3 Ferris & another v FirstRand Bank Ltd 2014 (3) SA 39 (CC). 4 Sebola & another v Standard Bank of South Africa Ltd & another 2012 (5) SA 142 (CC). court always had a discretion to refuse to grant summary judgment and that in this particular case the discretion should so be exercised. The amicus submitted that there was a lacuna in the provisions of s 88(3) that did not have regard to the interests of the other credit providers. The respondent supported the Constitutional Court’s reasoning in Ferris v FirstRand Bank and submitted that the discretion to refuse summary judgment was confined to situations where there was doubt about the indebtedness of the defendant, which obviously was not the position in the present case. [11] Section 88(3) of the NCA provides as follows: ‘Subject to section 86(9) and (10), a credit provider who receives notice of court proceedings contemplated in section 83 or 85, or notice in terms of section 86(4)(b)(i), may not exercise or enforce by litigation or other judicial process any right or security under that credit agreement until – (a) The consumer is in default under the credit agreement; and (b) one of the following has occurred: (i) An event contemplated in subsection (1)(a) through (c); or (ii) the consumer defaults on any obligation in terms of a re-arrangement agreed between the consumer and credit providers, or ordered by a court or the Tribunal.’ (My emphasis.) we use italics to emphasize [12] In Ferris v FirstRand Bank5 Moseneke ACJ, delivering the unanimous judgment of the Constitutional Court, approved the reasoning in Fillis. He said at para 16: ‘It seems to me that an original credit agreement is enforceable without further notice if the relevant debt-restructuring order is breached.’ Moseneke ACJ said that this was ‘clear from the wording of the relevant sections of the Act’.6 He also noted that s 129(2) of the NCA ‘expressly stipulates that the requirement to send a notice under s 129(1) is not applicable to debts subject to debt-restructuring orders’7 The Constitutional Court has therefore set it free from doubt that, once a debtor has defaulted in terms of an order by a magistrate for the re-arrangement of debt, a 5 Ferris & another v FirstRand Bank Ltd 2014 (3) SA 39 (CC). 6 Para 14. 7 Ibid creditor is entitled to enforce the terms of the loan agreement, without having to apply for a variation or a setting aside of the order of the magistrate. In my opinion, these remarks by Moseneke ACJ were not obiter but were part of the ratio decidendi. In any event, remarks of the Constitutional Court, even if merely obiter, carry great weight indeed. To refuse to follow Moseneke ACJ’s observations and remarks on this point would create huge confusion among credit providers and consumers. Moreover, if every other credit provider affected by a debt-restructuring order had to be given notice of an application for summary judgment, it would create a potentially never ending merry-go-round. [13] Insofar as the question of the high court’s discretion to grant or refuse the application for summary judgment is concerned, the critically relevant fact is that it is common cause that the appellant had no defence, recognised in law, to the fact that she was indebted to the bank. It is indeed trite that a court has a discretion as to whether to grant or refuse an application for summary judgment.8 Although Breitenbach v Fiat SA (Edms) Bpk9 has made it plain that a court should exercise a discretion against granting such an order where it appears that there exists ‘a reasonable possibility that an injustice may be done if summary judgment is granted’,10 the context in which that was said indicates that this precaution applies in situations where the court is not persuaded that the plaintiff has an unanswerable case.11 [14] It is a different matter where the liability of the defendant is undisputed: the discretion should not be exercised against a plaintiff so as to deprive it of the relief to which it is entitled.12 Where it is clear from the defendant’s affidavit resisting 8 See for example Gruhn v M Pupkewitz & Sons (Pty) Ltd 1973 (3) SA 49 (A) at 58D-59A and Breitenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 (T) at 229B-H. 9 Breitenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 at 229H.This case has been referred to with approval by this court in Tesven CC & another v South African Bank of Athens 2000 (1) SA 268 (SCA); [1999] 4 All SA 396 (A) para 22 and Soil Fumigation Services Lowveld CC v Chemfit Technical Products (Pty) Ltd 2004 (6) SA 29 (SCA) para 24. 10 Breitenbach v Fiat at 229B-H. See also Shepstone v Shepstone 1974 (2) SA 462 (N) at 467E-H and Jacobsen van den Berg SA (Pty) Ltd v Triton Yachting Supplies 1974 (2) SA 584 (O) at 589D to which cases Colman J referred with approval in Breitenbach v Fiat at 229D and 229F-G respectively. 11 Breitenbach v Fiat at 229D-E. See also Shepstone v Shepstone at 467E-H to which, as mentioned in footnote 7 above, Colman J referred with approval in Breitenbach v Fiat at 229D-E. 12 Breitenbach v Fiat at 229C-G. See also Shepstone v Shepstone at 467E-H and Jacobsen van den Berg SA (Pty) Ltd v Triton Yachting Supplies to which cases, as mentioned in footnote 7 above, Colman J referred with approval in Breitenbach v Fiat at 229D and 229F-G respectively. summary judgment that the defence which has been advanced carries no reasonable possibility of succeeding in the trial action, a discretion should not be exercised against granting summary judgment.13 The discretion should also not be exercised against a plaintiff on the basis of mere conjecture or speculation.14 The consequences of refusing summary judgment in this particular case are entirely speculative. [15] In all the circumstances of the matter, the high court cannot be faulted for having granted summary judgment. Although this case has raised issues of constitutional importance, it was not primarily driven by either party in order to test its constitutional rights. This is not a case where the principles relating to costs, set out in Biowatch Trust v Registrar, Genetic Resources & others,15 should apply. [16] The following order is made: The appeal is dismissed, the appellant to pay the respondent’s costs. _______________________ N P WILLIS JUDGE OF APPEAL 13 Breitenbach v Fiat at 229E. See also Shepstone v Shepstone at 467E-H. 14 Breitenbach v Fiat at 229E-F. 15 Biowatch Trust v Registrar, Genetic Resources & others 2009 (6) SA 232 (CC). Leach JA (Maya and Shongwe JJA and Mocumie AJA concurring): [17] I have read the judgment of Willis JA, but while I agree that summary judgment was correctly granted by the high court and that the appeal should be dismissed, the judgment does not fully reflect my views on the matter. [18] The instalment sale agreement concluded between the appellant and the respondent in November 2007 resulted in the appellant becoming indebted to the respondent in a total sum of R245 468 inclusive of financial charges and VAT. The debt was repayable by way of 60 monthly instalments commencing on 16 January 2008, the first 59 instalments being in a sum of R3 100,05 with a final so-called ‘balloon’ payment of R62 565,05 payable on 27 November 2012 (these details are reflected in a payment scheduled attached to the agreement; they differ slightly from those reflected in the agreement itself but nothing turns on this for present purposes). [19] Some three years later the appellant, who was then in financial difficulties, approached a registered debt counsellor and applied for a debt review under s 86(1) of the NCA. Pursuant to procedures outlined by that Act, a debt re-arrangement order was made in the Pietermaritzburg Magistrate’s Court by consent under s 86(8) of the NCA. Under such order the obligations of various of the appellant’s credit providers, including the respondent, were re-arranged and the appellant became obliged to pay the respondent a much reduced monthly instalment of R1 714,44 over an estimated period of 68 months in order to repay the balance of R117 130,31 then still owing. Not only was this new instalment substantially less than that set out in the initial credit agreement but it was payable over a period far in excess of the original period. [20] Despite the terms of this debt re-arrangement order extending substantial relief to the appellant in regard to her monthly commitments, she failed to pay her instalments for March 2012 and April 2012. The respondent accordingly issued summons against her, claiming the return of the motor vehicle that was the subject of the instalment sale agreement as it was entitled to do under the contract. It was only on 13 July 2012, after the institution of the respondent’s action, that the appellant paid the instalments due for March and April 2012. But, as this did not extinguish her debt in respect of further amounts that had since become due under the debt re- arrangement order, the respondent proceeded to apply for summary judgment for return of the motor vehicle. [21] In seeking to avoid summary judgment the appellant argued, both in the court below and in this court, that the respondent had not been entitled to simply issue summons while the re-arrangement order remained in force and that, without that order being rescinded or varied, any action to enforce its terms was premature. In this regard, the appellant relied upon the unreported judgment in Reid v Standard Bank of SA Ltd [2011] ZAKZPHC 34. In that matter, the respondent bank had sought summary judgment against the appellants arising from their liability to pay certain amounts under three mortgage bonds. The appellants sought to oppose by alleging that their debt obligations had been re-arranged under an order granted by a magistrate under s 86(7) of the NCA although the respondent alleged that the appellants had not paid any amounts under that order. A high court had granted summary judgment but, on appeal to a full bench, its order was set aside by Lopes J (with whom Jappie J and Ndlovu J concurred), who inter alia stated: ‘In my view it was incumbent on the respondent to have applied to set aside the Magistrates’ Court orders rather than seeking simply to ignore them. Once a court order is granted, it is valid and enforceable until and unless set aside. As pointed out by counsel for the appellants, any assumption of invalidity would possibly affect other parties to the order.’ [22] This decision, however, applies in the face of the provisions of s 88 of the NCA which deals with the effect of debt review on a re-arrangement order or agreement. Section 88(3) provides that a credit provider who has received notice of an application for debt review: ‘. . . may not exercise or enforce by litigation or other judicial process any right or security under that credit agreement until ─ (a) the consumer is in default under the credit agreement; and (b) one of the following has occurred: (i) . . .; or (ii) the consumer defaults on any obligation in terms of a re-arrangement agreed between the consumer and credit providers, or ordered by a court or the Tribunal.’ In FirstRand Bank Ltd v Fillis 2010 (6) SA 565 (ECP) para 16 Eksteen J, in dealing with the NCA and s 88(3) in particular, stated: ‘It follows . . . that once the jurisdictional requirement set out in s 88(3)(a) co-exists with any one of the jurisdictional requirements set out in s 88(3)(b), the credit provider is at liberty to proceed and to exercise and enforce, by litigation or other judicial process, any right or security under his credit agreement, without further notice.’ [23] It was argued on behalf of the appellant that Fillis had been wrongly decided, but the insurmountable problem facing the appellant in this regard is the fact that the Constitutional Court has already reached the contrary conclusion in Ferris v FirstRand Bank Ltd 2014 (3) SA 39 (CC) and, in doing so, cited with approval the passage from the Fillis judgment quoted above.16 In regard to the effect of s 88, Moseneke ACJ, in delivering the unanimous judgment of the court in Ferris, said:17 ‘Once the restructuring order had been breached, FirstRand was entitled to enforce the loan without further notice. This is clear from the wording of the relevant sections of the Act. Section 88(3)(b)(ii) does not require further notice ─ it merely precludes a credit provider from enforcing a debt under debt review unless, among other things, the debtor defaults on a debt-restructuring order.’ [24] Counsel for the appellant argued that the conclusion of the Constitutional Court in regard to s 88 was both obiter and clearly wrong, and that this court was entitled to reach a contrary conclusion. I do not agree. In the first instance, such conclusion is in my view clearly right. But in any event, the contention that it was obiter is unsustainable. The appellants in Ferris had sought to rescind a default judgment on the basis that it had been erroneously sought or granted against them as there was a debt re-arrangement order in place. Although that order recorded that the rights and obligations amended by the order would be ‘fully enforceable’ in the event of the order being breached, this did no more than spell out the effect of s 88(3). The clear ratio decidendi of the case was that the breach of the debt re- arrangement order entitled the bank to enforce the loan without further notice. [25] In these circumstances, Reid was wrongly decided in so far as it held that a debt re-arrangement order that had been breached had to be varied or set aside before the affected creditor could seek to enforce its claim. In the present matter, therefore, the appellant’s default under the debt re-arrangement order entitled the 16 Ferris para 16. 17 Ferris para 14. respondent, without further ado, to proceed to recover the motor vehicle in question from her. The appellant had neither purged her default at the time the summary judgment application was heard nor had any defence to the respondent’s claim at that stage. [26] I turn to the appellant’s submission that even if she has no defence, the court a quo should have exercised its discretion to refuse summary judgment and thereby afforded her the opportunity of fulfilling her obligations under the debt re- arrangement order. In advancing this argument, counsel for the appellant emphasised that the NCA was intended to protect consumers and to promote social and economic welfare and a fair, transparent, competitive, effective and accessible credit market. [27] The simple answer to this argument is, of course, that a court’s discretion to refuse summary judgment is limited to those cases where there may be some doubt as to the defendant’s liability. There is no such doubt in this case. It is not disputed that the respondent is entitled to the order that it seeks if the debt re-arrangement order earlier granted by the magistrate does not bar the respondent’s claim which, for the reasons already given, it does not. [28] Moreover, as this court stressed in Nedbank Ltd v National Credit Regulator 2011 (3) SA 581 (SCA) para 2, a passage cited with approval by the Constitutional Court in Sebola v Standard Bank of South Africa Ltd 2012 (5) SA 142 (CC) para 40, notwithstanding the objective of the NCA to protect consumers, there has to be a careful balancing of the competing interests sought to be protected and further that the interests of creditors should ‘also be safeguarded and should not be overlooked’. [29] The appellant has already enjoyed the considerable benefit afforded by a debt re-arrangement order that substantially reduced her monthly instalments and at the same time increased the period available to her to effect repayment. As Eksteen J observed in Fillis:18 ‘The Act provides very extensive protection to a consumer who has become over-indebted, whether it be of his or her own making or through circumstances beyond his or her control. Not only does a rearrangement afford him or her alleviation from the onerous monthly obligations that he or she has in all seriousness undertaken to his or her credit providers but he or she also enjoys the protection of s 103(5) against the ravaging effect of escalating interest whilst he or she remains in default under the credit arrangement. If, however, he or she fails to embrace this opportunity, or he or she is, notwithstanding this very considerable assistance, unable to comply with his or her restructured debt commitment, the Act permits the common law to run its course.’ [30] To allow the appellant, who has spurned the advantages flowing from the magistrate’s order of 4 November 2011 by defaulting in her payments, a yet further opportunity to attempt to get her affairs in order at the expense of the respondent who is entitled to the relief it seeks, would not be in the interests of justice. To refuse summary judgment would be to afford the appellant a further advantage not envisaged by the NCA ─ and a second bite at the cherry, so to speak ─ to the detriment of the clear rights of the respondent. [31] For these reasons the appeal should be dismissed with costs. The amicus curiae, to whom this court is grateful, sought no order as to its costs and no order need be made in that regard. 18 Para 14. ______________________ L E LEACH JUDGE OF APPEAL APPEARANCES: For the Appellant: PJ Blomkamp Instructed by: WHA Compton Attorneys, Pietermaritzburg c/o Lovius Block, Bloemfontein For the Respondent: N Konstantinides Instructed by: Legator McKenna Inc, Durban c/o Matsepes Inc, Bloemfontein For the Amicus Curiae: AJ Van Lapaan Instructed by: Nyapotse Inc, Johannesburg c/o McIntyre & Van der Post, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE November 2014 STATUS Immediate Jili v Firstrand Bank Ltd t/a Wesbank (763/2013) Please note that the media summary is for the benefit of the media and does not form part of the judgment. Today the Supreme Court of Appeal dismissed an appeal by a defaulting credit consumer. Having fallen into arrears, the appellant had concluded a debt restructuring agreement with her creditors. This had been made an order of court. Thereafter the appellant had failed to comply with the court order for two consecutive months. The bank applied to the high court for summary judgment. The appellant, who had been defendant in the high court, defended the action and attempted to make good the arrears two months later by paying the outstanding amounts of the two previously defaulted months. The high court granted the bank summary judgment. The sheriff was ordered to attach the vehicle in question. The appellant was granted leave to appeal and disputed not only the correctness of the decision of the high court judge in exercising his discretion to grant summary judgment, but also the right of a creditor to proceed without further notice to any party where a debt-restructuring agreement was concluded by various creditors and the debtor. The judges of Appeal ultimately confirmed The Constitutional Court’s interpretation of section 88(3) of the National Credit Act 34 of 2005 that a creditor has the right to enforce its rights without further arrangements or notice to any party and obtain judgment against the debtor.

4009

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 432/2022 In the matter between: MYSTIC RIVER INVESTMENTS 45 (PTY) LTD FIRST APPELLANT KARIM ISSA MAWJI SECOND APPELLANT and ZAYEED PARUK INCORPORATED FIRST RESPONDENT NAUSHAD MAHOMED ISMAIL (GORA) ABDOOLA SECOND RESPONDENT SHAUKAT ALI MOOSA THIRD RESPONDENT SALIM MAHOMED MOOSA FOURTH RESPONDENT GOOLAM HOOSEN MOOSA FIFTH RESPONDENT Neutral citation: Mystic River Investments 45 (Pty) Ltd & Another v Zayeed Paruk Incorporated & Others (Case no 432/2022) [2023] ZASCA 54 (19 April 2023) Coram: VAN DER MERWE, SCHIPPERS, GORVEN and MATOJANE JJA and KATHREE-SETILOANE AJA Heard: 6 March 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 19 April 2023. Summary: Practice – application that peregrinus provide security for costs under rule 47 of Uniform Rules of Court – exercise of true discretion – powers of the appellate court to interfere strictly circumscribed – court a quo exercised discretion on wrong principle – court at large to consider application afresh – proper case for provision of security for costs. ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Vahed J, sitting as court of first instance): Save to the extent set out below, the appeal is dismissed with costs to be paid by the second appellant. Paragraph d of the order of the High Court is set aside and replaced with the following: ‘The second applicant is directed to pay the costs of the applications, including the costs of 14 May 2021.’ JUDGMENT Van der Merwe and Matojane JJA (Schippers and Gorven JJA and Kathree- Setiloane AJA concurring): Introduction [1] The first appellant, Mystic River Investments 45 (Pty) Ltd (Mystic River) and the second appellant, Mr Karim Issa Mawji, instituted an application against the respondents in the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court). The first respondent is Zayeed Paruk Incorporated, and the second respondent is Mr Naushad Mahomed Ismail Abdoola. The third, fourth and fifth respondents are Mr Shaukat Ali Moosa, Mr Salim Mahomed Moosa and Mr Goolam Hoosen Moosa, respectively (the Moosa brothers). On the back of allegations that the respondents had ‘hijacked’ and were ‘looting’ Mystic River, the appellants sought an order: preventing the respondents from continuing to unlawfully represent and make decisions purportedly on behalf of, or in the name of Mystic River; ordering the respondents to return funds belonging to Mystic River, which were misappropriated or diverted from it; compelling the respondents to provide full and proper accounts in respect of the affairs of Mystic River; for those accounts to be debated; and for Mystic River to be paid any amounts due to it pursuant to such statement and debatement of account. [2] The respondents served the second appellant with notices in terms of rule 47(1) of the Uniform Rules of Court, calling upon him to furnish security for costs in the main application. They contended that he is a peregrinus of the court, has no assets in the Republic of South Africa (the Republic) and would be unable to pay their costs should they be successful in the main application. Security for costs was ordered by Vahed J. The appeal against that order is with the leave of the high court. The first respondent abides the outcome of the appeal. Factual background [3] The second appellant is the sole director of Mystic River. He brought the main application in his representative capacity and in his personal capacity. It is common cause that he is a peregrinus and owns no assets in the Republic. He had a temporary presence in the United Kingdom (the UK) and stated that he had moved to Portugal in 2018 and intended to reside in Portugal permanently. [4] Because the second appellant declined to furnish security for costs, the second to fifth respondents delivered separate applications seeking to stay the main application and ordering security for costs. These applications were set down for hearing on 14 May 2021. However, the parties, by agreement following the suggestion of Vahed J, elected to forego a hearing on 14 May 2021, permitting the matter to be decided without oral argument. [5] On 4 January 2022, the high court handed down judgment ordering the second appellant to provide security for costs in an amount to be fixed by the registrar. The appellants were ordered to pay the costs of the applications, including the wasted costs of the opposed hearing intended for 14 May 2021. [6] The primary issue for determination is whether the high court correctly exercised its discretion by ordering the second appellant to furnish security for costs. A secondary issue pertains to the order directing the appellants to pay the wasted costs of 14 May 2021. The relevant legal principles [7] We now turn to consider the legal position regarding security for costs. Security for costs is a discretionary remedy that a court may grant to a defendant who has a reasonable apprehension that the plaintiff will not be able to pay the costs of litigation if the plaintiffs claim fails. An incola is not, as a matter of course, entitled to demand security from a peregrinus claimant. It is at the discretion of the court to make such an order after an investigation of the circumstances and if equity and fairness to both litigants dictate that such an order be made.1 There is no justification for requiring the court to exercise its discretion in favour of a peregrinus only sparingly.2 [8] In Shepstone & Wylie & Others v Geyser NO (Shepstone & Wylie ),3 Hefer JA further explained the applicable test. He said that a court should not fetter its own discretion, particularly not by adopting an approach which brooks of no departure except in special circumstances. It must decide each case upon consideration of all the circumstances without adopting a predisposition either in favour or against granting security. The court must carry out a balancing exercise. On the one hand, it must weigh the injustice to the plaintiff if prevented from pursuing a proper claim by an order for security. Against that, it must weigh the injustice to the defendant if no security is ordered and at the trial, the plaintiff’s claim fails, and the defendant is unable to recover the costs incurred in defence of the claim. [9] In Exploitatie- en Beleggingsmaatschappij Argonauten 11 BV and Another v Honig,4 this Court referred to a general rule of practice that a peregrinus should provide security for an incola's costs. However, a reading of the judgment as a whole makes 1 Magida v Minister of Police [1987] 1 All SA 218 (A) at 226 (Magida); see also Blastrite (Pty) Ltd v Genpaco Ltd; In re: Genpaco Ltd v Blastrite (Pty) Ltd [2015] ZAWCHC 76; 2016 (2) SA 622 (WCC) para 10 (Blastrite). 2 Ibid Magida at 226; see also Ibid Blastrite para 28. 3Shepstone & Wylie & Others v Geyser NO [1998] 3 All SA 349 (A); 1998 (3) SA 1036 (SCA) at 1045I- 1045C. 4 Fn 3 above paras 18-19. it clear that the court did not intend to depart from the settled principles in Magida v Minister of Police (Magida)5 and Shepstone & Wylie. [10] The extent of this Court’s power to interfere with the high court exercise of discretion depends on the nature of the discretion concerned. In Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another, Khampepe J held that: ‘In order to decipher the standard of interference that an appellate court is justified in applying, a distinction between two types of discretion emerged in our case law. That distinction is now deeply rooted in the law governing the relationship between appeal courts and courts of first instance. Therefore, the proper approach on appeal is for an appellate court to ascertain whether the discretion exercised by the lower court was a discretion in the true sense or whether it was a discretion in the loose sense. The importance of the distinction is that either type of discretion will dictate the standard of interference that an appellate court must apply.’6 [11] In Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd (‘Perskor’),7 EM Grosskopf JA explained that the restraint on the appellate court’s power of interference only applies to discretion in the strict or narrow sense. He explained that discretion in the strict sense involves a choice between different but equally permissible alternatives, whilst discretion in the broad sense means no more than that the court is entitled to have regard to a number of disparate and incommensurable features in coming to a decision. [12] The court in Shepstone & Wylie,8 left open the question as to how a discretion to order security for costs should be classified. This question has since been settled by the Constitutional Court in Giddey NO v JC Barnard & Partners (Giddey NO),9 where it set out the following guidelines to determine the extent of the appellate court’s power to substitute its own determination for that of the high court. The court held that: 5 Magida fn 1 above. 6 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 83. 7 Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd (‘Perskor’) [1992] 2 All SA 453 (A); 1992 (4) SA 791 at 796H-I and 800E-G. 8Shepstone & Wylie & Others v Geyser NO [1998] 3 All SA 349 (A); 1998 (3) SA 1036 (SCA) at 1044- 1045G. 9Giddey NO v JC Barnard & Partners [2006] ZACC 13; 2007 (5) SA 525 (CC); 2007 (2) BCLR 125 (CC) paras 8 and 30. ‘…The court of first instance… is best placed to make an assessment of the relevant facts and correct legal principles, and it would not be appropriate for an appellate court to interfere with that decision as long as it is judicially made on the basis of the correct facts and legal principles. If the court takes into account irrelevant considerations or bases the exercise of its discretion on wrong legal principles, its judgment may be overturned on appeal. Beyond that, however, the decision of the court of first instance will be unassailable.’10 Analysis [13] In its judgment, the high court fully quoted the relevant passages from Magida and Shepstone & Wylie. Nevertheless, the high court adopted a predisposition that a peregrinus is obliged to furnish security for costs when demanded by an incola. The high court, therefore, did what Shepstone & Wylie said it should not do. In the circumstances, the high court erred by applying a wrong principle. [14] Furthermore, the high court appears to have misread the judgment in Blastrite (Pty) Ltd v Genpaco Ltd; In re: Genpaco Ltd v Blastrite (Pty) Ltd (Blastrite).11 It stated that Blastrite affirmed the existence of a general, but not inflexible, rule that a peregrinus must furnish security for costs. This was quite incorrect. In Blastrite, the court asked whether, in terms of the practice, security for costs was required purely because the litigant was a peregrinus who owned no immovable property in this country.12 The court answered the question in the negative, holding that a court had the discretion to order security and had to take into account the particular circumstances of the case and consideration of fairness and equity for both parties.13 Following the approach articulated in Magida, the court stated that there was no justification for the principle that a court should exercise its discretion in favour of a peregrinus only sparingly.14 10 Fn 10 above para 22. 11 Fn 1 above. 12Ibid para 28. 13 Ibid para 28. 14 Ibid para 28. [15] Thus, the high court erred in holding that, as a general rule, a peregrinus is obliged to furnish security for costs. This misdirection justifies interference by this Court. That being so, this Court is at large to consider the application afresh. [16] The second applicant submits that it is unreasonable and unnecessary to require security for costs from him as, first, Mystic River, an incola, has the means to and thus could effectively cover any adverse costs awarded. Second, he argues that the application is that of Mystic River, that the application is for its benefit, and that it should accordingly pay the costs if they arise. Third, he states that his involvement does not expand the case or create additional costs exposure for the respondents as they would have to answer essentially the same case as if Mystic River is the sole litigant, and the relief sought would be identical. [17] These contentions are unacceptable. The second appellant alleges that a funding and profit share agreement exists between him in his personal capacity and entities under his control, on the one hand, and the Moosa brothers, on the other, in terms of which the second appellant and his entities would be entitled to 50 per cent profit in respect of the development of any property by Mystic River. On his own showing, one of the main purposes of the main application is to retain funds in, or return funds to, Mystic River for the second appellant and the entities under his control to claim 50 per cent profit in respect of the development of property by Mystic River. However, the Moosa brothers claim to be the ultimate shareholders or beneficial owners of Mystic River. The second appellant did not dispute this under oath. Therefore, should the second appellant not be ordered to furnish security for costs and should the main application fail, the effect might well be that the Moosa brothers would (through Mystic River) bear the costs of unsuccessful litigation brought against the respondents by and for the benefit of the second appellant. [18] The second appellant states that the respondents may recover their costs from him in the UK or Portugal as the legal systems in those countries would allow enforcement of South African cost orders. This implies that he can afford any costs order that may be ordered. Whilst it would not be impossible for the respondents to enforce any costs order against the second appellant abroad, the respondents will have to incur increased expenses and be subjected to uncertainty and inconvenience, which has been found by this Court to be one of the fundamental reasons why a peregrinus should provide security.15 [19] In the final analysis, the balancing exercise referred to in Shepstone & Wylie amounts to this. The second appellant does not plead poverty. He does not complain that an order of security would cause an injustice in the sense that it would prevent him from pursuing the main application. There is, thus, nothing really on his side of the scale. But if no security is ordered and there is a cost order against the second appellant (whether jointly or severally with Mystic River or not), the respondents would suffer the inconvenience, delay and additional costs involved in enforcing a cost order in a foreign jurisdiction. [20] Fairness and equity dictate that the second appellant should be ordered to provide security for costs as he involved himself in the matter in his personal capacity so that when the monies due to Mystic River are returned to it, he could claim his 50 per cent share of the profit. He could have simply withdrawn from the matter in order to defeat the application for security if he was indeed litigating solely for the benefit of Mystic River. We are satisfied that it is fair and equitable to all the parties involved to require the second appellant to furnish security for the respondents’ costs in the main application. [21] The high court erred in directing that the appellants pay the costs of the applications to provide security jointly and severally. There was no basis for a costs order against Mystic River. The second appellant should have been ordered to pay the costs of these applications. We consider it fair and just that these costs should include the costs of 14 May 2021. Being the unsuccessful party, the second appellant should pay the costs of the appeal. The respondents did not ask for the costs of two counsel on appeal. [22] In the result, the following order is made: Save to the extent set out below, the appeal is dismissed with costs to be paid by the second appellant. 15 Op cit fn 3 para 19. Paragraph d of the order of the High Court is set aside and replaced with the following: ‘The second applicant is directed to pay the costs of the applications, including the costs of 14 May 2021.’ __________________________ C H G VAN DER MERWE JUDGE OF APPEAL __________________________ K E MATOJANE JUDGE OF APPEAL APPEARANCES For appellant: M Du Plessis SC Instructed by: Webber Wentzel, Johannesburg Symington & De Kok, Bloemfontein For first respondent: M Jooste Instructed by: Amod's Attorneys, Durban Matsepes, Bloemfontein. For second respondent: M C Tucker (with N L Nickel) Instructed by: Nourse Incorporated, Durban Matsepes, Bloemfontein. For third to fifth respondents: I Veerasamy (with E Mizrachi) Instructed by: Sameera Cassimjee Attorneys, Pietermaritzburg Honey 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: 19 April 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Mystic River Investments 45 (Pty) Ltd & Another v Zayeed Paruk Incorporated & Others (Case no 432/2022) [2023] ZASCA 54 (19 April 2023) Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing with costs, an appeal against the decision of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court). The issue before the SCA was whether the high court correctly exercised its discretion by ordering the second appellant to furnish security for costs. The first appellant, Mystic River Investments 45 (Pty) Ltd (Mystic River) and the second appellant, Mr Karim Issa Mawji, instituted an application against the respondents in the high court. On the back of allegations that the respondents had ‘hijacked’ and were ‘looting’ Mystic River, the appellants sought an order: preventing the respondents from continuing to unlawfully represent and make decisions purportedly on behalf of, or in the name of Mystic River; ordering the respondents to return funds belonging to Mystic River, which were misappropriated or diverted from it; compelling the respondents to provide full and proper accounts in respect of the affairs of Mystic River; for those accounts to be debated; and for Mystic River to be paid any amounts due to it pursuant to such statement and debatement of account. The respondents served the second appellant with notices in terms of rule 47(1) of the Uniform Rules of Court, calling upon him to furnish security for costs in the main application. They contended that he is a peregrinus of the court; has no assets in the Republic of South Africa (the Republic) and would be unable to pay their costs should they be successful in the main application. Security for costs was ordered by the high court. The SCA held that the high court erred in holding that, as a general rule, a peregrinus is obliged to furnish security for costs. This misdirection justified interference by this Court. That being so, this Court was at large to consider the application afresh. In considering the application, the SCA found that the second appellant did not plead poverty. He did not complain that an order of security would cause an injustice in the sense that it would prevent him from pursuing the main application. There was, thus, nothing really on his side of the scale. But if no security was ordered and there was a cost order against the second appellant (whether jointly or severally with Mystic River or not), the respondents would suffer the inconvenience, delay and additional costs involved in enforcing a cost order in a foreign jurisdiction. The SCA therefore held that fairness and equity dictated that the second appellant be ordered to provide security for costs. Furthermore, it held that the high court erred in directing that the appellants pay the costs of the application to provide security jointly and severally. ~~~~ends~~~~

4164

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case No: 568/2022 In the matter between: FRANK NABOLISA APPELLANT and THE REGIONAL FIRST RESPONDENT COURT MAGISTRATE MS SYTA PRINSLOO N.O. THE DIRECTOR OF PUBLIC SECOND RESPONDENT PROSECUTIONS: GAUTENG DIVISION OF THE HIGH COURT, JOHANNESBURG Neutral Citation: Nabolisa v The Regional Court Magistrate and Another (568/2022) [2023] ZASCA 07 (19 January 2024) Coram: ZONDI and MOKGOHLOA JJA and NHLANGULELA AJA Heard: 24 AUGUST 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, published on the Supreme Court of Appeal website, and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 19 January 2024. Summary: Appeal against the dismissal of an application for review – whether the appellant's right to a fair trial was infringed – the appeal is dismissed. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Bokako AJ with Yacoob J concurring, sitting as court of first instance): The appeal is dismissed. ________________________________________________________________ JUDGMENT NHLANGULELA AJA (ZONDI and MOKGOHLOA JJA concurring): Introduction [1] The appellant together with one Ms Natasha Mashiane, both legally represented, appeared before the first respondent (sitting as the regional magistrate at the Regional Division of Johannesburg, Alexandra) each charged on two counts of dealing in or unlawful possession of cocaine in contravention of s 5(b) or s 4(b) of the Drugs and Drug Trafficking Act 140 of 1992 (the Drugs Act); and unlawful possession of paracetamol (acetaminophen) and methenamine (hexamine) in contravention of s 22A of the Medicines and Related Substances Act 101 of 1965 (the Substances Act). At the conclusion of the trial, the appellant was convicted of dealing in cocaine and unlawful possession of paracetamol and methenamine. He was sentenced to undergo imprisonment for a cumulative period of 30 years. Further, an order was issued that the exhibits, 2.455 kg of cocaine, 5.681 kg of paracetamol and 2.748 kg of methenamine are forfeited to the State. Ms Mashiane was found not guilty in respect of both counts, and she was acquitted. [2] Having exhausted all the avenues of appeal, albeit without success, the appellant brought an application to the Gauteng Division of the High Court, Johannesburg (high court) seeking an order to review and set aside the decision of the first respondent convicting and sentencing him on the basis that his fair trial rights were infringed, which vitiated the criminal proceedings in their entirety. On 8 April 2021 the high court (per Yacoob J and Bokako AJ) dismissed the review application. The appeal to this Court is with the leave of the high court. The litigation history [3] The appellant’s efforts to have his conviction and sentence quashed commenced by engaging in the appeal process. Following upon the sentence proceedings on 19 May 2014, he brought an application for leave to appeal against both the conviction and sentence. The first respondent found that the application for leave had no reasonable prospect of success on appeal, and she dismissed it. Undeterred by that outcome, the appellant petitioned the Judge President of the Gauteng Division of the High Court for leave to appeal against conviction and sentence. On 5 September 2014, Mokgoatlheng and Strydom JJ dismissed the appellant's petition for leave to appeal against both the conviction and sentence. In a further application for special leave to appeal to this Court against conviction and sentence, on 16 July 2015, Navsa ADP and Mbha JA dismissed the application on the ground that there were no special circumstances present that merited a further appeal. To that extent, all the efforts of the appellant to have his conviction and sentence overturned on appeal came to naught. It is against that background that the review remedy of the appellant must be considered. Background facts [4] The facts which gave rise to these proceedings are the following: Acting on a telephonic police intelligence report, a team of police officers led by Warrant Officer Hein Leonard De Jager went to house no. 2053 Makwata Street, Ebony Park where they found one Ms Audrey Radien and her son in occupation of the house. Ms Radien introduced herself as the mother of Ms Mashiane, the appellant’s girlfriend. She permitted them to search the house. In a bedroom that she identified to the police officers as belonging to Ms Mashiane, they found two suitcases, one maroon and another black in colour, in which they found small plastic packets that contained large quantities of powdery substances that they suspected was cocaine. Thereafter, they removed the exhibits to the police station, wrote them into the SAP 13 Register and kept them in the storeroom. These exhibits were later analysed by Sergeant Rodney Machimane at the state laboratory. [5] Sgt Machimane and Major Nolovuyo Gifta Makwatane, the government employees attached to the Forensic Science Laboratory unit of the SAPS testified on behalf of the state. Sgt Machimane testified that he was a forensic analyst who was charged with the task of analysing the exhibits to verify if they were ‘dangerous dependence producing’ substances within the definition of that term in the Drugs Act and the Substances Act respectively. After rigorous analytical testing performed in a laboratory applying internationally accepted comparative analytical techniques of gas chromatography coupled to mass spectrometry (the GC-MS) and Fourier Transform Infrared Spectroscopy (the FT-IR), he found that out of the substances that were contained in the maroon suitcase (evidence bag FSG-249068) and the black suitcase (evidence bag FSG-249067), substances weighing 2.455kg; 5.681kg; and 2.748kg were cocaine, paracetamol and methenamine respectively. The forensic evidence adduced by Sgt Machimane was foreshadowed in the affidavit that he had prepared in terms of s 212 of the CPA. It was admitted in evidence as Exhibit ‘G’. [6] The appellant was legally represented at the trial. But he did not cross- examine the state witnesses, testify in his own defence or call a witness to testify on his behalf. Mr Hamilton, the legal representative for Ms Mashiane, led the evidence of Dr Cornelius Christoffel Viljoen who is qualified as a biochemist with forensic experience in research of snake venoms. Dr Viljoen disputed the integrity of the forensic analysis and findings of Sgt Machimane that some of the exhibits contained cocaine powder, alleging that the 303 molecular mass spectrometry found is a chemical description of cocaine as well as other substances that have been compiled by the USA National Institute for Standards and Technology. He testified that the GC-MS technique that was applied by Sgt Machimane did not have unlimited capacity to produce unquestionable results. He testified that since only a few of the majority samples obtained from the exhibit substances were analysed, the findings of Sgt Machimane that the exhibits contained cocaine, paracetamol and methenamine were not conclusive. He also testified that the findings made by Sgt Machimane are incorrect because the testing machines used had not been calibrated. [7] Mr Hamilton also called Dr Andrew Dinsmare to testify. He has a doctoral degree in chemistry. In the course of executing duties as a chemistry lecturer at the University of the Witwatersrand, he ran a private analytic laboratory for 15 years for the benefit of research students. He once assisted in a research project of a student on an assignment that had been offered by the National Intelligence Agency. The assignment involved forensic analysis of narcotics or drug-related substances. However, it was the student, not Dr Dinsmare that did the analysis. He testified that the findings that the exhibit substances contained cocaine, paracetamol and methenamine, were invalid because not all the samples were tested in the HP9 machine. The reference samples used by Sgt Machimane were not named and the results of the forensic analysis were hastily written by hand instead of the HP9 machine printing them out. [8] To the extent that Dr Viljoen queried the fact that the GC-MS machine was calibrated, the prosecution applied for the re-opening of the state’s case to lead the evidence of Major Makwatane, which was granted. Major Makwatane’s evidence was that she, in her capacity as a laboratory technician, had carried out suitability tests on the two machines described as HP4 and HP9 that were later used by Sgt Machimane to analyse the exhibits. She disavowed any involvement in the exercise of forensic analysis, but confirmed that the machines were calibrated properly, and they were in good condition for the analysis of exhibits to be carried out. In the high court [9] The appellant brought an application seeking an order to review the first respondent's decision to convict and sentence him. He relied on the following grounds of review: (i) The second respondent’s failure to make proper disclosure and the first respondent’s failure to order proper disclosure of the working papers of the forensic analyst. (ii) The first respondent placed an onus on an accused in a criminal matter. (iii) The appellant was convicted of a non-existing offence of possession with intention to deal, relying on a presumption, contained in s 21 of the Drugs Act1, that has been declared unconstitutional. 1 Section 21 presumptions were declared unconstitutional in S v Bhulwana; S v Gwadiso 1995(2) SACR 748 (CC) (iv) The first respondent permitted rude and inappropriate cross-examination by the second respondent’s counsel. (v) Evidence of a state witness in favour of the defence was rejected when the witness was not discredited. (vi) Sentencing proceedings were unfair. [10] The high court rejected all of the appellant’s grounds of review and dismissed the application. It, nevertheless, granted him leave to appeal to this Court. In this Court [11] The issue is whether the high court erred in finding that the appellant's right to a fair trial was not infringed. To succeed in his review application the appellant had to bring his application within the purview of s 38, read with s 35(3) of the Constitution2 by satisfying the high court on the facts supporting his claim that his constitutional rights were infringed during the criminal proceedings. In terms of S v Zuma and Others3 (Zuma) the s 35(3) fair trial rights of the Constitution that the appellant seeks to advance in his review proceedings embrace a concept of substantive fairness that is much broader than the fair trial rights themselves. The Constitutional Court in Zuma held at para [16]: 2 Section 38 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.’ Section 35(3) provides: ‘Every accused person has a right to a fair trial, which includes the right–…(i) to adduce and challenge evidence; . . .(l) not to be convicted of an act or omission that was not an offence under either national or international law at the time it was committed or omitted;’ 3 S v Zuma and Others [1995] ZACC 1; 1995 (2) SA 642 (CC); 1995 (4) BCLR 401 (SA); 1995 (1) SACR 568; [1996] 2 CHRLD 244 para 16. See also National Director of Public Prosecutions v King [2010] ZASCA 8; 2010 (2) SACR 146 (SCA); 2010 (7) BCLR 656 (SCA); [2010] 3 All SA 304 (SCA) para 4. ‘That caveat is of particular importance in interpreting section 25(3) of the Constitution. The right to a fair trial conferred by that provision is broader than the list of specific rights set out in paragraphs (a) to (j) of the sub-section. It embraces a concept of substantive fairness which is not to be equated with what might have passed muster in our criminal courts before the Constitution came into force. In S v Rudman and Another; S v Mthwana 1992(1) SA 343(A), the Appellate Division, while not decrying the importance of fairness in criminal proceedings, held that the function of a court of criminal appeal in South Africa was to enquire "whether there has been an irregularity or illegality, that is a departure from the formalities, rules and principles of procedure according to which our law requires a criminal trial to be initiated or conducted". A court of appeal, it was said, (at 377) "does not enquire whether the trial was fair in accordance with 'notions of basic fairness and justice', or with the 'ideas underlying the concept of justice which are the basis of all civilised systems of criminal administration'." That was an authoritative statement of the law before 27th April 1994. Since that date section 25(3) has required criminal trials to be conducted in accordance with just those "notions of basic fairness and justice". It is now for all courts hearing criminal trials or criminal appeals to give content to those notions.’ [12] The appellant’s attack on the high court’s judgment is based on the following grounds: (a) The prosecutor suppressed the working papers used in the forensic analysis of the exhibit substances during the state case, thus depriving the appellant of his right to challenge the forensic evidence adduced by Sgt Machimane which proved that some of the exhibits were cocaine; (b) The first respondent failed to order the re-calling of Sgt Machimane for cross-examination on the working papers; (c) Sgt Machimane conducted selective forensic analysis of some of the samples, instead of all, taken from the exhibit substances, which was irregular; (d) The HP4 and HP9 machines used and the GC-MS technique applied by Sgt Machimane in analysing the exhibit substances did not meet internationally recognized scientific standards; (e) The condonation by the first respondent of the prosecutor’s use of rude and inappropriate language, ‘Ag shame’, when cross-examining Dr Dinsmare, the defence witness, was improper; and (f) The finding by the first respondent that the appellant and his counsel had not challenged the evidence of Sgt Machimane when that had been done by Mr Hamilton, the legal representative for the co-accused, was erroneous. [13] In argument, it was submitted on behalf of the appellant that the irregularities listed above constituted an infringement of the appellant’s constitutional rights as set out in ss 35 (3) (i) and (l) of the Constitution. It was contended further that the suppression of and/or late disclosure of the working papers denied the appellant information that was favourable to his defence, denied him his right to raise contradictions in Sgt Machimane's evidence, concealed irregularities in methods used to analyse the exhibit samples and made it possible for Sgt Machimane not to be recalled by the first respondent to clarify the discrepancies between his s 212 affidavit and the working papers on which this scientific analysis of the exhibit samples was done. [14] On the other hand , the State raised a point in limine urging this Court to dismiss the appeal on the ground that this appeal is res judicata4 as the grounds for the appeal against the judgment and order of the high court are the same as those on which this Court dismissed the application for special leave to appeal This same point in limine had also been raised before the High Court, and it was 4 In Molaudzi v S [2015] ZACC 20; 2015 (8) BCLR 904 (CC); 2015 (2) SACR 341 (CC)para 14 it was stated “Res judicata is the legal doctrine that bars continued litigation of the same case, on the same issues, between the same parties.” dismissed on the basis that the grounds for the review application and those for the application for special leave overlap. In the absence of an appeal against that decision, the point in limine cannot succeed. [15] On the merits of this appeal, it was submitted on behalf of the State that the contention by the appellant that it had suppressed the working documents of the forensic analysts, was not correct. The State argued that the documents were not part of the docket. In any event, the s 212 statement of Sgt Machimane that was contained in the docket was discovered, and it was used by the prosecutor when leading the evidence of Sgt Machimane. Both the State and defence had closed their cases when Mr. Hamilton brought an application in terms of s 87 (1) of the Criminal Procedure Act 51 of 1977 (CPA)5 to be furnished with further particulars of the docket. Although the first respondent dismissed the application, the working papers sought were furnished to Mr Hamilton upon request for the same from the Forensic Science Laboratory. Counsel for the State argued, with reliance on Mkhize v S6, that the finding of the trial court that some of the exhibit samples were cocaine was correct as Sgt Machimane was not challenged by counsel for the appellant and the alleged discrepancies between the working papers and the evidence of Sgt Machimane, as alluded to by Mr. Hamilton, were never put to Sgt Machimane. [16] In any event, the State submitted that the fact that the working documents had certain numbers written in pen did not contradict the correctness of the 5 Section 87 (1) serves the right of the accused to obtain more information on what has been alleged or is missing in the charge sheet to prepare his/her defence. 6 The case of Mkhize v S (390/18) [2019] ZASCA 56 (1 April 2019) restates the principle of law that the accused has an obligation to put his/her case to the state witnesses under cross-examination, and the failure to do so strengthens the state case against him/her. In terms of the decisions in the President of the Republic of South Africa v South African Rugby Football Union & Others [1999] ZACC 11; 2000 (1) SA 1 (CC) para 61; and S v Boesak 2000 (3) SA 381 (SCA), the appellant deliberately abandoned his fair trial protection. evidence of Sgt Machimane. It argued that both Dr Viljoen and Dr Dinsmare lacked the skills and experience in forensic analysis of cocaine substances using GC- MS and FT-IR techniques. The State further submitted that the use by the State counsel of the term “Ag Shame” during the cross-examination of Dr Dinsmare did not constitute an appropriate language. It argued that the comment was made in response to Dr Dinsmare’s criticism of the evidence of Sgt Machimane that he could not have analysed the number of samples which he said he did. Dr Dinsmare, proceeded the argument, could not criticize the evidence of Sgt Machimane when he had not studied Sgt Machimane's working papers before testifying. [17] The allegations that the appellant’s fair trial rights were violated during the trial are not borne out by the evidence. The police witnesses conducted a lawful search and seizure of the substance exhibits. I cannot find irregularities in the manner in which the charge sheet was framed and the charges were put to him. The first respondent handled the plea proceedings and the trial properly. The offences that were proved against the appellant were competent and he was convicted on the strength of credible state evidence. The evidence of both Dr Viljoen and Dr Dinsmare was correctly rejected by the first respondent. It transpired during cross-examination that the criticism made by these witnesses against the forensic findings of Sgt Machimane was not buttressed with scientific facts. They testified without having read the working documents of Sgt Machimane. They were proved not to possess experience in analysing drugs. They had no experience in the use of the HP4 and HP9 machines that were calibrated by Major Makwatane and used by Sgt Machimane. Dr Viljoen conceded that he was a ‘chemical layman’. He was unable to point to any one compound in the list compiled by the USA National Institute for Standards and Technology that has the same molecular mass of 303 as the cocaine compound. Dr Dinsmare conceded that he was rushed to give his testimony without having had the benefit of consultation with Sgt Machimane. He conceded that the reference samples used by Sgt Machimane to analyse the exhibit substances were in accordance with international best practices. He conceded that Sgt Machimane did find cocaine and methenamine in the exhibits. [ 18] I reject the appellant’s contention that the use of the phrase ‘ag shame’ by the State counsel during the cross-examination of Dr Dinsmare was so inappropriate to such an extent that it undermined the integrity of the proceedings. A proper reading of the record reveals that the prosecutor merely used the comment to lambast Dr Dinsmare’s stratagem of shifting blame for not having prepared for trial. [19] The appellant did not ask for further particulars of the charge relevant to the working papers. Neither did he ask for the discovery of the working papers of the forensic analysis of the substances that had been found in his possession7. The dismissal of the appellant’s application for further particulars of the charges was proper, it having been made on the basis that the papers sought were not part of the police docket and were not sought for the purpose of preparation for trial. He chose not to exercise his constitutional right to challenge the evidence of Sgt Machimane that directly implicated him in the commission of the offences with which he was charged. The appellant, still being legally represented, elected not to testify.8 7 As indicated in Shabalala and Others v Attorney-General of Transvaal and Another 1995 (2) SACR 761 (CC), 1996 (1) SA 725 (CC) at 778E the accused will have access to relevant parts of the docket if he or she asked for discovery thereof. 8 It was stated in Osman and Another v Attorney General [1998] ZACC 14; 1998 (4) SA 1224 (CC); 1998 (11) BCLR 1362 para 22 and S v Thebus and Another [2003] ZACC 12; 2003 (6) SA 505 (CC); 2003 (10) BCLR 1100 (CC) at para 57 that the exercise of the right to remain silence is not a risk, but has consequences for trial proceedings. [20] Consequently, none of the grounds of appeal have been proved. The judgment of the high court cannot be faulted. [21] In the result the following order is made: The appeal is dismissed. ___________________________ ZM NHLANGULELA ACTING JUDGE OF APPEAL Appearances For Appellant: M Kolbe SC Instructed by: HJ Van der Westhuizen Attorneys, Roodepoort Wessels & Smith Attorneys, Bloemfontein For Respondents: AM Williams Instructed by: Office of the State Attorney, Pretoria C/O Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 19 January 2024 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Nabolisa v The Regional Court Magistrate and Another (568/2022) [2023] ZASCA 07 (19 January 2024 __________________________________________________________________________ Today the SCA handed down judgment dismissing the appeal against the decision of the Gauteng Division of the High Court, Johannesburg (the high court). On 8 April 2021 the high court dismissed an application brought by the appellant seeking an order to review and set aside the decision of the first respondent convicting and sentencing him on the basis that his fair trial rights were infringed. The common cause facts were that the members of the SAPS, acting on a tip-off, searched and found large quantities of powdery substances stored in two suitcases kept in a house used and controlled by the appellant. In the forensic tests that were conducted by Sgt Rodney Machimane, the drugs analyst attached to the Forensic State Laboratory, it was found that the powdery substances were cocaine weighing 2.455kg, paracetamol (acetaminophen) weighing 5.681 kg and methenamine (hexamine) weighing 2.748 kg. Having been charged and appeared for trial before the first respondent at the Regional Division of Alexandra, the appellant was found guilty of dealing in cocaine in contravention of s 5(a) of the Drugs and Drug Trafficking Act 140 of 1992 and unlawful possession of paracetamol and methenamine in contravention of the Medicines and Related Substances Act 101 of 1965. Pursuant thereto, he was sentenced to undergo imprisonment for 30 years. When his appeal remedy against the convictions and sentence was unsuccessful, he resorted to the review application in terms of s 38 read with s 35 of the Constitution, alleging that had the respondents not infringed his fair trial rights he would not be convicted and sentenced. The upshot of the appellant’s appeal was that the decision of the high court would have been different if the first respondent had taken into account that the prosecutor failed to use the working papers of the forensic analysis when leading the evidence of Sgt Machimane; selective samples of the exhibit substances were used during the forensic analysis; the HP4 and HP9 machines used and the GC-MS technique applied in testing the exhibit samples did not comply with international standards; and that the prosecutor was rude towards one of the witnesses called to testify on behalf of the appellant’s co-accused. In assessing the appeal, the SCA took into account the facts found proved by the regional court that the appellant was the possessor of and dealer in the exhibit substances that were recovered by Warrant Officer De Jager and that the forensic analysis conducted by Sgt Machimane revealed that the exhibit substances fitted the description of cocaine, paracetamol and methenamine that are prohibited substances under the Drugs Act and Medicines and Related Substances Act. The submission made on behalf of the appellant that the forensic analysis of the exhibit samples and the machines used did not meet international standards is not borne out of the facts. The SCA did not find any irregularities in the proceedings before the high court, including the forensic evidence adduced by Sgt Machimane. Neither was any of the appellant’s trial rights infringed in the management of the trial by the first respondent. The language used by the prosecutor during the cross-examination of Dr Dinsmare did not compromise the integrity of the trial proceedings. Instead, the SCA found that the appellant chose not to ask for further particulars to the charge or to call upon the state to discover the working papers for the preparation of his defence. The appellant chose not to testify and call witnesses to challenge the state evidence which called for his answer. In the absence of a misdirection on sentence, the appeal court is not entitled to interfere with the imposed sentence of 30 years’ imprisonment. In the result, the SCA dismissed the appeal.

1374

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 250/09 In the matter between: THE REPRESENTATIVE OF LLOYDS First Appellant THEBE RISK SERVICES (PTY) LTD Second Appellant DEVEREUX MARINE CC Third Appellant and CLASSIC SAILING ADVENTURES (PTY) LTD Respondent Neutral citation: Lloyds & others v Classic Sailing (250/09) [2010] ZASCA 89 (31 May 2010) Coram: Harms, Lewis, Cachalia and Malan JJA and Griesel AJA Heard: 20, 21 May 2010 Delivered: 31 May 2010 Corrected: 7 June 2010 Summary: Marine Insurance: parties cannot exclude mandatory provisions of South African statute by choice of other legal system: validity of policy affected by non-disclosure, misrepresentation or illegality determined by reference to ss 53 and 54 of Short-Term Insurance Act 53 of 1998: vessel sinking as a result of latent defect in hull: Lloyds held liable. Second and third appellants, joined as defendants, not liable: entitled to full costs of trial. _____________________________________________________________ ORDER ______________________________________________________________ On appeal from: Western Cape High Court (Cape Town) (Cleaver J sitting as court of first instance): 1 The first appellant‟s appeal is dismissed with costs, including those occasioned by the employment of two counsel. 2 The appeals by the second and third appellants are upheld with costs, including those occasioned by the employment of two counsel. 3 Paragraph 1.4 of the order of the high court is replaced with the following: „The first defendant is ordered to pay the costs of the second and third defendants including the costs occasioned by the employment of two counsel and the preparation expenses of Mr Child.‟ 4 The respondent‟s conditional cross-appeal is dismissed. _____________________________________________________________ JUDGMENT ______________________________________________________________ LEWIS JA (HARMS DP, CACHALIA and MALAN JJA and GRIESEL AJA concurring) [1] The vessel Mieke was built as a motorized yacht for fishing in 1997 at the instance of Mr A Viljoen, the director and shareholder in various companies which had fishing vessels, and Mr W Hennop, the skipper over a number of years of several of the Viljoen vessels. Hennop was the skipper of the Mieke from inception. The vessel was originally designed and built for fishing in the southern oceans. The fishing venture proved to be unprofitable and Viljoen and Hennop decided to convert the Mieke into a luxury charter yacht in 2003. It was transferred to Classic Sailing Adventures (Pty) Ltd, the respondent. Viljoen is the director of and controlling shareholder in Classic Sailing. Once converted the Mieke could accommodate 12 passengers who would fish and indulge in various other activities from it. [2] On 15 September 2005 the Mieke sailed from Vilanculos off the Mozambican coast. Only the crew were onboard. Three days later, on 18 September, the Mieke sank approximately 58 nautical miles south east of Angoshe off the coast of Mozambique. The crew, with Hennop as skipper, reached shore on a rubber duck (a tender). [3] The first appellant is the representative (cited as such in terms of the Short-Term Insurance Act 53 of 1998) of a Lloyds‟ syndicate which had insured the Mieke. I shall refer to the first appellant simply as Lloyds. The second appellant, Thebe Risk Services (Pty) Ltd (Thebe), is the insurance broker that placed the insurance. The third appellant is Devereux Marine CC (Devereux CC), also an insurance broker which specializes in hull insurance in the Lloyds market. Classic Sailing claimed from Lloyds the sum insured – R10m. Lloyds declined to pay. Classic Sailing instituted action for payment in the Western Cape High Court, exercising its admiralty jurisdiction. [4] In its plea to Classic Sailing‟s particulars of claim Lloyds alleged that it was not liable because the sinking was caused by a risk not insured against, and also because of other special defences. It alleged that Classic Sailing had not disclosed to it that Hennop was not certified to serve as the skipper; it had also not disclosed that the stability information on board was inaccurate, not in the prescribed form and not approved by the South African Maritime Safety Authority (SAMSA). In the alternative Classic Sailing, alleged Lloyds, had misrepresented the nature of a dispute between it and SAMSA as to the certification of Hennop, and that Lloyds was thus entitled to avoid the policy; and lastly, that the „adventure insured‟ had been carried out in an unlawful manner in breach of the implied warranty of legality in s 41 of the English Marine Insurance Act of 1906. The insurance policy expressly stated that the contract was governed by English law. [5] If there were any non-disclosures or misrepresentations made by Classic Sailing these would have been effected through its insurance broker since Classic Sailing did not deal directly with Lloyds. Viljoen had placed all the insurance of his vessels, owned by different corporate entities, with Thebe, represented by Mr M Brown. Brown in turn had instructed Devereux, of Devereux CC, which specializes in hull insurance on the Lloyds market. And Devereux had asked Arthur J Gallagher (UK) Ltd (Gallagher), accredited Lloyds brokers, to find an underwriter for the Mieke, which it had done. Accordingly, after action was instituted and on receipt of the plea, Classic Sailing joined Thebe as the second defendant and Devereux CC as the third defendant, the claims against them being conditional on the claim against Lloyds failing. Classic Sailing‟s claim against Thebe was premised on it having failed to obtain valid insurance for the Mieke in breach of the contract between Thebe and Classic Sailing. The claim against Devereux CC was premised also on breach of contract and in the alternative on breach of a duty of care in delict. [6] Cleaver J found that there were no material non-disclosures; no misrepresentation made, and that the Mieke had not embarked on an unlawful voyage. He also held that the sinking of the Mieke was due to a latent defect, which was covered by the insurance policy. He accordingly ordered Lloyds to pay the sum insured, less the value of the tender which had not sunk – a sum of R9 940 000 – and the costs of two counsel and various experts. [7] Thebe and Devereux CC were therefore not liable, but they were awarded only the costs incurred for half of the hearing since they took no active part in the trial in respect of the cause of the sinking. Lloyds applied for leave to appeal to this court and Thebe and Devereux CC applied for leave to appeal against the costs orders made in respect of them. Leave to all three appellants was granted by Cleaver J. Classic Sailing was also given leave to cross-appeal, conditional on the appeal by Lloyds succeeding. [8] I shall discuss each of the special defences separately. If there is merit in any then the insurance policy may be avoided and the question whether the sinking of the Mieke was covered by the terms of the policy falls away. The court below held that Classic Sailing bore the onus of proving that the risk was insured against, but that Lloyds had to prove the special defences. The parties on appeal do not take issue with this. They also do not dispute that the policy is governed by English law, but subject to South African jurisdiction: but they differ as to the applicability of South African legislation – the Short Term Insurance Act. The history in brief The conversion of the Mieke [9] Before turning to the special defences some background is required, both as to the structure of the Mieke and the conclusion of the insurance policy. The vessel, described as a grand bank schooner, was first built in 1997. A schooner is a small sea-going fore-and-aft rigged vessel. Originally, schooners had only two masts, but now often have three or four, and carry one or more topsails. Grand Bank schooners are those that plied the oceans off the Grand Banks alongside the coast of Canada and Newfoundland. [10] The Mieke was conceived of and designed by Hennop and Mr J Liverick, both of whom had worked for Viljoen on other vessels. It had both sails (two masts) and Caterpillar turbo-charged marine diesel engines. It was 31 metres long and its beam was 7.68 metres. The vessel, with Hennop as skipper, was used for long-line fishing for some five years. As I have said, the fishing venture was not profitable and Hennop and Viljoen decided to convert it to a charter yacht which could carry 12 passengers. Liverick, Hennop and Viljoen were involved in the redesign, and Hennop acted as project manager for the conversion and rebuilding, which commenced in 2003. The vessel was transferred to Classic Sailing, in which Hennop had some shares but Viljoen had the majority shareholding. The conclusion of the insurance policy [11] In November 2004 Brown, of Thebe, who had long been the broker for Viljoen‟s insurance and that of his various companies, visited Viljoen in his office in St Francis Bay to discuss insurance for Viljoen‟s businesses generally and for the various vessels owned by them. One of the issues discussed was the difficulty Classic Sailing was having in obtaining certain certificates from SAMSA for Hennop. [12] Viljoen believed that Hennop had all the necessary certificates – although in respect of three parts of the syllabus set by SAMSA to qualify as a skipper of a vessel like Mieke, Hennop had received his certificates from bodies other than SAMSA. Viljoen and Brown considered that SAMSA was acting unreasonably in refusing to recognize Hennop‟s certification. But they decided that any insurer should be apprised of this. Accordingly, following the meeting, Brown wrote to Devereux on 23 November 2003, saying that Classic Sailing had „ongoing difficulty‟ with SAMSA with regard to Hennop‟s qualifications as skipper. I shall set out the terms of the letter more fully when dealing with the issue of misrepresentation. He attached numerous documents reflecting the courses completed by Hennop. [13] Devereux in turn wrote to Mr N Paice of Gallagher (the Lloyds broker). Paice, it is common cause, gave Devereux‟s letter to Mr J S James, the lead underwriter for the corporate member of the Lloyds syndicate, who was authorized to determine the terms of any insurance policy. James, who testified for Lloyds, said that he had no independent recollection of any conversation with Paice, but acknowledged that he had noted the word „seen‟ on Devereux‟s letter, and said that he would not have done so unless he had read the contents of the letter and the attachments. He dated Devereux‟s letter 24 November 2004. [14] I shall revert to the allegation of misrepresentation as to Hennop‟s qualifications when dealing with the second special defence raised by Lloyds. Although in its plea Lloyds had alleged that there was a non-disclosure of Hennop‟s lack of certification, this defence is not pursued on appeal, given the concession of James under cross-examination that he had seen the documents that revealed that Hennop did not have all the SAMSA certificates required. Lloyds relied instead, on appeal, on misrepresentation as to the nature and extent of the disputes between Classic Sailing and SAMSA as to Hennop‟s certification to avoid liability. The terms of the policy [15] The written terms of the contract are set out in a cover note (Number M041209D). The period covered was 12 months with effect from 1 December 2004. The „interest‟ was stated to be „Hull Materials Etc, Machinery Outfit Etc, and everything connected therewith nothing excluded‟. The sum insured was R10m, which also covered the two tenders, insured for R80 000 each. The Mieke was allowed to „trade‟ „not North of the Equator, not West of 20° West, not South of 45° South and not East of 70° East.‟ Choice of law and jurisdiction were stated to be „English Law and South African Jurisdiction‟. The terms of the policy were stated to include the Institute (of London Underwriters) Fishing Vessel clauses, clause 6 of which deals with the perils insured against. Clause 6.2 provides that the insurance covers loss or damage to the vessel caused, inter alia, by any latent defect in the machinery or hull, provided that the loss or damage is not the result of „want of due diligence by the Assured, Owners or Managers‟. The stability book [16] Section 226 of the Merchant Shipping Act 57 of 1951 requires the owner of a vessel in the class of the Mieke (Class XI) to keep on board the ship „such information in writing about the stability of the ship as is necessary for the guidance of the master in loading and ballasting the ship‟. Regulation 7(1) of the Safety of Navigation Regulations repeats this wording.1 Regulation 7(3) states that the stability information shall be based on „the determination of the stability . . . by means of an inclining test‟. Regulation 8 sets out the form of the stability information and the requirements for drawings and measurements. Lloyds contended that the stability book on board the Mieke at the time when the insurance policy was concluded had not been approved by SAMSA. But there is no requirement in the Act or regulations for SAMSA approval. [17] When the Mieke was first constructed as a fishing vessel in 1997 a stability book, as required by the regulations, was compiled and approved by SAMSA. On its conversion to a charter yacht SAMSA required that a new 1 Safety of Navigation Regulations 1968, as amended. stability book be prepared. To this end Liverick was asked to carry out an inclining test, which he did, and he requested Mr M Stewart, who was in Durban, to compile a new stability book. In doing so, Stewart relied on the results of the inclining test conducted by Liverick, as well as on the latter‟s general plan and the former stability book. The new book was placed on board, but when the converted Mieke sailed to Cape Town early in 2004 she was detained there by SAMSA on the basis that the stability book had not been approved by SAMSA. [18] Stewart advised that 19.3 tons of additional ballast (heavy material to balance a vessel) be placed in the Mieke. Accordingly Hennop and a crew member, Mr E S Awad, attended to the pouring of concrete into the Mieke‟s sewage tank during one night when she was still detained. There is a dispute as to how much concrete was added and how many walls were constructed to retain it, but this is not relevant for the reasons that follow. SAMSA granted interim approval of the stability book on 15 March 2004 after the addition of ballast. The approval was valid only until 15 April. The Mieke was released from detention and sailed to Mozambique, where, but for one trip to Port Elizabeth, she remained until September 2004. [19] In September 2004 the Mieke returned to Port Elizabeth. She was placed in dry dock and surveyed by SAMSA. The principal officer of SAMSA in the Port Elizabeth office, Captain Colenutt, did a hull survey and, on 18 October, issued a survey report. In it he described the condition of the hull and ship side valves as „satisfactory‟. Colenutt also issued a survey report: he stated that „the required SAMSA approved stability book is aboard.‟ The following day a Local General Safety Certificate was issued for the Mieke. This stated that she was a class XI sailing vessel undertaking charter excursions or unlimited voyages in the Indian Ocean, carrying 12 or fewer passengers. The certificate stated further that the vessel had been inspected in accordance with the requirements of applicable regulations. On 21 October 2004 the Mieke again sailed for Mozambique. Application of the English Marine Insurance Act of 1906 and the provisions of the Short-Term Insurance Act 53 of 1998 [20] As I have said, the parties to the policy agreed that the applicable law was English, though South African courts would have jurisdiction. Lloyds relies on sections of the English Act in support of its special defences. To the extent that there is inconsistency or a conflict between these and the provisions of the Short-Term Insurance Act, which law governs? This question is pertinent to all the special defences raised by Lloyds. [21] The general rule is that the choice by parties to a contract of the governing law – the proper law of the contract – is valid.2 However, legality is a question to be determined by the lex fori.3 The ius cogens (peremptory law) of the forum cannot be excluded. Our case law is sparse on this issue, but it is the general view of writers on the subject. And it must be that peremptory (mandatory) rules of the forum – especially legislative provisions – apply. Complete party autonomy cannot prevail over the premptory provisions of a statute, especially where the action is brought in terms of the statute (as in this case). The Short-Term Insurance Act is applicable to marine insurance by virtue of the definitions of a „short-term policy‟ and „transportation policy‟ which expressly include insurance of a vessel. [22] Professor Forsythe,4 in discussing the question whether the lex fori applies even where the parties have chosen another system of law to govern their contract, refers to Voet5 who drew a distinction between prohibitory statutes, which cannot be renounced, and dispositive statutes which can. Sections 53 and 54 of the Short-Term Insurance Act on which Classic Sailing relies are not prohibitory: they deal with the effect of misrepresentation, non- disclosure and illegality – issues to which I shall revert. But as Forsythe states, the distinction between prohibitory provisions and others is not easy to 2 2 (2) Lawsa (2 ed) „Conflict of Laws‟ paras 328ff; Christopher Forsythe Private International Law (4 ed) p 294ff and John Hare Shipping Law and Admiralty Jurisdiction in South Africa 2 ed (2009) p 143. 3 Lawsa op cit para 329. 4 Op cit p 299, fn 33. 5 J Voet Commentarius ad Pandectas Appendix to 1.4 18-22. draw. He suggests that where the lex fori is designed to protect the weaker party in contractual negotiations the chosen law, if it is inconsistent, should not prevail.6 In international trade, on the other hand, parties tend to be on an equal footing and may in effect contract out of the lex fori. [23] Rather than asking whether statutory provisions are prohibitory or dispositive, a better approach to determining whether parties may exclude the operation of statutory provisions by choice of another system of law might be to question whether they can waive the application of the provisions. This question was addressed in SA Co-Op Citrus Exchange v Director-General: Trade & Industry7 where Harms JA, dealing with procedural statutory provisions, held that they may be renounced by a party (in that case the State) for whose benefit they are enacted. But where public policy and interest would be prejudiced by a waiver, such provisions cannot be escaped. Waiver is not possible, said this court, if it affects public policy or interest or a right.8 This principle was affirmed in De Jager en andere v Absa Bank Bpk,9 where this court held that the application of the provisions of the Prescription Act 68 of 1969 may be waived by a debtor under a contract after the prescriptive period has run because renunciation did not substantially or materially impact on the public interest. [24] Sections 53 and 54 of the Short-Term Insurance Act are at issue in this matter. Section 53 deals with the effect of non-disclosures and misrepresentations on an insurance policy, and s 54 with the effect of a contravention of a law on a policy. Section 53 is designed to protect insured parties who are ignorant, careless or uneducated from unscrupulous insurers who attempt to escape liability on the basis of the common law that has evolved in relation to misrepresentation or non-disclosure.10 And s 54 ensures that a policy is not avoided only because the insured has contravened a law. I 6 Op cit p 301 and Lawsa op cit para 329 fn 12 and 13. 7 1997 (3) SA 236 (SCA). 8 At 244D-245D. 9 2001 (3) SA 537 (SCA) para 17. 10 On s 53 see Joubert v Absa Life Ltd 2001 (2) SA 322 (W) at 328F-H. As to the effect of s 53, and the reasons for its amendment in 2003, see Mahadeo v Dial Direct Insurance Ltd 2008 (4) SA 80 (W) at 86B-87D. shall deal with both sections in due course. Given their effect, it should not be open to the parties to contract out of the application of the provisions of that statute by choosing another system of law to govern their contract.11 If an insured cannot waive the benefits of ss 53 and 54 – as would be the case because waiver would be contrary to public policy and interest – then equally contracting out of the benefits afforded by the sections cannot be permitted. [25] This view is supported by Professor Michael Martinek,12 who, referring to Von Savigny,13 states that a distinction must be drawn between general rules of private law, which may be governed by a system other than the lex fori, and law of strictly positive imperative nature – those that bear a „political, police-related or economic character‟ (Martinek‟s translation). In modern Swiss and German private international law these are what Martinek refers to as „mandatory interventions‟ – „norms employed by the state to regulate private relationships in the public common interest while pursuing socio- economic tasks, thereby restricting the individual freedom of private persons‟.14 These norms are of direct application, much as the values of the Constitution are. Counsel for Lloyds was constrained to concede that parties cannot contract out of provisions – and thus the norms and values – of the Constitution. The protection afforded to insured persons by the Short-Term Insurance Act, on this basis, can likewise not be avoided. [26] There are other strong indications that the Short-Term Insurance Act, to the extent that it is inconsistent with the English Marine Insurance Act, must apply. The action was instituted under the former Act. Lloyds is regulated by that Act (Part VIII). Moreover, Lloyds relied extensively on other South African statutes such as the Merchant Shipping Act and Safe Manning Regulations. It is difficult to discern why Classic Sailing should be bound by the provisions of 11 See also Dicey Morris and Collins The Conflict of Laws (general editor Sir Lawrence Collins) 14 ed (2006) Vol 2, p 1649, paras 33-033 and 33-034 dealing with the proposition that in certain circumstances parties cannot, with reference to another system of law, contract out of the English Unfair Contract Terms Act 1977. 12 „Codification of private international law – a comparative analysis of the German and Swiss experience‟ 2002 TSAR p 234, pp 248ff. 13 The System of Modern Roman Law Vol VIII (1849). 14 Martinek op cit p 249. those Acts and not entitled to the benefits conferred by those of the Short- Term Insurance Act. [27] But the definitive answer, in my view, is to be found in the Admiralty Jurisdiction Regulation Act 105 of 1983. The Admiralty Act governs not only jurisdiction but also the substantive law to be enforced in South African high courts, all of which are given jurisdiction for the hearing of any admiralty action for the enforcement of a maritime claim. Section 1(u) of the Admiralty Act defines a maritime claim to include one relating to „marine insurance or any policy of marine insurance‟. Section 3 provides that any maritime claim may be enforced by an action in personam and may be instituted against a person in respect of whom a court has jurisdiction in terms of Chapter IV of the Insurance Act 27 of 1943. Chapter IV governed insurance by members of Lloyds. That Act has been repealed by the Short-Term Insurance Act. But the latter Act still governs Lloyds (Part VIII). The reference to the former Act must be read now as a reference to the current Act. [28] Section 6 of the Admiralty Act reads: „ Law to be applied and rules of evidence (1) Notwithstanding anything to the contrary in any law or the common law contained a court in the exercise of its admiralty jurisdiction shall- (a) with regard to any matter in respect of which a court of admiralty of the Republic referred to in the Colonial Courts of Admiralty Act, 1890, of the United Kingdom, had jurisdiction immediately before the commencement of this Act, apply the law which the High Court of Justice of the United Kingdom in the exercise of its admiralty jurisdiction would have applied with regard to such a matter at such commencement, in so far as that law can be applied; (b) with regard to any other matter, apply the Roman-Dutch law applicable in the Republic. (2) The provisions of subsection (1) shall not derogate from the provisions of any law of the Republic applicable to any of the matters contemplated in paragraph (a) or (b) of that subsection (my emphasis). . . . . (5) The provisions of subsection (1) shall not supersede any agreement relating to the system of law to be applied in the event of a dispute.‟ [29] Subsection 5 thus does allow parties to make a choice as to the legal system they wish to govern their contract. But this cannot mean that they can contract out of legislative provisions that amount to ius cogens. One cannot read subsections 2 and 5 in isolation. Subsection 5 must be subject to subsection 2. Read together, as they must be, the subsections mean that while the parties may choose a non-South African system of law to govern their contract, they may not do so where the provisions of the other system are inconsistent with peremptory South African law. The effect of subsection 2 is that ss 53 and 54 of the Short-Term Insurance Act apply to the contract. And to the extent that the English Marine Insurance Act is inconsistent with peremptory statutory provisions it is not applicable.15 The first defence: Non-disclosures about the stability book [30] Lloyds relied on s 18 of the English Marine Insurance Act 1906 in contending that the non-disclosure of the facts that the stability book on board the Mieke at the time when the insurance policy was issued was not approved by SAMSA, and was inaccurate. Section 18 reads: „(1) Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such a disclosure, the insurer may avoid the contract. (2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.‟ [31] Cleaver J in the high court, assuming that s 18 was applicable, considered the English cases and writers in respect of this section and held that it was not necessary to show that „the circumstances will have a decisive influence on the judgment of [a] prudent insurer‟. All that the latter need show is that the circumstances would have had an effect on the insurer in weighing up the risk, and in determining whether to insure, at what premiums and 15 „Law‟ in subsection 2 is statutory: R v Detody 1926 AD 198 at 201 where Innes CJ said „The word “laws” means statutes.‟ subject to which conditions. Moreover an insurer must show that the non- disclosure induced it to enter into the contract (even if it was not the sole inducing cause). [32] Lloyds argued on appeal that it relied on two factors that should have been disclosed to it. First, the stability information on board was inaccurate and Viljoen either was or ought to have been aware of this. Second, at the time when the insurance contract was concluded the stability book was not stamped as approved by SAMSA, a material fact that should have been brought to the attention of Lloyds. As to the second basis, there is no requirement in the regulations or elsewhere that SAMSA approval be indicated through stamping. And in fact SAMSA had approved the book prior to the conclusion of the contract of insurance. That disposes of this ground for avoiding the contract on the basis of non-disclosure. [33] The first basis – inaccuracy – of the defence based on non-disclosure is argued by Classic Sailing to be one it did not have to meet at the trial. In its plea Lloyds stated that the particulars of the vessel were inaccurate. On appeal Lloyds has argued that the position and quantity of the ballast was inaccurately described in the stability book. This proposition was not put to Hennop when he testified as to the loading of the ballast. Nor was it put to Viljoen, who had no first-hand experience of where the ballast had been placed, but who represented Classic Sailing as its owner. In fact the high court found that Classic Sailing had had to meet a defence only as to inaccurate calculations. This is what the plea and responses to requests for further particulars referred to, and this is what Stewart testified about in giving evidence as to the design of the Mieke and his recommendation as to the quantity of ballast to be placed in the sewage tank. He testified also that SAMSA‟s naval architect, Ms E Dzinic, had been satisfied with line plans for the Mieke drawn by Stewart and with the recalculated tonnage, although she had had queries that required explanation. Changes to figures reflecting size and weight made by him subsequently were of no consequence, he said, and this was not challenged. Moreover, one of the expert witnesses for Classic Sailing, Dr J Zietsman, testified that such differences did not affect the calculations reflected in the stability book. Dzinic herself, in April 2004, had concluded that the 2004 stability book was mathematically correct and acceptable „in essence‟. And importantly, James was not asked how he would have responded had he been advised, through the brokers, that there were insignificant differences in measurements reflected in the stability book. [34] As I have indicated, s 53 of the Short-Term Insurance Act applies to the alleged non-disclosure. It sets the test for determining whether a non- disclosure has the effect of invalidating a policy or excluding the liability of the insurer. It reads: „Misrepresentation and failure to disclose material information (1) (a) Notwithstanding anything to the contrary contained in a short-term policy, whether entered into before or after the commencement of this Act, but subject to subsection (2) - (i) the policy shall not be invalidated; (ii) the obligation of the short-term insurer thereunder shall not be excluded or limited; and (iii) the obligations of the policyholder shall not be increased, on account of any representation made to the insurer which is not true, or failure to disclose information, whether or not the representation or disclosure has been warranted to be true and correct, unless that representation or non-disclosure is such as to be likely to have materially affected the assessment of the risk under the policy concerned at the time of its issue or at the time of any renewal or variation thereof. (b) The representation or non-disclosure shall be regarded as material if a reasonable, prudent person would consider that the particular information constituting the representation or which was not disclosed, as the case may be, should have been correctly disclosed to the short-term insurer so that the insurer could form its own view as to the effect of such information on the assessment of the relevant risk. . . .„. [35] Thus even if there had been a failure to disclose that the stability book was not accurate, it could hardly be said to be material. The „reasonable, prudent person‟ would not have thought that information as to the measurements of the ship, or a stamp of approval, affected the assessment of the risk, given that the purpose of the stability book information is to guide the master in loading and ballasting the ship. SAMSA itself was not concerned about the stability of the Mieke. It had allowed her to sail, from Cape Town to Port Elizabeth and to Mozambique and back. And the safety certificate issued by Colenutt on 16 October 2004, which remained valid until 6 October 2005, was not placed in issue. Accordingly I find that there was no failure to disclose by Classic Sailing that would have invalidated the policy or exempted Lloyds. The second defence: The misrepresentation as to Hennop‟s certification [36] The second special defence relied upon by Lloyds is that Viljoen, through Brown and Devereux, misrepresented the nature of the dispute between Classic Sailing and SAMSA as to Hennop‟s certification as a skipper. The correspondence between Brown and Devereux, and Devereux and Paice of A J Gallagher form the basis of the defence based on misrepresentation. [37] On 23 November 2004 Brown of Thebe sent a fax to Devereux. It was some 19 pages long, including the cover page which read: „Re: Classic Sailing Adventures – Cover Note We advise that the Insured has an ongoing difficulty with SAMSA with regard to the qualifications of the skipper of the vessel. Attached you will find a mass of documentation dealing with the skipper, Mr Willy Jan Hennop‟s certification which we are confident would enable Mr Hennop to operate a charter yacht vessel of the size of the “Mieke” anywhere else in the world other than the bureaucratic mess that exists here regarding acceptability of certification from bodies such as the Royal Yacht Association U.K. I too have an ongoing fight with SAMSA regarding the re-issue in the new format of my own coastal skippers certificate and I can tell you it is one long bureaucratic mess. As matters presently stand there is confusion in the offices of SAMSA as to whether or not they are able to issue a South African Certificate of Competency as they seem to be unable to decide as to whether or not they will accept bodies such as the Royal Yacht Association as being competent bodies for the certification of seagoing people onboard yachts, be they commercial or not. We submit these documents as we seek confirmation that Insurers are happy with his qualifications.‟ Some 14 certificates were attached to the fax. [38] On the same day Devereux sent a fax to A J Gallagher, for the attention of Paice, attaching the same documents. Devereux wrote: „Re: Classic sailing – MY “Mieke” The skipper of this vessel a Mr Willy Jan Hennop is engaged in a dispute with SAMSA regarding his qualification to act as skipper. Although the “Mieke” is not a fishing vessel SAMSA seem keen to impose their authority and we have been asked to request that you view Hennop’s qualifications not to try to override SAMSA but rather to ascertain whether they satisfy underwriters. (My emphasis.) I believe that Kuttel had a similar problem with SAMSA but eventually prevailed and his Yachtmaster Ocean certificate was recognized.‟ [39] Paice took the fax from Devereux with the attached documents to James at Lloyds. And as I have already said, James wrote „seen‟ on the fax. Paice advised Devereux of this by email the following day. And Devereux in turn sent an email to Brown on 25 November 2004 advising him that the underwriters had noted „seen‟ on his fax. He also ventured the view that „from a practical point of view my contract says nothing about compliance with the Merchant Shipping Act nor has it a skipper‟s warranty so as your client has demonstrated that his skipper has the necessary qualifications . . . the unseaworthy warranty which is what we would rely on if the skipper was unqualified would not be breached. Underwriters having only noted “seen” on the documents are basically saying that they don‟t object and as far as they are concerned the skipper is acceptable.‟ [40] The high court found that no misrepresentation had been made. The fact that Lloyds had been informed that SAMSA had not accepted Hennop‟s qualifications, and that there was confusion in the SAMSA offices meant that Lloyds had been put on guard. The court thus did not accept the view of an English underwriter, Mr P Northfield, called by Lloyds. Northfield, who had considerable experience in marine insurance, had testified that it was implicit from the letters that Hennop would receive the certification required from SAMSA imminently. Moreover, Northfield had said that a prudent underwriter would have been substantially influenced as to whether to accept the risk, or restrict the terms or adjust the premiums, had he been aware that the regulatory authority‟s certification was not imminent. Of course Northfield‟s opinion on the meaning of the statements made is not even relevant:16 it is for the court to interpret what was said and would be understood. But the high court found in any event that whether or not a prudent underwriter would have been influenced, James had in fact accepted the risk having seen that Hennop was not certified by SAMSA. No misrepresentation had thus been proved. [41] On appeal Lloyds accepted that the high court correctly set out the tests for determining whether a misrepresentation vitiates a contract. These were that there must be a statement of fact, present or past, or opinion, which is untrue, material to the insurer‟s appraisal of the risk and which in fact induced the insurer to enter into the contract. (As I have said earlier, the test is now to be found in s 53 of the Short-Term Insurance Act.) But Lloyds argued that the statements about Hennop‟s qualifications imply that SAMSA would issue formal certificates; that in effect the dispute was about minor paperwork to be completed by an office in disarray; and the matter was of no consequence. In effect, the problem with SAMSA was trivialized, and what was conveyed to James was actually false. The essence of the defence, as argued on appeal, was that Devereux had implied, in his letter of 23 November to Gallagher, that Hennop‟s dispute with SAMSA would be resolved and that SAMSA would recognize him as qualified and certificated to skipper the Mieke. [42] In my view the letter written by Devereux, seen by James, made it absolutely plain that SAMSA had not certified Hennop as a skipper for a vessel of the class of the Mieke. Lloyds was asked only if it were satisfied with Hennop‟s existing qualifications. James‟ conduct made it clear that it was. No misrepresentation was proved and the test in s 53 need not be applied. The third defence: Illegal voyage 16 See KPMG Chartered Accountants (SA) v Securefin & another 2009 (4) SA 399 (SCA) para 40. [43] Section 41 of the English Marine Insurance Act provides: „There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner.‟ Lloyds‟ argument was that the Mieke was sailed in an unlawful manner, contrary to the provisions of the Merchant Shipping Act, and to the regulations promulgated in terms of that Act. Section 73(1) of the Merchant Shipping Act provides that the owner and master of every ship going to sea from any South African port „shall ensure that there is employed on board of that ship . . . the number of officers and other persons, duly certificated as provided by regulation . . .‟. Contravention of the section amounts to an offence attracting a penalty of a fine or imprisonment not exceeding one year. Section 226(1) of the Merchant Shipping Act requires that such stability information as is necessary for guiding the master in loading and ballasting the ship be kept on board. And the regulations require that this information be reliable and up to date. [44] Lloyds argued that Classic Sailing and Hennop had contravened both these sections knowingly, and were thus guilty of a breach of the implied warranty of lawfulness. Cleaver J in the high court found that the „adventure‟ was not illegal, relying largely on English and Australian authorities in this regard and in part on s 54 of the Short-Term Insurance Act. I do not consider it necessary to traverse any of the English or other cases. The defence of illegality can be disposed of shortly. [45] First, the stability book was on board and met the requirements of the Merchant Shipping Act, as discussed earlier. And SAMSA had had no difficulty in allowing the Mieke to sail. It has a discretion to do so under s 85 of the Merchant Shipping Act. And in relation to the certification of the crew, even if no formal exemption had been granted to Hennop, he had been permitted by SAMSA to sail the Mieke. Colenutt certainly knew that Hennop was going to sail to Mozambique when he issued the general safety certificate in October 2004. On the face of it, no illegality was committed. [46] Secondly, Classic Sailing, through Thebe and Devereux, advised Lloyds that Hennop‟s certificates were not recognized by SAMSA. It could hardly have warranted that he was properly certificated. There was thus no warranty in this regard. [47] And thirdly, s 54(1) of the Short-Term Insurance Act is not consonant with s 41(1) of the Marine Insurance Act.17 I have said earlier that Classic Sailing and Lloyds could not contract out of that Act and to the extent that English law is inconsistent with the provisions of the Act it is inapplicable to the contract. Section 54 (1) provides: „54 Validity of contracts (1) A short-term policy, whether entered into before or after the commencement of this Act, shall not be void merely because a provision of a law, including a provision of this Act, has been contravened or not complied with in connection with it.‟ On the assumption that Hennop or Classic Sailing were guilty of contraventions of the Merchant Shipping Act, the effect of s 54(1) is that the insurance policy would not be void „merely because a provision of a law‟ had been contravened. [48] Lloyds argued that the use of the word „merely‟ indicated that the contravention must be collateral to the claim and not related to the cause of the loss in order for the policy to remain valid. That may be so. In court the analogy of an insured car being stolen, and the insurer refusing to meet the claim because of a traffic offence committed by the insured before the theft, was debated. Clearly the insurer would not be allowed to escape liability in such a case. [49] But equally in this case the sinking of the Mieke was not related to Hennop‟s lack of certification, nor to the stability information onboard. That is common cause. In my view, s 54(1) of the Short-Term Insurance Act 17 It should be noted that Hare op cit pp 902-903 does not consider the effect of s 54 (1) of the Short-Term Insurance Act on the breach of a warranty of legality but does state that warranties that the insured will comply with statutory requirements is subject to s 54, such that a policy will not be void because of the illegality: p 327 fn 51. precludes Lloyds from relying on any breach (if there was one) of an implied warranty introduced by the English Marine Insurance Act. This defence must thus also fail. The sinking of the Mieke [50] The principal witnesses for Classic Sailing who testified as to the sinking of the Mieke were Hennop and Mr D Grieve, the vessel‟s engineer. The cook on board, Ms C du Plessis, who testified for Lloyds, also described the event and took photographs of the vessel, from the tender, as she sank. [51] Prior to the sinking, and before leaving Vilanculos for Pemba on 15 September 2005, the crew loaded 3 400 litres of diesel in the fuel tanks. The weather deteriorated after they left Vilanculos, and a heavy swell and strong wind lasted about two days. On 17 September Grieve discovered that they had somehow, inexplicably, lost the fuel taken onboard at Vilanculos. Hennop decided to sail to shore. A small amount of fuel remained in what was termed the „day tank‟. The main engine was run at idling speed. This was not normally done, and it had the effect of making the engine vibrate. [52] Early in the morning (at about 6h30) of 18 September, Hennop and Grieve were on deck when the bilge alarm sounded. Grieve went to investigate. As he entered the transverse passage in front of the engine room he stepped into water, which he said was about ankle depth. He attempted to turn on the emergency lighting but could not. When he went into the engine room there was water „swishing in and out, up and down the walls‟. He was able to start the starboard generator, the lights came on and he primed the mechanical bilge pump and started to run the electrical bilge pump. He asked Hennop, who had come into the engine room, to increase the revolutions for the main engine. But there was water everywhere: „it was chaos‟. And the pumps were not having any effect. He had checked several times that the seacocks in the engine room and elsewhere were closed. [53] Hennop, in seeking the source of the inflow of seawater, noticed that the side passage close to the rudder compartment, was full of water. A smell of exhaust gases was evident in the side passage and the engine room. [54] When the water was about hip-height Grieve had to shut down the generator to avoid electrocution. He dived below the water level in the engine room to see if he could find the source of the ingress of water, but could see nothing except disintegrating cardboard boxes that had been stored there and were floating around. He could hear the hull cracking. There was a strong smell of diesel. [55] Hennop instructed the crew to bail the water out with buckets, but the inflow of water was so great that he decided they should get off the vessel, and instructed Grieve to see to it. Grieve and the rest of the crew got on to one of the tenders. Hennop remained on deck. The vessel was sinking from the stern. Its exhaust was under water. When Grieve had discovered that the fuel tanks were empty, he had noticed that there were traces of moisture around the exhaust as it exited the hull. The area was damp. He had not told Hennop about this, thinking it was of no significance. But as the vessel sank, Grieve observed from the tender that there were no bubbles coming off the exhaust into the water although the main engine was still running. This too suggested that something was amiss in the exhaust area. [56] One of the reasons suggested by Lloyds as to the cause of the sinking was that the cover for the sewage tank had not been secured. However, Hennop and Grieve testified that the hatch cover had been firmly in place at the time of the ingress of water, although it had not been bolted down. Grieve said that when he first went into the transverse passage to attend to the bilge alarm he had tried to lift the cover so see if the ingress was through the sewage tank. But the pressure of water above the cover was such that he could not lift it. Hennop too said that when he had tried to lift the cover the force of the water prevented it from being moved. Du Plessis testified that she had seen sewage in the water swirling through the vessel. No one else had done – but Hennop had said he smelled sewage. In fact, nothing turns on this and it is clear that the very rapid and large ingress of water could not have been a result of the cover of the sewage tank being unsecured. [57] When the Mieke listed to port Hennop jumped off deck and swam to the tender. The crew watched the vessel come upright again and then sink at the stern. They proceeded to shore. The cause of the sinking of the Mieke [58] Cleaver J in the high court found that Classic Sailing had discharged the onus of proving that the Mieke sank as a result of a latent defect in the hull – an excessive stress concentration in the structure of the hull which resulted in a fatigue failure and associated sudden propagation of cracks and the sudden ingress of seawater. In this regard, the judge had regard to the evidence of Hennop and Grieve, described above, and concluded that a large mass of water had entered the aft portion of the Mieke, where the exhaust was located, which caused the Mieke to sink by the stern. This conclusion was supported by the evidence of Hennop that there was a break in the welds where the exhaust system exited the hull, and by that of Grieve that he could see no bubbles discharged into the sea when he had left the vessel and was on the tender. [59] The high court took the view that in the absence of direct evidence as to the cause of the sinking, Classic Sailing had to establish inferentially that the loss of the Mieke was caused by a latent defect – a peril insured against. This was the approach of the majority of this court in The Wave Dancer: Nel v Toron Screen Corporation (Pty) Ltd & another.18 Scott JA (in the minority judgment) said:19 „......it should be observed that while an insured would ordinarily be obliged to adduce evidence identifying the precise cause of the loss and the particular defect responsible therefor, such evidence is not necessarily essential. In principle there can be no reason why, in the absence of evidence as to the precise cause of the 18 1996 (4) SA 1167 (A). 19 At 1179I-1180A. The principle was not in issue in the majority judgment. loss, an insured should not in appropriate circumstances be able to establish inferentially that the loss was occasioned by a latent defect.‟ The majority considered that on the probabilities the owner of the vessel, being „caring and meticulous‟,20 would not have allowed it to go to sea had he known that there was any defect in the hull. This court concluded that the inference to be drawn from the absence of evidence of wear and tear or patent damage was that there was an inherent defect covered by the insurance policy. [60] Cleaver J also accepted the evidence of two expert witnesses who testified for Classic Sailing: Dr J Zietsman and Dr C Grobler. Their reports and testimony were based on the evidence of Hennop and Grieve as to how the sinking occurred, and on scientific hypotheses flowing from that and from evidence as to the structure of the vessel and repairs done to the exhaust in particular over several years. Before dealing with their evidence I must emphasize that where there is eyewitness or direct evidence of an occurrence this may render the reconstructions of experts less relevant or even irrelevant (this observation is particularly pertinent to the evidence of Lloyd‟s expert Mr A J Sinclair): see Parity Insurance Co Ltd v Van den Bergh21 and Van Eck v Santam Insurance Co Ltd22 where the court said that while it was not unusual for parties to tender expert evidence to determine the cause of a collision, the expert‟s evidence is „inevitably based on reconstruction and cannot conceivably bear the same weight as direct, eye-witness testimony of the event in question‟. See also Michael & another v Linksfield Park Clinic (Pty) Ltd & another.23 [61] Before turning to the evidence of the experts it is important to state that all causes of the Mieke’s sinking save a latent defect in the hull that allowed for the ingress of seawater can be excluded. The vessel was not scuttled; the crew were not negligent; the seacocks were closed; there was no patent defect and there was no evidence of wear and tear that had any causal 20 At 1188A-D. 21 1966 (4) SA 463 (A) at 476B-H. 22 1996 (4) SA 1226 (C) at 1229H-1230B; see also the cases cited at 1229I-1231H. 23 2001 (3) SA 1188 (SCA) para 40. connection. (Viljoen had thought that a collision with a floating object might have caused a crack in the hull to develop, but the crew had not been aware of any collision and the experts were agreed that if there had been one sufficient to cause damage the crew would have been aware of it. In any event a collision would have been covered by the policy.) [62] Counsel for Lloyds argued on appeal that there was no objective evidence – such as that of a SAMSA surveyor – that wear and tear were excluded: but Hennop and Viljoen‟s evidence that the Mieke was in good condition when she set sail for Mozambique was not gainsaid. The only inference to be drawn then is that the hull was latently defective. There does not need to be proof of the precise defect that caused the sinking. [63] In any event, it was the conclusion of an expert, Captain David, hired by Lloyds to investigate the loss, and whose expert report was filed by Lloyds, that there was no readily apparent cause for the sinking: while discounting the pleaded cause, he could not say what other factor had allowed for a rapid ingress of seawater, other than an overflow from the sewage tank which had not been properly sealed. This suggestion is not consonant with the evidence of Hennop and Viljoen and was rejected by Zietsman. Moreover, David‟s theory would not have explained the large ingress of water that resulted in the sinking of the vessel. Interestingly, David did not testify, although he was available to Lloyds and in court throughout the proceedings. [64] The evidence of the experts who prepared reports and testified for Classic Sailing supported the inescapable inference that there was a latent defect of the nature pleaded by Classic Sailing. Zietsman, who has a doctorate in ocean engineering, and over 30 years‟ experience, took into account the evidence of Hennop and Grieve as to the structure of the vessel and the vibration of the engine when idling; the invoices reflecting repairs to the exhaust and the hull in the area of the exhaust over a period; prepared a numerical model of the Mieke and assessed the rate at which water may have entered the vessel through various apertures, and did flooding calculations. His view was that the sudden and rapid flooding seen by the crew was consistent with a large aperture having opened to the sea. Although water might have leaked slowly into the hull when cracking first occurred, it was probable that there was a sudden growth of a crack because of the vibration of the exhaust pipe. [65] Over the years since the Mieke was built cracks had appeared from time to time near the exhaust. These had been repaired by welding. In February 2001 a hole was cut in the hull at the stern and the exhaust assembly was replaced with a stainless steel doubler plate, welded to the hull, to reduce cracking in the area of the exhaust exit. The hull itself was made of a different metal. [66] Immediately prior to the sinking the engine had been idling for some time, causing vibrations in the hull which Zietsman said would have exacerbated the growth of cracks near the engine room. In his report he stated: „These vibrations most probably served as a driver for sudden crack growth. . . . The cracks which had previously occurred had been repaired in part, by welding stainless steel doubler plates on either side of the hull. These repairs and modifications probably introduced stress concentrations at those locations. . . . The repairs to the exhaust penetrations through the hull occurred in the splash zone and the chance of development of corrosion fatigue was thus enhanced due to wetting and drying in that area.‟ [67] This hypothesis was confirmed by Grieve‟s evidence that he had noticed damp in the area of the exhaust. Zietsman could not find confirmation that the correct welding procedures had been used to weld stainless steel to the hull. Even if they had, however, differential expansion rates of different metals could lead to excessive stresses, he said. [68] Zietsman concluded that the sudden rapid flooding was probably caused by an aperture or apertures that developed near the engine room. „Stress concentrations in those areas, together with fatigue corrosion mechanisms, driven by the vibrations caused by the engine most probably caused the cracks to grow suddenly. . . . The growth of the cracks was most probably associated with an initially slow, but finally rapid flooding, causing the yacht to settle by the stern and then sink.‟ [69] Zietsman had requested Classic Sailing to consult a metallurgist, Dr Grobler, to confirm his conclusions. Grobler spoke to Viljoen and to the person who had over the years repaired the hull, Mr F J J Botha, about the structure of the Mieke and the repairs effected over the years. Grobler concluded that the welding done in the past and the use of the stainless steel doubler plate had been far from ideal (the latter increasing the risk of fatigue cracking) and that there was additional cyclic loading because of the differential thermal expansion of the different metals used. Other factors, such as dissimilar welds, had also led to stresses on the hull. There is no need to consider these. Grobler‟s evidence confirmed Zietsman‟s conclusions. [70] The expert witness for Lloyds on the question of the cause of the sinking, Mr Sinclair, also wrote a report and testified. Unlike Zietsman and Grobler, however, he did not take into account the evidence of Hennop, Grieve and Viljoen, and denied that there would have been excess vibration caused by the engine idling for a long period. He offered no explanation as to the reason for the Mieke sinking and conceded reluctantly when cross- examined that the vessel had indeed sunk. He insisted that there must have been substantial leaking before the morning of 18 September 2005, which could not have gone unnoticed. He could not of course counter the evidence of the crew as to the sudden ingress of seawater. Cleaver J correctly rejected his evidence. [71] When asked by this court to point to any finding in relation to the cause of the loss by the high court that was wrong, counsel for Lloyds could suggest only that Cleaver J had drawn his own conclusions not based on evidence. The learned judge said that because the exhaust exited above the water level it was „feasible that cracks occurring in the area would have taken longer to develop‟. The evidence of the cook had been that at 4h00 in the morning she felt that „the vessel had settled by the stern‟. If that were the case, the learned judge continued, „there would have been more time when pressure from the ocean would have been applied to any crack or cracks which might have been in existence without being observed‟. [72] But in fact the court‟s conclusion was based on Zietsman‟s evidence that a critical area for corrosion is the splash zone which is at times immersed and at times above water and that that was another area where the crack that ultimately became a large aperture might have developed. The criticism is thus without warrant, and there is no reason to differ from the high court‟s findings as to the cause of the sinking. Was the cause of the loss a „latent defect‟? [73] Lloyds argued that even if the conclusion drawn by the high court (that the Mieke sank because of a crack in the hull that had developed into a large aperture) was correct, the crack was not a latent defect. As I understood the argument it was that there was no defect when the hull was constructed. A fatigue crack that developed during the course of sailing was not a peril insured against. [74] Cleaver J rejected the argument, referring to The Caribbean Sea,24 where Robert Goff J held that fatigue cracks, developed over time, but attributable to faulty design (also in respect of the manner of welding) amounted to latent defects. A combination of circumstances resulted in a fracture opening up a significant period of time before the end „of the natural life of this ship‟.25 The court held that the defective design had the effect that defects would inevitably develop in the ship, but would not amount to ordinary wear and tear. A similar approach is to be found in The Nukila.26 [75] In my view, the high court correctly found that the „excessive concentration in the structure of the hull‟ which led to fatigue failure as a result 24 Prudent Tankers Ltd S A v The Dominion Insurance Co Ltd (The “Caribbean Sea”) [1980] Vol 1 Lloyd‟s Rep 338 (QB). 25 At 347. 26 Promet Engineering (Singapore) Pte Ltd v Sturge & others (The “Nukila”) [1997] Vol 2 Lloyd‟s Rep 146 (CA). See also Arnould’s Law of Marine Insurance and Average 17 ed (2008) 22-22, pp 939-940. of heating and vibration amounted to a latent defect covered by the policy. I have already said that all other causes of the sinking can be excluded. Accordingly Lloyds is liable on the policy and Classic Sailing‟s conditional cross appeal does not arise for consideration. The appeals by Thebe and Devereux CC on the costs orders [76] Cleaver J correctly found that because Lloyds was liable, the conditional claims against Thebe and Devereux CC fell away. And since I find that Lloyds is liable, there is no need to consider the soundness of these claims. But the high court decided that because counsel for Thebe and Devereux CC had not participated in the hearing in so far as the sinking of the Mieke, and whether the loss was covered by the policy, were concerned, they should be awarded only half the costs of the trial (although senior and junior counsel for each had been present throughout the hearing). They have appealed against the costs awards. [77] It will be remembered that Thebe and Devereux CC were joined by Classic Sailing as defendants only when Lloyds raised the special defences. Since these rested, to a substantial extent, on letters written by Brown and Devereux, I consider that Classic Sailing had no choice but to join both. Brown had written to Devereux, and Devereux had in turn written to Paice of Gallagher. These letters formed the basis of the defences of misrepresentation and non-disclosure. [78] It is trite that the award of costs is a matter within the trial court‟s discretion, although the general rule is that in commercial litigation costs follow the event. The discretion must be exercised judicially, and in this case it must be asked why the general rule was departed from. [79] Cleaver J considered that costs in respect of the days on which the evidence on the sinking, and its cause, was given by Hennop, Grieve, Zietsman, Liverick, Du Plessis and Stewart should not be awarded to Thebe and Devereux CC. This decision ignored the fact that Thebe and Devereux CC‟s liability was directly affected by whether the sinking was caused by an insured event – the latent defect. They were thus entitled to be represented in court when that evidence was given. And the evidence was not self- contained. Viljoen, for example, gave evidence in respect of the structure of the Mieke and the repairs to it, as well as on the misrepresentations and non- disclosures alleged. Hennop testified as to the sinking and as to the stability book and his certification. On what basis should Thebe and Devereux CC have decided when and when not to be in court? The issues were not separated, nor even susceptible to separation. [80] Thebe and Devereux CC were compelled to defend the claims against them, which had been initiated by the defences raised by Lloyds. They were entitled to representation throughout the trial. Counsel for both point out that these two appellants may have been penalized with a costs order had they extended the period of the trial by cross-examining witnesses unnecessarily. [81] In the circumstances I consider that the discretion exercised by the high court in awarding Thebe and Devereux CC only half their costs cannot be justified. Lloyds must pay the full costs of Thebe and Devereux CC who were joined only because of Lloyds‟ defences. [82] In the circumstances Lloyds‟ appeal must be dismissed and the appeals of Thebe and Devereux CC must be upheld. 1 The first appellant‟s appeal is dismissed with costs, including those occasioned by the employment of two counsel. 2 The appeals by the second and third appellants are upheld with costs, including those occasioned by the employment of two counsel. 3 Paragraph 1.4 of the order of the high court is replaced with the following: „The first defendant is ordered to pay the costs of the second and third defendants including the costs occasioned by the employment of two counsel and the preparation expenses of Mr Child.‟ 4 The respondent‟s conditional cross-appeal is dismissed. _______________ C H Lewis Judge of Appeal APPEARANCES FIRST APPELLANT: M Wragge SC (with him D J Cooke) Instructed by Bowman Gilfillan Attorneys, Cape Town. Matsepes, Bloemfontein. SECOND APPELLANT: M J Fitzgerald SC (with him D Melunsky) Instructed by Deneys Reitz Inc Cape Town Claude Reid Attorneys Bloemfontein THIRD APPELLANT: R D McClarty SC (with him P A Corbett) Instructed by Reillys, Cape Town Matsepes, Bloemfontein RESPONDENT: R W F MacWilliam SC (with him L Burger) Instructed by Dawson Edwards & Ass Cape Town McIntyre & Van Der Post, Bloemfontein.

SUPREME COURT OF APPEAL OF SOUTH AFRICA PRESS RELEASE 31 MAY 2010 STATUS: Immediate Lloyds & others v Classic Sailing.(250/09) [2009] ZASCA 89 (31 May 2009) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal Lloyds, the London underwriters, had insured Classic Sailing’s yacht, the Mieke, which sank off the Mozambican coast in September 2005. Lloyds declined to pay the sum insured, R10m, because it contended that the cause of the sinking was not covered by the policy; that the policy was vitiated by certain misrepresentations and non-disclosure of material facts; and that the voyage was illegal because the skipper did not have all the necessary South African Marine Authority’s certificates, and inaccurate information about the stability of the vessel was reflected in the stability book on board. The Western Cape High Court (exercising its Admiralty jurisdiction) found that the sinking had been caused by a latent defect in the hull which was covered by the policy. It also found that the misrepresentations and non-disclosures alleged had not been made and that the voyage was legal. The high court relied on an English statute and cases in reaching these decisions, for the parties had chosen English law to govern their contract. It ordered Lloyds to pay Classic Sailing R10m, less the cost of a stealth boat (tender), on which the crew had reached shore after the yacht sank. Today the SCA dismissed Lloyds’s appeal, but applied South African law: the provisions of the Short-Term Insurance Act of 1998 govern misrepresentations and non-disclosures (s 53) and illegality (s 54). They are not consistent with the English law. Because these sections are enacted to protect the rights of the insured one cannot waive their application nor choose to be bound by the provisions of another system of law that are inconsistent with them: it would be contrary to public policy and the public interest. It would also be in conflict with s 6 of the Admiralty Jurisdiction Regulation Act 105 of 1983. The SCA found that Classic Sailing, through its insurance broker, had not made misrepresentations and was not guilty of non-disclosure. The voyage was also not illegal simply because a statute had been contravened. It confirmed the high court’s finding that the sinking had been caused by a latent defect in the hull which caused a large aperture to open and sea water to flood the Mieke, causing her to sink. The court thus dismissed the appeal. ------

2820

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case No: 417/11 In the matter between: Robert Mandlakayise Du Plooy First Appellant Victor Nkosinathi Zikole Second Appellant and Ntombi Christophora Du Plooy First Respondent Mfanukhona Du Plooy Second Respondent Malezi Du Plooy Third Respondent Thulisile Du Plooy Fourth Respondent Delsie Du Plooy Fifth Respondent Tobhi Du Plooy Sixth Respondent Tandiwe Du Plooy Seventh Respondent Maria Du Plooy Eighth Respondent Neutral citation: Robert Du Plooy v Ntombi Du Plooy (417/11) [2012] ZASCA 135 (27 September 2012) Coram: MTHIYANE DP, HEHER, BOSIELO, PETSE JJA AND PLASKET AJA Heard: 4 September 2012 Delivered: 27 September 2012 Summary: Ownership of immovable property – whether first appellant owning property in personal capacity or as nominee of siblings (the respondents) – nomination of first appellant established – transfer of property – whether second appellant had knowledge of challenge to first appellant’s right to alienate property prior to transfer ORDER On appeal from: KwaZulu-Natal High Court, Durban (Ngwenya AJ sitting as court of first instance): (a) The appeal succeeds to the extent that paragraphs 2 and 4 of the order of the court below are set aside. (b) The appellants are directed, jointly and severally, to pay the costs of the respondents. JUDGMENT PLASKET AJA (MTHIYANE DP, HEHER, BOSIELO and PETSE JJA concurring) [1] This appeal concerns a dispute between members of a family about the ownership of two houses. It has spawned, according to the papers, great enmity and even violence and, whether or not the respondents are able to establish co- ownership of the properties with the first appellant, the maxim communio est mater rixarum – co-ownership is the mother of disputes – has, in this case, proved to be pertinent.1 The case also illustrates the difficulties and uncertainties that can be created by a failure to formalise and define legal relationships with precision and care, especially where they are intended to endure over generations. [2] The respondents (the applicants in the court below) applied to the KwaZulu- Natal High Court, Durban (Ngwenya AJ) for orders interdicting the first appellant, (the first respondent in the court below) from ‘alienating, selling, disposing of or in any way encumbering’ two properties in Emmaus, Pinetown upon which two four- roomed houses had been built; in the event that the transfer of one of the properties 1 Francois du Bois, Graham Bradfield, Chuma Himonga, Dale Hutchison, Karin Lehmann, Rochelle le Roux, Mohamed Paleker, Anne Pope, C G van der Merwe and Daniel Visser Wille’s Principles of South African Law 9 ed (2007) at 558. to the second appellant (the second respondent in the court below) had already taken place, setting that transfer aside; declaring that the respondents and the first appellant were co-owners of the properties; and authorising and directing the Registrar of Deeds to register the properties in the names of the respondents and the first appellant. Orders in these terms plus a costs order against the first and second appellants were granted by Ngwenya AJ. This appeal against those orders is before this court with his leave. The facts [3] The first appellant and the respondents are siblings, born of George and Irene Du Plooy. A tenth sibling, Raymond Du Plooy, who played a part in the events that I shall outline below, died in 1995. The family lived in a home in Emmaus, Pinetown that was owned by the Marianhill Mission Institute – the MMI. The precise nature of their tenure is unclear, but nothing turns on this. George and Irene Du Plooy died during the 1970s and their children continued to occupy the house. I think that it would be fair to describe the house as a family home in the sense that even if some of the siblings had homes elsewhere, they returned to the house from time to time and regarded it as the hub of their family. [4] During the late 1980s or early 1990s MMI decided to sell the land upon which the houses of the Du Plooys and other families stood. The area was rezoned for industrial use and it proposed to sell the land for that purpose. MMI wanted to relocate the families to Umhlathuzana. Some families agreed to be relocated but others, numbering 27 families, did not want to move. They elected a committee, chaired by one Fidelius Phewa, to negotiate with MMI. [5] The committee met with representatives of MMI and the Pinetown municipality on five occasions during the period 19 March 1990 to 3 May 1990. It was agreed that plots in another part of Emmaus would be allocated to the 27 families, that MMI would build houses on those plots and that the beneficiaries would pay between R2 800.00 and R3 800.00 for a house, not as a purchase price but as a ‘token of appreciation’. [6] The Du Plooy family was initially allocated two four-roomed houses some distance apart. They were allocated two houses of this size because their old house was an eight-roomed house, and there were no houses of this size available. The late Raymond Du Plooy and one of his sisters, Ntombi Du Plooy (the first respondent) spoke to a representative of MMI, one Father Dieter, who then allocated two adjacent erven to the Du Plooy family. These are the erven at the heart of the dispute in this matter, erf 17874 and erf 17875. In due course, the committee under the chairmanship of Mr Phewa handed over the keys of the houses to Raymond Du Plooy, on behalf of the Du Plooy family. [7] During at least part of this period, Robert Du Plooy, the first appellant, was not present or involved. According to the respondents, he had been ‘chased away’ by their mother. If that is so, that would have been in the 1970s, because she died in 1977. According to Robert Du Plooy, he left the area for a much shorter period. He went to Umkomaas to be treated by an isangoma and then he trained and qualified as an isangoma himself. According to Ntombi Du Plooy, he only returned to Emmaus in 1994, while he stated in his affidavit that he left for treatment in 1991 and returned in 1992. In his answering affidavit he denies the averments made by his sister concerning the allocation of the houses and the handing over of the keys by stating that they are ‘highly improbable’ and that he dealt personally with Father Dieter who allocated the houses to him. This, however, if it happened at all, must have occurred much later, even on Robert Du Plooy’s version. For reasons that will be dealt with below, these disputes of fact are resolved against him. [8] In 1995 Raymond Du Plooy died. It was decided, said Ntombi Du Plooy, that Robert Du Plooy would be the family representative and would hold the houses in trust on their behalf. He denied that this was so and stated that when he acquired title to the properties in 1996, he did so in his personal capacity and was hence entitled to sell one of the properties, as he did, to the second appellant. After he had decided to sell erf 17874 to the second appellant, matters took a turn for the worse. He and the second appellant claim that they were subjected to threats, harassment and assaults by some of the respondents. He was forced to flee from the home at one stage. [9] As a result of the disputes of fact on the papers, the matter was referred to oral evidence. While the order making the referral was not part of the record, counsel appearing for both the appellants and the respondents were prepared to accept the formulation of the issue to be determined by the oral evidence as being correctly encapsulated by the first paragraph of Ngwenya AJ’s judgment. He had stated: ‘The crisp question for consideration in this matter is to determine whether the first respondent is the true owner of two immovable properties, erf number 17874 and erf number 17875, Township Pinetown Extension 113, KwaZulu-Natal.’ While this formulation of the issues is rather cryptic, essentially the dispute that the court was required to resolve was whether, when Robert Du Plooy acquired title to the properties, he acquired ownership in his personal capacity or on behalf of his siblings. [10] Two witnesses testified on behalf of the respondents. They were Fidelius Phewa and Beatrice Malezi Mkhize (neé Du Plooy), the third respondent. The case of the first and second appellants was closed without any evidence being led by them. [11] Phewa testified about the proposed relocation of the 27 families by MMI from one part of Emmaus to another and the negotiations between the committee he chaired, MMI and the Pinetown municipality. He confirmed that the Du Plooy family was one of the 27 families that his committee represented. [12] He stated that the negotiations resulted in an agreement that the 27 families would be given new homes in Emmaus to occupy – an area described elsewhere in the record as New Emmaus – and that they would be built in phases. He emphasised that those houses ‘would not be constructed for an individual, but they were going to be constructed for all the 27 families’. [13] During the planning of the project, Father Bohmer of MMI had asked whether the homes could be sold after they had been allocated. Phewa said that the committee’s response was in the negative and that ‘we wanted those homes to belong to us for generations to come’. [14] When the houses were built, the committee allocated them. Phewa’s evidence in this regard was as follows: ‘We as the committee handed the keys to the people, and this is how we did it: we would look at a family and determine who in the family was going to serve as the head of that family. But, most importantly, we would determine the head of the family, not based on the gender of whether it was a male or a female. Our allocation of these houses was based on the fact whether the person concerned was originally occupying a four-roomed house or an eight-roomed house, and if the person concerned was occupying a four-roomed house, we would allocate a four-roomed house. Similarly, when the person had been occupying an eight-roomed house, we would allocate an eight-roomed house. The way in which we conducted these allocations were based on families, not individuals. If a family had been occupying a four-roomed house, we would allocate a four-roomed house to that family. Similarly, if that family had been occupying an eight-roomed house, we would allocate an eight-roomed house. And in instances where an eight-roomed house was not available, we would allocate two four-roomed houses to make up for the eight-roomed house. And the Du Plooy family had previously occupied an eight-roomed house, so they were allocated an eight-roomed house.’ [15] As to the allocation of the houses to the Du Plooy family, he stated: ‘When the Du Plooys then were given the accommodation, Robert was not there. The Du Plooy family itself sent a young man who was working for them, who was their breadwinner; with agreement with them, we then gave the key to Raymond Du Plooy. It was not up to us to suggest that we were not going to give Raymond the key because he was not the eldest, this was based on the agreement with the family. It was in 1991. Robert returned in 1994 and he went to occupy the two four-roomed houses, that is the eight-roomed that had been allocated to the family. When Robert returned, the Du Plooys were already living in the two four-roomed houses. At the time when these homes were being erected and the people were being allocated, the registration of bonds was not applicable yet at that time. That only came about in the year 1996 and at the time Robert was already there. And at that time Madoda Raymond had passed away. Then it was up to the Du Plooy family to nominate one amongst themselves as the person who was going to act on their behalf, not as the owner, but merely as the nominee in the family.’ [16] He confirmed that MMI required a nominal amount to be paid for each house; that the amounts were R2 600.00 for a four-roomed house and R3 800.00 for a bigger house; and that this was not regarded as a purchase price but a ‘token of appreciation’. In order to facilitate the payments of these amounts, families were allowed five years grace in which no interest would run. Phewa testified that it was then up to the individual families to decide for themselves ‘who had the money and was able to buy the property on behalf of the families’. [17] Provision was, however, made for the ownership of the houses to pass. Phewa testified in cross-examination that at the stage when title deeds were applied for the committee had fallen out of the picture. The questions and answers that follow this read as follows: ‘So, each person who purchased a property dealt directly with MMI? – No, the family. No, I’m saying, because when it came to the purchase an agreement was signed by one person with MMI, of purchase and sale? – Yes, the person who had been nominated by the family to represent them.’ [18] The upshot of the evidence of Beatrice Malezi Mkhize, little of which was challenged in cross-examination, was this. After the committee had allocated the two houses to the Du Plooy family, Phewa handed over the keys of both to Raymond Du Plooy. This was in 1991, at a time when Robert Du Plooy was not in Emmaus but was, she thought, at Umgababa. The family took occupation of the houses. Raymond Du Plooy died in 1994, the year in which Robert Du Plooy returned. Following the death of Raymond Du Plooy, at the washing of the hands ceremony (ukugezwa kwezandla), a decision was taken to nominate Robert Du Plooy ‘to represent the family’. [19] Her evidence then proceeds as follows: ‘When Robert was nominated to represent the family, please tell the Court who was present at the time the nomination was made? – All of us, the members of the Du Plooy family , were present. Was Robert also present? –Yes. And for what purpose was Robert nominated to represent the Du Plooy family? – We chose him because he was the eldest male in the family and he had to look after the interests of the family. Was there anything that Robert had to do in relation to the two houses that had been built by the MMI? – No, there was nothing. Was there any discussion about taking legal ownership, transfer, of the two properties? – No, that was never discussed. Did Robert accept the nomination? – Yes. And did he tell the members of the Du Plooy family that he accepted that nomination? – We were all together at home and he accepted in the presence of all of us.’ [20] As stated above the appellants closed their case without giving any evidence at all. The result, for the determination of the facts, has been set out as follows by Cloete JA as follows in Lekup Prop Co No. 4 (Pty) Ltd v Wright:2 ‘A referral to trial is different to a referral to evidence, on limited issues. In the latter case, the affidavits stand as evidence, save to the extent that they deal with dispute(s) of fact; and once the dispute(s) have been resolved by oral evidence, the matter is decided on the basis of that finding together with the affidavit evidence that is not in dispute.’ [21] There is no reason why the evidence of Phewa and Mkhize should not be accepted and I do not understand the judgment of the court below to take a contrary view. That means that the primary issue – the capacity in which Robert Du Plooy acquired title deeds to the houses in 1996 – must be decided on the basis of the uncontroverted oral evidence which I have set out above plus any additional undisputed evidence contained in the affidavits. The judgment of the court below [22] Ngwenya AJ decided that the matter should be dealt with in terms of Zulu customary law.3 In this decision he was not supported by either of the parties. He then proceeded to set out the customary law position as he saw it. He was certainly able to take judicial notice of customary law4 and he had a discretion as to the system of law to be applied5 but, in my view, he erred in exercising that discretion. 2 Lekup Prop Co No 4 (Pty) Ltd v Wright 2012 (5) SA 246 (SCA) para 32. 3  I use the term customary law, rather than indigenous law, because that is the term used in the Constitution. See s 39. 4 Law of Evidence Amendment Act 45 of 1988, s 1(1) which reads: ‘Any court may take judicial notice of the law of a foreign state and of indigenous law in so far as such law can be ascertained readily and with sufficient certainty: Provided that indigenous law shall not be opposed to the principles of public policy and natural justice: Provided further that it shall not be lawful for any court to declare that the custom of lobola or bogadi or other similar custom is repugnant to such principles.’ 5 Ex Parte Minister of Native Affairs: In Re Yako v Beyi 1948 (1) SA 388 (A) 395-396. [23] He made an assumption that the Du Plooy family ‘conduct their relationship and relate to one another in terms of customary law’. This conclusion is not, in my view, evident from the record, as he asserted. He also appears to have been influenced by the fact that Robert Du Plooy was regarded as the head of the family. Further than that, he considered no factors that may or may not have served as connections between the parties and a system of customary law and, as the parties made no assertions as to the application of customary law to their dispute, no evidence was led from which that choice could be inferred. Similarly, no specific evidence concerning the lifestyles or the prior transactions of the parties was tendered and that evidence which incidentally dealt with their lifestyles does not necessarily point to customary law as the appropriate choice of law.6 Finally, Ngwenya AJ applied the Zulu customary law of succession to the dispute but the dispute had nothing to do with succession. It concerned whether or not an agreement of co-ownership had been reached or whether or not Robert Du Plooy had been mandated by his siblings to hold the property as a nominee. [24] Ngwenya AJ arrived at the conclusion that Robert Du Plooy had, in terms of customary law, held the properties as head of the family and that he was not able to dispose of them without the consent of his siblings. He also found that the properties, although registered in the name of Robert Du Plooy, were in fact ‘collectively and equally owned’ by the respondents and Robert Du Plooy. Ngwenya AJ also dealt with the matter, in the alternative, on the same basis as the parties, finding that the evidence had established that Robert Du Plooy had been nominated by his siblings to look after the interests of the family. He accordingly granted all of the relief claimed. The issues on appeal [25] Two principal issues arise in this appeal. The first is the capacity in which Robert Du Plooy acquired title to the houses and the second is whether the second appellant, Mr Victor Nkosinathi Zikole, had knowledge of the dispute concerning Robert Du Plooy’s right to alienate before transfer to him was effected. 6 See generally, T W Bennett (assisted by N S Peart) A Sourcebook of African Customary Law (1991) at 123-129; T W Bennett Customary Law in South Africa (2004) at 51-57. [26] Before turning to the first issue it is necessary to say something of what is meant by the term ‘family’. In S v Ndabesitha; S v Tshabalala,7 the court observed that the ‘word “family” has no precise legal connotation but is clearly one of wide signification’. And in Smith NO and Lardner-Burke NO v Wonesayi,8 Beadle CJ said that the ‘word “family” again may have many meanings, according to the context in which it is used.’ It is clear from these cases (and others cited in them) that the particular meaning of the word, in each instance, is fact-specific. For this reason, a general definition of its meaning (such as a dictionary meaning) serves little purpose in a case such as this. In the context of this case, in my view, it means the living siblings born of George and Irene Du Plooy – Robert Du Plooy and the respondents. That meaning emerges in particular from the context of the negotiations for the houses in New Emmaus and the way in which the houses were occupied thereafter. Most importantly, it is also the conclusion to be drawn from what the parties themselves considered ‘the family’ to be for the purpose of the mandate given to Robert Du Plooy. [27] From the evidence that I have outlined, it is clear that the houses were allocated to the Du Plooy family while Robert Du Plooy was away from Emmaus. That was in 1991. They occupied them on the terms agreed to by the committee that represented them, namely as a family, rather than in the name of any individual. Indeed, at that stage there was no talk, according to both Phewa and Beatrice Mkhize, of the transfer of ownership to anyone. That came later. [28] After Robert Du Plooy returned, in 1994, he must, as a matter of overwhelming probability, have become aware of the terms of the grant of the houses to the families. He could have been under no illusions on this score. And if there was any doubt, that would have been removed by his nomination as the representative of the family. It is most unlikely that Father Dieter, as one of the MMI representatives in the negotiations, would have told him, as he claims, that the houses would be transferred to him in his personal capacity, rather than as a representative of the Du Plooy family. As it happens, Robert Du Plooy did not testify 7 S v Ndabesitha; S v Tshabalala 1966 (1) SA 827 (N) at 828F. 8 Smith NO and Lardner-Burke NO v Wonesayi 1972 (3) SA 289 (RA) at 297F. about his dealings with Father Dieter and allow this evidence to be placed under scrutiny. It can safely be rejected in the circumstances. [29] He also did not testify about what transpired at the washing of the hands ceremony. The evidence of Beatrice Mkhize stands uncontroverted that he was nominated to represent the family and safeguard its interests. Even though there was no mention of the ownership of the houses at that stage, that is explicable: it was not then a live issue. Despite that, however, Robert Du Plooy, when he accepted the nomination must have understood his mandate to be in relation to all of the affairs of the Du Plooy family. Given the history of the acquisition of the properties, they, as part of the mandate, must have been uppermost in the minds of the entire family. [30] The conclusion is inescapable that, either when the opportunity to acquire ownership of the properties arose or later when he discerned the chance to sell, Robert Du Plooy opportunistically snatched at a bargain and betrayed the trust that had been reposed in him by his siblings. He could not have believed that he was entitled to take ownership in his personal capacity. [31] That said, however, I am of the view that the evidence of Beatrice Mkhize does not go so far as to establish that an agreement was reached that Robert Du Plooy and his siblings would own the property as co-owners, in the sense that the members of the family became owners of the properties ‘simultaneously, not in physical portions but in abstract undivided shares’.9 The broad terms of the mandate given to him are not capable of such an interpretation. Indeed, it will be recalled that Beatrice Mkhize’s evidence was that Robert Du Plooy was nominated to represent the family and to look after its interests but there was no discussion at all about taking transfer of the houses. [32] That does not mean that Robert Du Plooy was free to dispose of the houses. He held them, once transfer had been effected, on behalf of himself and his siblings. His nomination placed him in a position of trust in relation to all of the affairs of the 9 Du Bois et al (note 1) 558; A J van der Walt and G J Pienaar Introduction to the Law of Property 6 ed (2009) 48-49. family, including its proprietary interests. In that sense, he was in a similar position to the respondent in Dadabhay v Dadabhay10 who, on the strength of an oral agreement entered into with the appellant, bought a house on behalf of and as nominee for her but refused to transfer it to her when called upon to do so. This court held that the oral agreement was not hit by s 1(1) of the Alienation of Land Act 68 of 1967 because it was ‘in no sense a contract of sale between the appellant and the respondent’ and neither was it a cession in respect of an interest in land because it was not a ‘cession in the nature of a sale’.11 In the context of the particulars of claim, the court held that the ‘word “nominee” may well have been used to denote that the respondent would act as a trustee in buying the property and would thereafter sign all documents, when called upon by the appellant, in order that it could be registered in her name’.12 [33] The terms of the nomination of Robert Du Plooy are quite different to those in Dadabhay but the evidence nonetheless establishes that he was not free to alienate erf 17874 to the second appellant without the consent of his siblings: in terms of the nomination, he held the property in the best interests of the family and that meant that he was not free to do with it as he pleased. [34] I turn now to the position of the second appellant in relation to the order setting aside the sale to him. In his affidavit, he makes no direct factual averments concerning when the property he bought from Robert Du Plooy was transferred to him and whether he was aware of the respondents’ challenge to their brother’s alleged right to alienate erf 17874. That he was aware of the dispute between Robert Du Plooy and his siblings is, however, clear from his affidavit. [35] At the hearing of this appeal, the parties were afforded an opportunity to file further affidavits on whether the second appellant was aware, prior to the registration of transfer on 30 June 2009, of the challenge to Robert Du Plooy’s alleged right to alienate erf 17874. In an affidavit deposed to by the respondents’ attorney, Mr M L Dube, reference is made to correspondence attached to the founding affidavit that 10 Dadabhay v Dadabhay & another 1981 (3) SA 1039 (A). 11 At 1048A-1049H. 12 At 1047F-G. establishes that the second appellant knew of Robert Du Plooy’s disputed title to the property prior to transfer having been effected. On 7 April 2009, he wrote to Mr ME Mbhele, who acted for both of the appellants. He stated: ‘We confirm the telephonic conversation of the 7th April 2009 between Messrs Mbhele and Dube of our respective offices wherein we indicated as follows: 1. It has come to our clients’ attention that you act for Mr Robert Mandlenkosi Du Plooy and Mr Nkosinathi Zikole in the transfer of the above-mentioned property. 2. Our clients inform us that Mr Robert Du Plooy is not the de facto owner of the Property, it is jointly owned by the whole family. He is merely a representative of the entire Du Plooy family. 3. That being the case he has no authority to sell the property without the consent of the family. Our instructions are to request you, as we hereby do, to discuss the matter with your above- mentioned clients with the view not to proceed with the transfers until the dispute between them has been resolved.’ On 21 April 2009, Mr Mbhele wrote back to say that he had consulted with his clients and his instructions were to proceed with the transfer. [36] On 28 April 2009, Mr Dube wrote a letter to Mr Mbhele because he had not at that stage received the letter of 21 April 2009. (He only received it on 14 May 2009.) In this letter he said that he had instructions to launch an application to interdict the transfer and asked that, if Mr Mbhele was intent on proceeding with the transfer, he at least hold the matter in abeyance ‘to give us time to bring the application, to give the high court a chance to deal with the matter’. Mr Dube also wrote a letter, dated 7 May 2009, to the second appellant in which he stated: ‘Our instructions are to demand, as we hereby do, that you discontinue with the said purchase; if you proceed to accept and receive transfer despite our warning, our client will make an application in court to prevent transfers from being effected in your favour, if transfers shall have been effected, for the sale to be set aside and for the transfers to be cancelled.’ Mr Dube attempted to serve this letter on the second appellant personally at the Pinetown Magistrates Court but the second appellant refused to accept the letter. [37] The application was served by the sheriff, according to the return of service, on the second appellant by service on one Mzwawele Zikole, described as a son of the second appellant at the residence of the second appellant on 5 June 2009. [38] In answer to these allegations the second appellant made no affidavit. Instead, his attorney, Mr Mbhele conceded that his clients were warned by the respondents’ attorneys of the planned application for an interdict but they chose to continue with the transfer and instructed him to oppose any application that may have been launched. For the rest, Mr Mbhele’s affidavit contains inadmissible hearsay evidence that must be disregarded. [39] In addition, the evidence indicates that the second appellant was aware, over a fairly long period, that the respondents disputed Robert Du Plooy’s right to sell the house to him. Indeed, so bitter was that dispute that it even resulted in violence directed at him. The second appellant lived in Emmaus. He leased a room on the property that he purported to purchase. That being so, it can as a matter of overwhelming probability be accepted that he knew of the history of the acquisition of the two houses by the Du Plooy family and the terms upon which they were allocated to them. He must be taken, in other words, to have known that Robert Du Plooy held the property that he purported to purchase as a nominee for his siblings. He must also have known that the dispute was a serious one in the sense that it could not simply be wished away as being without merit or frivolous. The basis for this is the letter that Mr Dube sent to Mr Mbhele on 7 April 2009, which was then brought to the notice of the second appellant when Mr Mbhele consulted with him in order to take instructions on whether to proceed with the transfer. [40] In the result, I conclude that, prior to transfer being effected on 30 June 2009, the second appellant had knowledge that Robert Du Plooy’s title was subject to challenge. When he instructed his attorney to proceed with the transfer, despite knowing that proceedings aimed at stopping or setting aside the transfer were in the offing, he did so at risk. He was not an ‘innocent transferee’ when transfer was effected and it follows from this fact that the transfer of erf 17874 is liable to be set aside.13 The order [41] In my view, some but not all of the relief granted by the court below was competent. The respondents were entitled to an interdict to restrain Robert Du Plooy from alienating the properties and the setting aside of the transfer to the second appellant. They did not establish that they were co-owners and so were not entitled to a declarator to that effect and an order directing the Registrar of Deeds to endorse the title deeds to reflect their co-ownership. In other words, the appeal succeeds in part. [42] That raises the issue of the costs order in the court below and the costs of the appeal. In my view, the respondents achieved substantial success in the court below in the form of the interdict and setting aside of the transfer. These orders, after all, go to the heart of the protection of their interests in the properties. It follows that they have also achieved substantial success on appeal. They are entitled to their costs in the court below and in this court. [43] I make the following order: (a) The appeal succeeds to the extent that paragraphs 2 and 4 of the order of the court below are set aside. (b) The appellants are directed, jointly and severally, to pay the costs of the respondents. ________________________ C Plasket Acting Judge of Appeal 13 Mvusi v Mvusi NO & others 1995 (4) SA 994 (Tk) at 1006A-D; Kazazis v Georghiades & andere 1979 (3) SA 886 (T) at 892B-894C; Cussons & another v Kroon 2001(4) SA 833(SCA) para 9. APPEARANCES: For the First and Second Appellant: M E Mbhele Instructed by: M E Mbhele & Co; Durban N W Phalatsi & Partners; Bloemfontein For the First to the Eighth Respondents: H A de Beer SC Instructed by: , Mbele, Dube & Partners; Durban Mthembu & Van Vuuren Inc; Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF 27 September 2012 STATUS: Immediate Robert Du Plooy v Ntombi Du Plooy (417/11) [2012] ZASCA 135 (27 September 2012) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (SCA) handed down judgment today in an appeal from the KwaZulu-Natal High Court, Durban (High Court). The matter concerned the ownership of immovable property. Specifically, the SCA had to decide whether property was held in someone’s personal capacity or as a nominee and whether a transferee had knowledge of a challenge to a transferor’s right to alienate property. After their parents’ death the Du Plooys continued to occupy their family home. The land upon which their house was built was to be rezoned and sold for industrial purposes. They were allocated two smaller houses, which could house the whole family, by the Marianhill Mission Institute, the owner of the land The keys to these houses were handed over to one of the Du Plooy brothers. He passed away. According to Robert Du Plooy the houses were then allocated to him; according to his brothers and sisters, he merely received the houses as their representative. Upon Robert Du Plooy selling one of the houses, litigation ensued. The Du Plooys applied for an interdict in the High Court interdicting Robert Du Plooy from transferring the two properties to one Mr Zikole. In the event that the properties were already transferred, the court was asked to set the transfer aside and to declare that Robert Du Plooy and the rest of the Du Plooys were the co-owners of the property. The High Court granted the relief sought and leave to appeal to the SCA. The SCA found that Robert Du Plooy, when the opportunity arose to acquire ownership of the properties or when he discerned a chance to sell them, opportunistically snatched at a bargain and betrayed the trust that had been reposed in him by his siblings. He could not have believed that he had been the owner of the properties in his personal capacity. However, the court found also that it had not been established that the Du Plooys, including Robert Du Plooy, had received the properties in co-ownership. It found that Robert Du Plooy rather held the properties as a nominee of the family, with the terms of the nomination not including a right to dispose of the properties; he was supposed to hold the properties in the best interests of the family. As to Mr Zikole, the court found that he was aware of the dispute regarding the ownership of the properties concerned. Indeed, the court found that he was aware of the application to be made to the High Court to interdict the transfer of the properties, but that he chose to continue with the transfer. He did so at his risk and he was not an innocent transferee. The transfer was liable to be set aside. The court thus found some but not all the relief granted in the High Court competent. The Du Plooys were entitled to an interdict against Robert Du Plooy and Mr Zikile stopping the transfer of the properties and setting aside the transfer. They were not, however, entitled to a declaration that they were co-owners. Accordingly, the appeal was upheld in part.

485

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 20785/2014 In the matter between: NICOLAAS JOHANNES SWART APPELLANT and CONRAD ALEXANDER STARBUCK FIRST RESPONDENT JAMES HENRY VAN RENSBURG SECOND RESPONDENT TSIU VINCENT MATSEPE THIRD RESPONDENT THE MASTER OF THE HIGH COURT FOURTH RESPONDENT Neutral citation: Swart v Starbuck & others (20785/2014) [2016] ZASCA 83 (30 May 2016) Coram: Ponnan, Seriti, Dambuza and Mathopo JJA and Fourie AJA Heard: 12 May 2016 Delivered: 30 May 2016 Summary: Claim by insolvent on behalf of his insolvent estate for the payment of damages by his trustees in terms of s 82(8) of the Insolvency Act 24 of 1936 – section 82(8) does not find application where the trustees sold immovable properties of the estate prior to the second meeting of creditors – sale of the immovable properties of the estate valid and enforceable – claim for damages dismissed. ________________________________________________________________ ORDER _______________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Strijdom AJ sitting as court of first instance): The appeal is dismissed with costs, including the costs consequent upon the employment of two counsel. _________________________________________________________________ JUDGMENT _________________________________________________________________ Fourie AJA (Ponnan, Seriti, Dambuza and Mathopo JJA concurring): [1] This appeal concerns an action brought by the appellant (the insolvent) against the first to third respondents, the trustees of his insolvent estate (the trustees), for the payment of damages allegedly caused by them in the administration of his estate. The matter was heard by Strijdom AJ in the Gauteng Division of the High Court, Pretoria, who dismissed the claim with costs, but granted the insolvent leave to appeal to this court. [2] The estate of the insolvent was provisionally sequestrated by order of the Gauteng Division, Pretoria, on 4 October 2005 and a final order of sequestration was granted on 1 November 2005. On 24 January 2006 the trustees were appointed as the provisional trustees of the insolvent estate by the fourth respondent (the master). Their appointment as final trustees followed on 16 November 2006. [3] At the time of his provisional sequestration the insolvent was the registered owner of certain immovable properties known as portions 5, 8 and 13 of the Farm Doorndraai 2A, Registration Division KR, Limpopo Province (the properties). Portion 5 had been granted water rights for agricultural purposes in terms of s 21(a) of the National Water Act 36 of 1998. [4] On 16 November 2005 the L J Möller Trust (the trust) submitted three written offers to purchase the properties (including the water rights attaching to portion 5) for a total purchase price of R1 625 000. The offers were addressed to the first respondent only and not to his two co-trustees. The trustees had by then not yet been formally appointed as provisional trustees of the insolvent estate, but had apparently been advised by the master on 6 October 2005 of the latter’s intention to appoint them as provisional co-trustees. The offers to purchase were addressed to the first respondent in his capacity as ‘trustee’ of the insolvent estate. It has become common cause that each of the three offers to purchase had been accepted by the first respondent who signed same as the ‘seller’ on 1 December 2005. [5] The three offers to purchase were similarly worded save for the description of the relevant property in each instance and the purchase price payable in respect thereof. Each offer contained the following suspensive condition: ‘The agreement is further subject to the condition that the Seller and/or Master of the High Court must grant the required consent, if applicable. Should the consent of the Master of the High Court or any court be required before transfer of the property or any portion thereof can be registered in the name of the Purchaser, this agreement is subject to such consent being obtained and it shall fall away and be regarded as pro non scripto if such consent cannot be obtained.’ [6] On 12 January 2006 the trustees submitted a written application to the master in terms of s 80bis read with s 18(3) of the Insolvency Act 24 of 1936 (the Act), for the extension of their powers to enable them to sell the properties by private treaty. The application motivated the decision to sell the properties of the insolvent estate prior to the second meeting of creditors, and included a consent from the two secured creditors; a circular sent to all known creditors regarding the decision to sell the properties; valuations of the properties and the three written offers to purchase received from the trust. The trustees further expressed the view that the properties should be sold by private treaty in terms of the offers received from the trust. I should add that no creditor responded to the circular by objecting to the anticipated sale of the properties. [7] On 31 January 2006 the master responded to the trustees’ application by consenting to the sale of the properties in the following terms: ‘The powers of the provisional trustees are hereby extended in terms of s 80(bis) of the Insolvency Act 24 of 1936, as amended, to sell the immovable properties of the above- mentioned insolvent estate, subject to the following conditions’. (There being no conditions stated.) [8] Having received payment of the agreed purchase consideration for the properties, the trustees executed written powers of attorney on 13 April 2006, in which they declared that the properties had been sold on 1 December 2005 and authorised the transfer thereof to the trust as purchaser. Pursuant thereto, on 14 June 2006, the transfer of the properties by the trustees to the trust was registered by the deeds office, Pretoria. The first meeting of creditors was held on 7 September 2006 with the second meeting of creditors taking place on 12 October 2006. At the second meeting, the creditors approved the trustees’ report reflecting the sale and transfer of the properties to the trust. [9] It is convenient to consider the opposing contentions of the parties against the backdrop of the relevant provisions of the Act. They are the following: Section 18(1) The subsection provides for the appointment of a provisional trustee by the master as soon as an estate has been sequestrated (whether provisionally or finally). The provisional trustee is required to furnish security to the satisfaction of the master for the proper performance of his or her duties as provisional trustee and holds office until the appointment of a trustee. Section 18(3) In terms of this subsection a provisional trustee shall have the powers and the duties of a trustee, as provided in the Act, except that, without the authority of the court or the master, he or she shall not sell any property belonging to the insolvent estate. Such sale shall be after such notices and subject to such conditions as the master may direct. Sections 54 and 56 These sections provide that, at the first meeting of the creditors of an insolvent estate, the creditors who have proved their claims against the estate may elect a trustee. The selection has to be confirmed by the master and the person so selected has to provide security to the master for the proper performance of his or her duties as trustee. Where (as happened in this case) the creditors do not elect a trustee at their first meeting the master would, virtually as a matter of course, appoint the provisional trustee as trustee. Section 80bis This section provides that, at any time before the second meeting of creditors, a trustee shall, if satisfied that any movable or immovable property of the estate ought forthwith to be sold, recommend to the master in writing accordingly, stating his or her reasons for such recommendation. The master may thereupon authorise the sale of such property on such conditions and in such manner as he or she may direct. Section 82(1) In terms of this subsection the trustee of an insolvent estate shall, as soon as he or she is authorised to do so at the second meeting of the creditors of that estate, sell all the property in that estate in such manner and upon such conditions as the creditors may direct. However, if the creditors have not, prior to the final closing of the second meeting of creditors given any directions, the trustee shall sell the property by public auction or public tender. Section 82(8) The relevant part thereof reads as follows: ‘If any person . . . has purchased in good faith from an insolvent estate any property which was sold to him in contravention of this section . . . the purchase . . . shall nevertheless be valid, but the person who sold . . . the property shall be liable to make good to the estate twice the amount of the loss which the estate may have sustained as a result of the dealing with the property in contravention of this section.’ [10] In his pleadings the insolvent contended that the trustees did not, on 1 December 2005, have the necessary authority (or rather capacity) to accept the offers to purchase made by the trust, as they had not yet been appointed as provisional trustees. Nor had the powers of the trustees, when they purported to accept the offers to purchase, been extended in terms of s 18(3) of the Act to authorise them to sell the properties. Also that at 1 December 2005, the trustees had not been granted any authorisation by the master in terms of s 80bis of the Act, to sell the properties to the trust. Therefore, according to the insolvent, the sale of the properties and the resultant transfer thereof to the trust were irregular (‘onreëlmatig’) and constituted maladministration of his estate. He further alleged that the sale of the properties had to take place in terms of s 82(1) of the Act and as the trustees had failed to follow the prescripts of this subsection, they were liable in terms of s 82(8), to make good to the insolvent estate twice the amount of the loss which the estate had sustained as a result of their irregular dealing with the properties. [11] In their plea, the trustees denied that on 1 December 2005 any agreements of sale were entered into by them in their capacities as trustees of the insolvent estate, but admitted that the first respondent signed and thereby accepted the offers to purchase on that date, ‘subject to the permission of the master being granted and by implication their formal appointment by the master.’ They further pleaded that, on 31 January 2006, they were granted authority in terms of s 80bis of the Act to sell the properties by way of private treaty. Therefore, the trustees contended, the properties had been validly transferred to the trust on 14 June 2006, which transfer took place after the master had granted the necessary authorisation in terms of s 80bis of the Act. They accordingly denied any maladministration on their part and disavowed liability for the payment of any damages. [12] The court a quo, in essence, held that the trustees had been granted the necessary authorisation by the master in terms of s 80bis of the Act to sell the properties to the trust, and that compliance with s 82 of the Act was accordingly not required. Therefore the action was dismissed with costs. [13] In evaluating the insolvent’s claim it has to be borne in mind that he is an unrehabilitated insolvent who would, save for the exceptions mentioned in s 23 of the Act (which do not apply in this instance), not have had locus standi to institute legal proceedings in his own name. However, as appears from the particulars of claim, the insolvent sought an order compelling the trustees to pay damages to his estate caused by their alleged maladministration of the estate. Our law has recognised that in certain circumstances an insolvent has locus standi by virtue of his or her real interest in the administration of the estate, to institute a claim on behalf of his insolvent estate. See Mears v Rissik, MacKenzie NO and Mears’ Trustee 1905 TS 303 at 305; Muller v De Wet NO & others 1999 (2) SA 1024 (W) at 1029D-1030H. Whether or not the insolvent had locus standi in this case is unnecessary to decide, for I will assume, without deciding, that he did. [14] Turning to the insolvent’s cause of action, I must confess that I have some difficulty in appreciating the legal basis of the claim. As recorded above, the insolvent’s case on the pleadings appears to be that the sale of the properties and the transfer thereof to the trust were ‘irregular’, constituting maladministration of his estate, entitling him to claim damages on behalf of the estate from the trustees. In the heads of argument filed on his behalf and in argument on appeal counsel for the insolvent expanded on this submission by contending that the agreements in terms of which the properties were sold were in fact void ab initio. However, as I understood the argument on his behalf, the insolvent did not seek to attack the validity of the transfer of the properties and have the parties restored to the status quo ante, but only to recover damages for and on behalf of the insolvent estate. [15] According to the insolvent’s pleadings and the written heads of argument filed on his behalf on appeal, his cause of action was based squarely on s 82(1), read with s 82(8), of the Act. He contended that, in view of the absence of a valid authorisation by the master in terms of s 80bis of the Act, the sale of the properties had to take place in terms of s 82(1), in such manner and upon such conditions as the creditors may direct at their second meeting, failing which, the properties had to be sold by public auction or public tender. As the trustees had sold the properties in contravention of s 82(1), they were, in terms of s 82(8) of the Act, liable to make good to the estate twice the amount of the loss which the estate may have sustained as a result of their dealing with the properties in contravention of s 82(1). That this was the basis of the insolvent’s cause of action is borne out by the emphatic statement in his heads of argument, that ‘the case is based on s 82(8) as read with s 82(1) of the Act’. [16] At the hearing of the appeal, counsel for the insolvent, however, attempted to change course by pinning his colours to the mast of a delictual claim for damages, based on a breach of their fiduciary duties by the trustees in disposing of the properties without the necessary authorisation by the master. As I understood the adapted cause of action, it was not based on s 82(8) as read with s 82(1) of the Act, but s 82(8) was invoked in order to recover twice the amount of the loss which the estate had allegedly suffered due to the breach of their fiduciary duties by the trustees. I should mention that, even on a liberal reading, the pleadings do not disclose a delictual claim advanced along these lines. [17] In my view, both the insolvent’s original cause of action based on s 82(8), read with s 82(1) of the Act, and the more recently adopted delictual cause of action based on the breach of a fiduciary duty by the trustees, are misconceived and devoid of any merit. At the outset, it is clear that both causes of action depend, inter alia, upon the absence of a valid authorisation by the master for the sale of the properties. However, as recorded earlier, the master did on 31 January 2006 extend the powers of the trustees by authorising the sale of the properties in terms of s 80bis of the Act. This authorisation was granted by the master after the trustees had been appointed as provisional trustees. The granting of permission in terms of s 80bis of the Act is clearly an administrative act which has legally valid consequences until such time as it is set aside. See Oudekraal Estates (Pty) Ltd v City of Cape Town & others [2004] ZASCA 48; 2004 (6) SA 222 (SCA) para 14. It is common cause that no application had been made to set aside the s 80bis authorisation granted by the master. It accordingly stands as a legally valid authorisation and on this basis alone the insolvent’s claim had to fail. [18] Returning to the cause of action as originally pleaded, it is clear from the wording of s 82(1) that it deals with the sale of property of an insolvent estate after the second meeting of creditors, in circumstances where the trustee sells the property in a manner or on conditions contrary to those directed by the creditors at their second meeting, or, absent such direction, sells the property other than by public auction or public tender. Section 82(1) has no application in a case such as the present where the sale of the properties had taken place prior to the first meeting of the creditors. When the present sales took place there were obviously no directives given by creditors at a second meeting that the trustees had to comply with, nor were the trustees bound, to sell the properties by public auction or public tender. They were perfectly entitled to sell the properties, having been duly authorised thereto by the master in terms of s 80bis of the Act. [19] In Cronje NO & others v Hillcrest Village (Pty) Ltd & another [2009] ZASCA 81; 2009 (6) SA 12 (SCA), this court dealt with an analogous situation where the liquidators of a company had sold the company’s property prior to the general meeting of the company’s creditors. Streicher JA, writing for the court, said the following at para 22: ‘Section 82(1) of the Insolvency Act deals with the sale of property after the second meeting of creditors and is not applicable to the auction of WKP’s [the company in liquidation] property. The auction sale was a sale authorised by the Master in terms of s 386(2B) of the Companies Act [the equivalent of s 80bis of the Act] before a general meeting of WKP’s creditors had been convened. The court below therefore erred in considering the section to be of application in respect of the auction sale.’ The present matter similarly did not concern a sale of property after the second meeting of creditors and therefore ss 82(1) and 82(8) did not find application. [20] It follows that the insolvent’s claim, whether based on s 82 of the Act or a delictual claim as belatedly contended for, fell to be dismissed. It is in any event telling that this action, which the insolvent purportedly instituted for the benefit of his insolvent estate, ie in effect for the benefit of the creditors of the estate, did not carry the support of the creditors. On the contrary, as recorded earlier, the two secured creditors whose claims represented the lion’s share of the value of the total claims against the estate, actively supported the sale of the properties to the trust. Nor did any concurrent creditor respond negatively to the circular sent by the trustees advising them of the intended sale. [21] It has to be borne in mind that the creditors of an insolvent estate are in law the masters of the realisation of the assets of the estate. This was emphasised in Janse van Rensburg v Muller [1995] ZASCA 136; 1996 (2) SA 557 (A), where the trustees of an insolvent estate, contrary to s 82(1) of the Act, disposed of an asset of the estate (a claim for damages) without value, by ceding same to the insolvent’s spouse. This occurred with the consent of the majority of the creditors in number and value, but in the litigation that followed the validity of the cession was put in issue. Joubert JA, writing for the court, concluded that, notwithstanding non-compliance with s 82(1) of the Act, the wishes of the creditors reigned supreme. It was put as follows at 565A-B: ‘Dit is duidelik dat die skuldeisers in die onderhawige geval nie die risiko van die skadevergoedingseis wou aandurf nie. Dis skadevergoedingseis het vir die skuldeisers geen praktiese betekenis en nut gehad nie. Hulle is regtens meesters van die tegeldemaking van die insolvente boedel se bates. Hulle optrede was geoorloofd . . . Dit volg na my oordeel dat die sessie geldig is en geensins in stryd met die openbare belang is nie.’ In the instant case the sale of the properties to the trust took place without objection from the body of creditors and enured to their benefit. There is no reason in law or public policy for the trustees to be mulcted in damages for acting in the best interests of the creditors. [22] This effectively disposes of the matter. However, I do believe that it is necessary to clear up a misconception that seems to have permeated the submissions made on behalf of the insolvent, namely that the sale and transfer of the properties were irregular (or maybe even void), thereby giving rise to a claim for damages on behalf of the insolvent estate against the trustees. It appears to me that the misconception is founded on a lack of appreciation of the principle laid down by this court in Legator McKenna Inc & another v Shea & others [2008] ZASCA 144; 2010 (1) SA 35 (SCA), namely that the abstract theory of transfer applies to immovable property as well, ie the validity of the transfer of ownership is not dependent on the validity of the underlying transaction such as, in this case, the contracts of sale. The abstract theory postulates two requirements for the passing of ownership of immovable property, namely delivery – which is effected by registration of transfer in the deeds office – coupled with a so-called real agreement or ‘saaklike ooreenkoms’. The essential elements of the real agreement are an intention on the part of the transferor to pass ownership and the intention of the transferee to become the owner of the property. The abstract theory does not require a valid underlying contract, eg an agreement of sale, but ownership will not pass, despite registration of transfer, if there is a defect in the real agreement. As explained by Ponnan JA in Du Plessis v Prophitius & another [2009] ZASCA 79; 2010 (1) SA 49 (SCA) para 11, it is at the moment of passing of ownership that the transferor must have the intention of transferring ownership (and obviously when the transferee must have the intention of acquiring ownership), which supplies the subjective element for the passing of ownership. [23] Moreover, in Legator McKenna para 28 this court also expressed its unequivocal approval of the 'rule' in Wilken v Kohler. The 'rule' has its origin in an obiter dictum by Innes JA in Wilken v Kohler 1913 AD 135 at 144, dealing with performance under sales of land that were invalid for want of compliance with a statute requiring the contract to be in writing. The 'rule' provides that, where both parties had performed in full in terms of such an invalid contract, neither party can recover its performance purely on the basis that the contract was invalid. [24] In Legator McKenna a curator bonis was appointed to a patient, but before receiving his letters of curatorship the curator bonis sold the immovable property of the patient. Pursuant thereto the letters of curatorship were received and the curator bonis thereafter effected transfer of the property to the purchaser. The validity of the transfer of the property was in issue. This court assumed that a sale concluded by a curator without letters of curatorship would be invalid and the transfer by a curator without letters of curatorship would therefore not pass ownership to the transferee, but as the curator had received his letters of curatorship before he concluded the real agreement, he was properly authorised to enter into that agreement when he did so. Therefore, the fact that the curator lacked authority when he purported to enter into the prior agreement of sale, was of no consequence. In view of the abstract theory, it did not affect the validity of the real agreement. This court held that to transpose the curator’s lack of authority when he concluded the sale to the real agreement was to ignore the implications of the abstract theory. It accordingly held that the property was validly transferred. [25] In the present appeal it is similarly of no consequence that, at the time of the acceptance of the offers to purchase by the first respondent, the trustees had not yet been appointed. The fact of the matter is that they had been subsequently appointed as provisional trustees on 24 January 2006, whereafter, on 13 April 2006, they executed written powers of attorney in terms of which they authorised the transfer of the properties to the trust and the transfer was registered in the deeds office. In addition, at the time when the parties concluded the real agreement and registration of transfer took place, the master had extended the powers of the trustees and granted the necessary authority to them in terms of s 80bis of the Act to sell the properties. The properties were accordingly validly transferred to the trust. [26] Neither counsel relied on nor made reference to Legator McKenna, but counsel for the insolvent set much store by the decision in Simplex (Pty) Ltd v Van der Merwe & others NNO 1996 (1) SA 111 (WLD), where Goldblatt J held that an agreement of sale concluded by trustees who had not yet been authorised to act in that capacity, was null and void and could not be ‘resuscitated by subsequent ratification either by the Master or by the trustees after receipt of the necessary authority’. [27] There are, however, two material distinguishing features in the instant matter. First, the agreements of sale resulting from the three offers to purchase were subject to the suspensive condition referred to in para 5 above. Second, the properties were subsequently validly transferred to the trust in terms of real agreements between the trustees and the trust after the master had provisionally appointed the trustees and granted them authority in terms of s 80bis of the Act to sell the properties to the trust. [28] By means of the suspensive conditions incorporated in the offers to purchase, the parties intended to render their contracts subject to the master granting the required consent to the trustees to transfer the properties to the trust. As pointed out by Brand JA in Legator McKenna, para 15, there is no rule that a contract cannot be rendered subject to compliance with a condition imposed by statute, such as s 80bis of the Act in this instance. The agreement would then only become final and binding upon the fulfilment of the condition. The absence of a similar suspensive condition in Simplex formed a significant part of the reasoning of Goldblatt J in declaring the relevant agreement void. This appears at 114E of Simplex where the court noted that ‘it was never the intention of the parties to have a limping contract which would only become whole on approval by a duly authorised trustee or the master or the beneficiaries or the court’. [29] The lack of authority on the part of the trustees when they (represented by the first respondent) accepted the offers to purchase, was accordingly of no legal consequence and could not somehow have served as a basis for a claim for damages against the trustees. [30] For these reasons the appeal is dismissed with costs, including the costs consequent upon the employment of two counsel. ____________________ P B Fourie Acting Judge of Appeal APPEARANCES: For Appellant: N Davis SC (with him M Coetzee) Instructed by: Minnaar & De Kock, Middelburg Honey Attorneys, Bloemfontein For Respondent: M Leathern SC (with him S J van Rensburg) Instructed by: Van Rensburg Koen Baloyi, Pretoria Hill McHardy & Herbst, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 30 May 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Swart v Starbuck & others (20785/2014) [2016] ZASCA 83 (30 May 2016)) MEDIA STATEMENT The Supreme Court of Appeal today dismissed the appeal of an insolvent who had instituted a claim on behalf of his insolvent estate for the payment of damages by his trustees allegedly caused by their maladministration of the estate. The SCA upheld the decision of the Gauteng Division of the High Court, Pretoria, that there was no proof of maladministration on the part of the trustees with the result that the claim for damages had been dismissed. --- ends ---

1779

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20/10 FREDDY HIRSCH GROUP (PTY) LTD Appellant and CHICKENLAND (PTY) LTD Respondent ____________________________________________________________ Neutral citation: Freddy Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd (20/10) [2011] ZASCA 22 (17 March 2011) BENCH: HARMS DP, PONNAN, MAYA, SHONGWE and TSHIQI JJA HEARD: 14 FEBRUARY 2011 DELIVERED: 17 MARCH 2011 SUMMARY: Purchase and sale – delivery of prohibited foodstuff – claim ex contractu – whether loss too remote – claim ex delicto – pure economic loss – wrongfulness – policy considerations determining liability considered. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: South Gauteng High Court (Johannesburg) (Blieden J sitting as court of first instance). The appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ PONNAN JA (HARMS DP, MAYA, SHONGWE and TSHIQI JJA concurring): Introduction [1] Messrs Robert Brozin and Fernando Duarte entertained the vision of establishing a chain of fast food chicken outlets. In time they were joined by Mr Eric Parker, who had expertise in marketing and brand development and the three of them launched Nando’s, a branded fast food franchise chain specialising in grilled Portuguese chicken. From those relatively humble beginnings in 1991, the Nando’s brand rapidly expanded within South Africa, into neighbouring countries and some 30 countries internationally. The respondent, Chickenland (Pty) Ltd (Chickenland), a wholly owned subsidiary of Nando’s Group Holdings Limited, is the primary operating entity within the Nando’s Group. [2] The business model chosen by Chickenland for the franchise business is what may loosely be termed a joint venture partnership. Each new franchise store became a subsidiary of Chickenland. Typically Chickenland owned 51 percent of that subsidiary and its joint venture partner, who was the actual operator of the store, owned 49 percent. [3] Whilst still in its infancy, Chickenland prepared the chicken in a central kitchen and delivered them in refrigerated trucks to the restaurants of its joint venture partners, where they were sold to customers. But, as the Nando’s brand expanded it proved more convenient for Chickenland to supply its joint venture partners with marinades, sauces and dressings that were prepared to its specifications. In time, it also began to market bottled sauces initially through its restaurants and thereafter through leading supermarket chains, both locally and internationally. [4] Spices and condiments were important ingredients of Nando’s sauces and marinades. When Chickenland experienced problems with its then supplier of spices, it turned to the appellant, the Freddy Hirsch Group (Pty) Ltd (Hirsch), whose primary business was the manufacture of spices. On 29 August 1994, Chickenland applied in writing to Hirsch on the latter’s standard credit application form for a line of credit. Hirsch approved the application and took to supplying the latter with spice packs consisting of a blend of different spices prepared in accordance with the latter’s specifications. [5] The reverse of the Hirsch credit application form that had been completed by Miss Lesley Smith, who was duly authorised to do so on behalf of Chickenland, contained what were termed Standard Conditions of Sale and Credit. Those included, inter alia, provisions relating to payment (which had to be effected within 30 days), interest, reservation of ownership and delivery. Most importantly it provided: ‘4. LIMITED LIABILITY 4.1 The Company shall not be liable for any defect in the goods by reason of faulty production, workmanship, quality of raw materials or otherwise unless: 4.1.1 it is established that the goods were correctly installed and properly cared for and used, and 4.1.2 the Customer notifies it in writing of the defect within 7 (SEVEN) days of the delivery of the goods. 4.2 The Company’s liability shall be limited, at its option, to: 4.2.1 repairing such goods free of charge: or 4.2.2 supplying the Customer with similar replacement goods free of charge or 4.2.3 passing a credit for the purchase price of the goods. provided that the Company shall under no circumstances whatsoever be responsible for any consequential or other damages whatsoever. 4.3 Notwithstanding anything to the contrary contained or implied in these conditions the liability of the Company arising out of any defect in the goods shall not exceed the purchase price of the goods concerned. 4.4 Save as set out herein all conditions, terms, warranties or representations (express or implied statutory or common law) as to quality fitness, performance or otherwise in relation to the goods are excluded. 4.5 When the Customer purchases the goods for re-sale, the Customer shall ensure that the purchasers of the goods is appraised of these conditions so as to ensure that the purchaser’s claims (if any) against the Company are limited to the extent stated herein. 4.6 The Customer indemnifies and holds the Company harmless against all claims, loss, damage, expense or proceedings of whatsoever nature against or on the part of the Company arising out of the sale or distribution of the goods whether defective or not for any reason whatsoever.’ [6] In signing the application on behalf of Chickenland, Ms Smith inscribed the words ‘standard conditions not checked’ immediately above her signature and below the following warranty: ‘I/we warrant and certify that the above information is true and correct and that I am/we are duly authorised to sign this application for credit facilities and I/we have read the conditions of credit set out on the reverse hereof and agree to be bound thereby’. [7] During January 2004 Geoff Bloch, the group technical compliance officer, who was responsible for all facets of food safety within the Nando’s group both locally and globally, was visiting the United Kingdom when he was informed that the UK health authority in Manchester had tested Nando’s extra hot peri-peri sauce and found it to be positive for Sudan 1 dye. Sudan 1 is a red dye that is used in colouring solvents, oils, waxes and shoe and floor polishes. It is considered to be a genotoxic carcinogen rendering it unfit for human consumption. It has been banned by the World Health Organisation and its presence is not permitted in foodstuff for any purpose in this country and most others internationally. [8] Chickenland was obliged by the Food Standards Agency of the UK to cause newspaper advertisements to be placed in newspapers in the UK informing consumers of the Agency’s finding and given 48 hours to withdraw any contaminated products from all supermarket shelves in the UK. Subsequent investigations identified cayenne pepper that had been sourced in India by Hirsch and supplied to Chickenland in certain of the spice packs as the contaminant. A worldwide recall of Chickenland’s peri-peri sauces followed. [9] The directors of Chickenland then met on several occasions with Freddy Hirsch, the chairman and founder of the Hirsch Group and his sons, all directors of Hirsch in the hope that they could persuade Hirsch to compensate them for their losses, which at that stage was assessed to be in the region of R12m. Aside from an undertaking by Hirsch to extend the credit period first from 30 to 60 days and thereafter to 90 days, no further agreement could be reached. Hirsch having referred the claim to its insurers eventually refused to engage in any further discussions with representatives of Chickenland, on the basis, so it was asserted by them, that continuing to negotiate had the potential to jeopardise their insurance claim. [10] In the meanwhile the extended period of 90 days for repayment having been exceeded by Chickenland, Hirsch began to agitate for payment of the outstanding moneys due to it. Chickenland refused to pay. Impasse having been reached, Hirsch relying on the standard terms and conditions to be found on the reverse of Chickenland’s credit application, caused summons to be issued against Chickenland for payment of the sum of R1 368 861.69 in respect of goods sold and delivered by it for the period November 2002 to April 2004. That claim was admitted by Chickenland. But, Chickenland asked that judgment on Hirsch’s claim be stayed pending adjudication on its counterclaims. [11] Chickenland alleged that the material, express and/or implied and/or tacit terms of the agreement were that: (a) each of the spice packs would be fit for human consumption; (b) each of the spice packs would be subjected to a stringent process of quality control and testing which would include the detection and removal of any foreign matter or substance not fit for human consumption; (c) the ingredients in the spice packs would be subjected to acceptable selection processes to comply with the requirements of the Food Standards Agency in the UK and the applicable South African legislation including the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972 and the regulations promulgated thereunder and with the applicable law in foreign jurisdictions where the spices were to be supplied; (d) the spice packs would be free of any banned substance. Asserting that those terms had been breached inasmuch as the spice packs contained Sudan 1, which at all material times was banned for use in food products thus rendering them unfit for human consumption, Chickenland’s counterclaim for damages for breach of contract and delict alleged, inter alia, that: '12 In breach of the terms and warranties applicable to such transactions however: 12.1 each of the spice packs listed . . . contained a substance known as Sudan 1 which is and was at all material times: 12.1.1 banned for use in food products in terms of GNR1008/1996 promulgated under the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972 (the Act) . . . ; 12.1.2 a substance which rendered the spice packs unfit for human consumption and which contaminated the spice packs; 12.1.3 a substance considered by the Food Standard Agency in the United Kingdom and relevant South African Statutory Authorities as being a banned substance in foodstuffs and/or harmful or potentially harmful to human beings; 12.1.4 an added colourant. 12.2 the spice packs were unfit for human consumption or for use in products prepared for human consumption; 12.3 the spice packs had not been subjected to a stringent process of quality control and testing or to a process for the detection of and removal of foreign matter; 12.4 the ingredients in the spice packs had not been subjected to acceptable selection and blending processes; 12.5 the ingredients in the spice packs were not of German origin and source; 12.6 the plaintiff had not performed such test/s as was required to detect the presence of an added colourant in the spice packs which the plaintiff could have done cost effectively and without difficulty. In the bona fide and reasonable but mistaken belief that the spice packs complied with the terms of the agreements: 13.1 the defendant made payment to the plaintiff of the total sum of R1 209 632,83 made up as . . . ; 13.2 the defendant utilised such spice packs in the manufacture and production of various sauces, marinades and bastings (the defendant’s sauces); 13.3 the defendant sold and supplied the defendant’s sauces to Brotrade (Pty) Limited (“Brotrade”): 13.4. Brotrade in turn sold and supplied the defendant’s sauces to: 13.4.1 the following country-based distributors (“country-based distributors”): 13.4.1.1 Nando’s Chickenland Inc. (USA); 13.4.1.2 Nando’s Chickenland (Canada) Inc. (Canada); 13.4.1.3 The Grocery Company Limited (United Kingdom); 13.4.1.4 Nando’s Grocery Australia Pty Limited (Australia); 13.4.1.5 Patleys (Pty) Limited (South Africa); and 13.4.1.6 Lufil Packaging (Pty) Limited (South Africa); and 13.4.2 Nando’s Chickenland Ltd (United Kingdom) (“Nando’s UK”) a restaurant operation 13.5 The country-based distributors, in turn, sold and supplied the defendant’s sauces to retail outlets in the countries in which they conduct business. In consequence of the breaches referred to . . . above; 14.1 the defendant’s sauces were subject to recall and were recalled from wherever they had been supplied and were subjected ultimately to destruction; 14.2 the defendant was obliged to and did replace the defendant’s sauces that had been supplied to each of Brotrade, the country-based distributors and Nando’s UK; . . . 14.4 the defendant incurred the . . . wasted expenditure1 thereby suffering damages in such amount.’ [12] Save for admitting that it was: (a) an implied term of the agreement that the spice packs would not contain any banned substance; and (b) a tacit term that the spice packs would be fit for human consumption, the remainder of Chickenland’s counterclaim was denied by Hirsch. Hirsch, moreover, relying on the standard conditions, alleged that: ‘The plaintiff in any event pleads that if it is liable for any defect in the spice packs supplied (which liability is denied), then in terms of clause 4.2 of the standard conditions of sale the plaintiff’s liability is limited at its option to repairing such goods free of charge, supplying the defendant with similar replacement goods free of charge or passing a credit for the purchase price of the goods. In the event of any liability on the part of the plaintiff, the plaintiff elects to supply the defendant with similar spice packs free of charge.’ 1 The alleged wasted expenditure incurred was inter alia in respect of the following: Microbiological testing of the affected products by forensic laboratories and the Department of Health to establish/confirm the presence of Sudan 1 and costs associated therewith, costs of the preparation of advertisements for the recall and press releases relating thereto, additional labour costs incurred pursuant to the employment of temporary personnel to attend to various aspects of the recall of affected products, truck-hire to facilitate upliftment of affected products and transport to central warehouse, costs of destruction of affected products and provision of certificates of destruction, incremental overtime labour costs incurred in relation to the manufacture of replacement products, transportation costs for delivery of replacement products to retailers, additional insurance premiums incurred as a direct result of the product recall. Hirsch furthermore sought in terms of clause 4.6 of the Standard Conditions of Sale an indemnity from Chickenland ‘in respect of any claim or proceedings against [it] for, inter alia, damages, such claims including the claims of the country based distributors, Nando’s UK and Brotrade which [Chickenland] has acquired by cession’. It thus joined Chickenland as a third party to those proceedings. In response Chickenland filed a replication. To paraphrase from the replication, Chickenland alleged that: (a) it had not assented to the standard terms and conditions; (b) it had made a counter offer to trade with Hirsch on the basis that the latter’s standard conditions did not apply; (c) the standard conditions do not bind third parties; (d) upon a proper construction of the standard terms and conditions they do not apply to claims of the nature forming the subject matter of the counterclaims; and (e) the provisions of clause 4 are unconscionable and contra bonos mores and accordingly unenforceable. [13] The issues of the merits and quantum having been separated the matter proceeded to trial before Blieden J in South Gauteng High Court solely in respect of the former. The judgment of Blieden J is reported sub nom Freddy Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd 2010 (1) SA 8 (GSJ). Blieden J held in favour of Chickenland. The learned judge concluded (para 63) that it is entitled to rely on all four of its counterclaims and that Hirsch’s claim falls to be set off against the amounts which are found to be due to Chickenland in terms of such counterclaims. The learned judge accordingly postponed the trial sine die in order for the issue of the quantum of Chickenland’s counterclaims to be determined. Hirsch appeals against the whole of the judgment and orders of Blieden J with his leave. [14] In heads of argument filed with this court, Hirsch states that it does not challenge the finding of the court below that it was negligent and that contributory negligence on the part of Chickenland had not been proved. It is thus contended that only two issues arise for determination in this appeal: First, did the respondent discharge the onus of proving that the terms relied on by the appellant were not part of the agreement between the parties? And, second, in the light of the facts, including the fact that the delictual claims were claims for pure economic loss, was Hirsch’s negligent conduct wrongful vis-a-vis (i) Chickenland, and (ii) the country-based distributors? The Standard Conditions [15] The first issue for consideration is thus whether the standard conditions of sale and credit on the reverse of the credit application form, formed part of the agreement. It will be recalled that in signing the application on behalf of Chickenland, Ms Smith inscribed the words ‘standard conditions not checked’ immediately above her signature and below the relevant warranty. According to Greenberg JA in Worman v Hughes & others 2 ‘It must be borne in mind that in an action on a contract, the rule of interpretation is to ascertain, not what the parties’ intention was, but what the language used in the contract means, i.e what their intention was as expressed in the contract. As was said by Solomon J in van Pletsen v Henning (1913, A.D., p 82 at p. 89): “The intention of the parties must be gathered from their language, not from what either of them may have had in mind.”. . . ’ [16] It follows that much of the evidence adduced by the parties on this aspect of the case was plainly inadmissible. What Ms Smith subjectively intended to convey when she inscribed those words in manuscript on the credit application form was irrelevant. The same holds true for the evidence of the various Hirsch employees who dealt with the credit application – what they subjectively understood Ms Smith to have conveyed was likewise irrelevant. [17] Blieden J concluded (para 30) that the warranty was not given. The warranty contains three distinct components: that the information furnished is true and correct; that the signatory is authorised; and, that the conditions on the reverse have been read and are binding. Ms Smith merely recorded that she had not checked the standard conditions. That was a simple statement of fact. It does not amount to an intimation from her that she did not agree to be bound by those standard conditions. In my view it hardly seems likely that a line of credit would have been approved absent any agreement at all. It must therefore be accepted, it seems to me, despite counsel’s 2 1948 (3) SA 495 (A) at 505. submission to the contrary, that the application for credit that one encounters here had to be subject to conditions of some kind - at the very least conditions as to payment and delivery. Thus whilst I incline to a different view to that of Blieden J, it is unnecessary that any firm conclusion be reached on this aspect of the case. I shall accordingly assume in favour of Hirsch, without deciding, that Chickenland are bound by the conditions of credit set forth on the reverse of the credit application. [18] I now turn to consider the proper construction to be placed on the non-liability clause. The approach to the interpretation of exemption clauses is well known. In Durban's Water Wonderland (Pty) Ltd v Botha & another3 Scott JA, stated: 'Against this background it is convenient to consider first the proper construction to be placed on the disclaimer. The correct approach is well established. If the language of a disclaimer or exemption clause is such that it exempts the proferens from liability in express and unambiguous terms, effect must be given to that meaning. If there is ambiguity, the language must be construed against the proferens. (See Government of the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd 1978 (2) SA 794 (A) at 804C.) But the alternative meaning upon which reliance is placed to demonstrate the ambiguity must be one to which the language is fairly susceptible; it must not be ''fanciful'' or ''remote” (cf Canada Steamship Lines Ltd v Regem [1952] 1 All ER 305 (PC) at 310C - D).’ [19] According to Freddy Hirsch, when he started the Hirsch group some 53 years ago, it sold equipment and machinery in addition to blended and milled spices. Clause 4.1 obviously dates back to the days when Hirsch sold machinery and equipment. Clause 4.1.1 thus refers to installation, proper care and use of those goods, whilst clause 4.2 limits Hirsch’s liability to repairing such goods or supplying replacement goods free of charge. It is thus plainly inapplicable to the sale and supply of spices. [20] Moreover clause 4.1 excludes liability by reason of any defect in the goods. But here one is not dealing with defect in the res vendita. Rather one is dealing with the delivery to a purchaser of a res different to that which had been bargained for. Chickenland were entitled to delivery of spices free of Sudan 1, that being what they had bargained for. Failure by Hirsch to deliver spices free of that banned contaminant 3 1999 (1) SA 982 (SCA) at 989 G-I. was in effect a failure to perform in terms of the contract because what was delivered was different in substance to that purchased.4 [21] In Marais v Commercial General Agency Limited5 a seed merchant inadvertently supplied a farmer with seeds of a character different to that purchased. Mason J said: ‘Now it seems to me somewhat a mis-use of terms to say that to supply one article in lieu of another article which was ordered can be brought under the term of “latent defect” ─ that because a mistake had been made in a matter in which admittedly mistakes may easily be made, particularly if there is any carelessness, such a mistake can be called a latent defect. As I understand the term "latent defect", it means a latent defect in the thing actually sold and intended to be sold. It seems to me, therefore, that Erasmus's case would not protect the defendant. If a man undertakes to deliver a particular article then surely he is bound by his undertaking, even if it is a matter in which a mistake may easily be made. If it is such a matter he ought to protect himself by a special contract or take very special care that no such mistake is made.' [22] It follows in my view that as one is here dealing with non-performance as opposed to defective performance, Clause 4.1 does not avail Hirsch. It was conceded by counsel for Hirsch that if Clause 4.1 did not find application then Clauses 4.2 to 4.6, which are linked to and dependent upon Clause 4.1, likewise could not avail Hirsch. That notwithstanding, it nonetheless remains to say something about clauses 4.4 and 4.6. In matters of contract the parties are taken to have intended their legal rights and obligations to be governed by the common law unless they have plainly and unambiguously indicated the contrary.6 Here clause 4.4 purports to go further - the assemblage of words includes statutory law. But such an exclusion if it is enforced would necessarily result in a contravention or tend to induce a contravention of statutory law. The following postulation illustrates the point: The relevant statute here not only prohibits the delivery of foodstuff that contains a prohibited substance, but also makes it an offence for one to do so. That notwithstanding, can Hirsch nonetheless adopt the 4 Roff and Co. Ltd v Mosely 1925 TPD 101 at 105; Naran & another v Pillai NO 1974 (1) SA 283 (D) at 285G-H; Ornelas v Andrew’s Cafe & another 1980 (1) SA 378 (W) at 389A-G; Cladall Roofing (Pty) Ltd v SS Profiling (Pty) Ltd [2010] 1 All SA 114 (SCA). 5 1922 TPD 440 at 443-444. 6 First National Bank of SA Ltd v Rosenblum & another 2001 (4) SA 189 (SCA) para 6. stance that it can because the contract permits it do so? The answer has to be ‘surely not’. [23] In Johannesburg Country Club v Stott & another7 Harms JA observed: ‘The conduct sought to be exempted from liability may involve criminal liability, however, and the question is whether a contractual regime that permits such exemption is compatible with constitutional values, and whether growth of the common law consistently with the spirit, purport and objects of the Bill of Rights requires its adaptation.’ but thought it unnecessary, in the light of the proper reading of the contractual exclusion encountered there, to determine it. Of clause 4.6, Blieden J said:8 ‘this is not a limitation of liability clause, it is an indemnity by the “Customer” for any claims by third parties which may be lodged against the “Company” for losses suffered because of the company’s fault or ‘for any reason whatsoever”. Counsel for the defendant referred to this clause as “Draconian”. I would say this is an understatement.’ In my view the provision is so gratuitously harsh and oppressive that public policy could not tolerate it.9 Or, in the language of the majority judgment in Sasfin v Beukes,10 it is '... clearly inimical to the interests of the community, . . . or run[s] counter to social or economic expedience...' Blieden J added:11 ‘It further seems to me that the words “for any reason whatsoever” in clause 4.6 . . . cannot be interpreted to mean that the plaintiff does not have to perform in terms of the contract, and that any loss resulting from such failure would justify the indemnity claimed.’ Those conclusions by Blieden J were not challenged on appeal. Nor, could they be. For, on the view that I take of the matter, it was plainly improper and unconscionable for Hirsch to purport to contract out of liability in that fashion. Against that backdrop I turn to consider Chickenland’s counterclaims. Claim 1 [24] Claim 1 alleges that: ‘15 The payments by the defendant, pleaded in paragraph 13.1 above were accordingly not due and/or are liable to be refunded by the plaintiff. In the circumstances the plaintiff is liable to the defendant in the sum of R1 209 632,83.’ 7 2004 (5) SA 511 (SCA) para 12. 8 Para 34.3. 9 Botha (now Griesel) & another v Finanscredit (Pty) Ltd 1989 (3) SA 773 (A) at 782. 10 Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at 8C-D. 11 Para 42. It is a claim for the refund of the purchase price paid to Hirsch for the contaminated goods. It presents no difficulty. Section 2(1) of the Act makes it an offence for any person to sell, manufacture or import for sale any foodstuff which contains or has been treated with a prohibited substance. It is common cause in this case that the contractual performance undertaken by Hirsch was illegal. In Schierhout v Minister of Justice12 Innes CJ said: ‘It is a fundament principle of our law that a thing done contrary to the direct prohibition of the law is void and of no effect . . . (Code 1.14.5). So that what is done contrary to the prohibition of the law is not only of no effect, but must be regarded as never having been done — and that whether the lawgiver has expressly so decreed or not; the mere prohibition operates to nullify the act.’ Chickenland having performed under the agreement by paying the purchase price to Hirsch, is entitled to its return. It follows that there can be no warrant for Hirsch to retain those moneys and that sum must accordingly be restored to Chickenland. Claims 2 and 4 [25] Claim 2 alleges: ‘17 In consequence of the defendant having incurred the wasted expenditure referred to in paragraph 14.4 above and having suffered damages accordingly, the plaintiff is further liable to the defendant in the sum of R1 779 545,96 . . . .’. And, claim 4 alleges: ‘24 At all material times hereto- 24.1 the plaintiff was aware of the matters set out in paragraph 13.2 above; 24.2 the plaintiff was aware that should there be any breach of the nature pleaded in paragraph 12 above, there would or could reasonably be consequences of the nature set out in paragraph 14 above; 24.3 the plaintiff accordingly owed the defendant a legal duty to comply with the terms and warranties pleaded in paragraph 4.2 of the defendant’s plea and to avoid any breach of the nature identified in paragraph 12 above. The breaches identified in paragraph 12 above were occasioned by the negligent acts or omissions on the part of the plaintiff on the grounds detailed in paragraph 19 above. In consequence of the plaintiff’s aforesaid wrongful and negligent conduct, the defendant suffered damages13 for which the plaintiff is accordingly liable in the amount of R6 424 402.04, . . . .’ 12 1926 AD 99 at 109. 13Those included inter alia the cost: to Chickenland of the replacement product, of airfreighting replacement stock; of microbiological testing of affected products by forensic laboratories and Department of Health to establish/confirm the presence of Sudan 1; of preparation of advertisements of recall and press releases relating thereto; of additional labour costs incurred pursuant to the employment of Claims 2 and 4 are claims for damages for breach of contract. Claim 2 is for the wasted expenditure incurred by Chickenland in having to recall the affected product, whilst claim 4 is for the wasted expenditure incurred by Chickenland in having to replace the affected product that had been recalled. It is thus convenient that they be considered together. The issue that arises for decision on this aspect of the case is whether it can be accepted that the breach of contract proved caused the losses sustained by Chickenland. Hirsch contends that the loss suffered by Chickenland, having regard to the test for causation in a claim for damages for breach of contract, is too remote. Factual causation is not in issue. What is, is whether the loss was not too remote. [26] According to Trollip JA in Novick v Benjamin:14 ‘A fundamental principle of our law is that for a breach of contract the sufferer should be placed by an award of damages in the same position as he would have occupied had the contract been performed, so far as that can be done by the payment of money, provided (a) that the sufferer is obliged to mitigate his loss or damage as far as he reasonably can, and (b) that the parties, when contracting, contemplated (actually or presumptively) that that loss or damage would probably result from such a breach of contract (see Victoria Falls & Transvaal Power Co. Ltd v. Consolidated Langlaagte Mines, Ltd., 1915 A.D. 1 at p. 22; Lavery & Co. Ltd. v. Jungheinrich, 1931 A.D. 156).’15 [27] And in Thoroughbred Breeders’ Association v Price Waterhouse16 Nienaber JA stated: ‘The traditional approach for determining remoteness in a contractual context was restated in 1977 by Corbett JA in Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) at 687D- 688A in the following terms: “To ensure that undue hardship is not imposed on the defaulting party . . . the defaulting party’s liability is limited in terms of broad principles of causation and remoteness, to (a) those damages that flow naturally temporary personnel to attend to various aspects of recall of affected products; of truck-hire to facilitate upliftment of affected products and transport to central warehouse; of the destruction of affected products and provision of certificates of destruction; of incremental overtime labour costs incurred in relation to the manufacture of replacement products; of transportation costs for delivery of replacement products to retailers; of additional insurance premiums incurred as a direct result of the product recall; of additional packaging material used for replacement products. 14 1972 (2) SA (A) 842 at 860A-B. 15 In Lavery & Co Ltd v Jungheinrich (at 169), Curlewis JA put it thus: ‘The question whether damage claimed in an action for breach of contract is or is not too remote depends in our view on whether at the time when the contract was made, such damage can fairly be said to have been in the actual contemplation of the parties or may reasonably be supposed to have been in their contemplation, as a probable consequence of a breach of the contract.’ 16 2001 (4) SA 551 (SCA) para 46. and generally from the kind of breach of contract in question and which the law presumes the parties contemplated as a probable result of the breach, and (b) those damages that, although caused by the breach of contract, are ordinarily regarded in law as being too remote to be recoverable unless, in the special circumstances attending the conclusion of the contract, the parties actually or presumptively contemplated that they would probably result from its breach (Shatz Investments (Pty) Ltd v Kalovyrnas 1976 (2) SA 545 (A) at 550). The two limbs, (a) and (b), of the above-stated limitation upon the defaulting party’s liability for damages correspond closely to the well-known two rules in the English case of Hadley v Baxendale 156 ER 145, which reads as follows (at 151): ‘Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.’ As was pointed out in the Victoria Falls case supra, the laws of Holland and England are in substantial agreement on this point. The damages described in limb (a) and the first rule in Hadley v Baxendale are often labelled ‘general’ or ‘intrinsic’ damages, while those described in limb (b) and the second rule in Hadley v Baxendale are called ‘special’ or ‘extrinsic’ damages.” ’ [28] The facts show that Hirsch was well aware of Chickenland’s business model. Mr Bloch testified that he had liaised closely with Hirsch’s employess, in particular John Morris. Morris, who was possessed of a BSc Degree and had vast experience in the spice manufacturing industry, knew that the product was required for export purposes. There were ongoing discussions between them as to the need for appropriate quality controls and in particular a need for the existence of a suitably equipped laboratory that was capable of testing spices to the relevant international standards applicable to the spice industry. As the Nando’s international footprint grew they had to comply with the labelling legislation of each of the foreign destinations to which their product was to be exported. Both of them thus made a point of staying abreast of the changing industry standards and legislative developments nationally and internationally. They specifically discussed the propensity of some unscrupulous suppliers to use artificial colourants in their spices. Moreover, Morris assured Bloch that appropriate checks were in place and that raw materials would only be sourced from reputable suppliers. Morris knew that Nando’s products were marketed as colourant free. Bloch was asked: ‘So from 1994 to the period 2003/3004 what was the state of awareness in the industry about colourants?’ He replied: ‘As far as I was concerned and where we were, that everybody — we applied our minds to making sure that we met the standards on every consignment we exported to our international jurisdictions. We made sure that our products were colourant free and that would have been indicated on any documentation that we would have received from Freddy Hirsch to do with the actual spice packs that we received from them because that would have — or we did not add any colourants at all to any of our products. I mean that was something that we did not do, specifically at the time to any of restaurant base products, our peri-peri sauces, our basting sauces and our chicken marinade, there was no colourants added whatsoever.’ Bloch’s evidence was not disputed. The evidence thus established that Hirsch knew that the spice packs would be used for a specific purpose and that they would be distributed worldwide and had to comply with the legislative and other industry requirements of the destination country. In that regard Bloch testified: ‘Normally when one exports anything outside of the country, one is obliged to send with the product to the country that is receiving the product, a product specification and a port health document which is signed off to make sure that the product is fit for human consumption and that is a requirement of most receiving countries from a customer in their port health authorities.’ [29] In terms of the Act colourants are prohibited generally unless specifically permitted. Sudan 1 is not a permitted colourant. Furthermore, no colourants are permitted in respect of certain foodstuff. Spice is one such foodstuff. At all material times Sudan 1 was a banned substance not just in this country but also in the European Union, United Kingdom, Australia and the United States. The World Health Organisation regards it as a banned substance. There is thus zero tolerance for its presence in foodstuff. Its presence is thus plainly illegal. [30] The commodity, it must be added, was not readily procurable elsewhere. Chickenland, quite clearly relied on Hirsch’s skill and expertise – it, after all, was an expert supplier of foodstuff intended for public consumption. Hirsch was clearly guilty of negligence in the discharge of its contractual obligation. That has now been admitted by it. What was delivered by Hirsch was not simply an inferior or defective product but one not fit for human consumption and more fundamentally, dangerous and, indeed, illegal. Chickenland relied on Hirsch to ensure that the product purchased would be fit for human consumption. Once it emerged that it was not, Chickenland had no choice in the matter – it was obliged to give effect to a mandatory recall of all of the contaminated product. And, what was more, it was given just 48 hours by the UK Food Standards Agency within which to do so. [31] From the commonly known circumstances mentioned above it can thus reasonably be supposed (Shatz Investments (Pty) Ltd v Kalovyrnas)17 that the parties contemplated when they contracted that, if the spice packs were delivered by Hirsch with an illegal contaminant, Chickenland would be obliged to recall and replace all of the products affected by that contaminant that it, in turn, had supplied to its distributors and that Hirsch would be taken to have assumed liability for all such costs directly linked to that recall and replacement. It follows that Chickenland has established Hirsch’s liability for those special damages. Claim 3 [32] That leaves claim 3, which alleges: ‘18 At all times material hereto: 18.1 the plaintiff was aware of the matters set out in paragraphs 13.2 to 13.5 above and that this was the usual manner in which the defendant conducted its business; 18.2 the plaintiff was aware that should there be any breach of the nature pleaded in paragraph 12 above, there would or could reasonably be consequences of the nature set out in paragraph 14 above; 18.3 the plaintiff accordingly owed each of the country-based distributors and Nando’s UK and Brotrade a legal duty to comply with the terms and warranties pleaded in . . . the defendant’s plea and to avoid any breach of the nature identified in paragraph 12 above. The breaches identified in paragraph 12 above were occasioned by the negligent acts or omissions on the part of the plaintiff in that: 19.1 the plaintiff failed to subject the spice packs to any, alternatively to adequate and/or proper quality control and testing or to a process for the detection of and removal of foreign matter or Sudan 1 being a substance not fit for human consumption and/or for use in products to be prepared for human consumption, when this could and should reasonable have been done; 19.2 the plaintiff unreasonably failed to subject the spice packs or the ingredients to acceptable selection and blending processes or to ensure that they complied with requirements or specifications of any of the Food Standards Agency, United Kingdom, South African law or the applicable statutory law in 17 1976 (2) SA 545 (A) at 555 G-H. foreign jurisdictions into which the spice packs or products in which the spice packs are used were to be supplied; 19.3 the plaintiff failed to establish that the ingredients were all of German origin and source when this ought reasonably to have been established; 19.4 the plaintiff sourced the ingredients from inter alia India, through the medium of agents without knowledge or concern as to the origin or source of supply; 19.5 the plaintiff knew, alternatively ought reasonably to have known of the prevalent usage of Sudan 1 in the ingredients sourced by it from India alternatively of an appreciable risk being attached to the ingredients sourced by it from India and the appreciable risk of such ingredients containing added colourants. 19.6 the plaintiff failed to detect the presence of Sudan 1 in the spice packs, when it ought reasonably to have done so. 20 In consequence of the plaintiff’s aforesaid wrongful and negligent breach each of the country-based distributors and Nando’s UK suffered damages for which the plaintiff is accordingly liable, as follows . . . Alternatively to paragraph 20 above, Brotade suffered damages for which the plaintiff is accordingly liable in the amount of R7 555 679.8018 as a result of the plaintiff’s wrongful and negligent conduct . . . The defendant has acquired by cession each of the claims which the country-based distributors, Nando’s UK and Brotrade has against the plaintiff as particularised in paragraphs 20 and 21 above, . . . Alternatively to paragraphs 18 to 22 above, the defendant itself sustained damages in the amount of R7 555 679.80 reasonably incurred in mitigating greater loss than the defendant would otherwise have suffered and for which the plaintiff is accordingly liable.’ [33] It is clear that the same facts may give rise to a claim for damages both ex contractu and ex delicto.19 But the breach of a contractual duty is not per se wrongful for the purposes of Aquilian liability. Admittedly there is an important factor present in contract and absent in delict - that is the competence of the parties to regulate, limit or expand by arrangement among themselves the consequences of any prospective breach (Thoroughbred Breeders Association (para 52)). A contract, it has been said, is the ‘ultimate limiting device’, moreover the duty in question is not imposed on the 18 Those included inter alia the costs associated with the recall and replacement of the affected products (including the costs of recall, labour, storage and destruction of the affected product). 19 Holtzhausen v Absa Bank Ltd 2008 (5) SA 630 (SCA). defendant by operation of law – it is one that the defendant was prepared to voluntarily assume.20 [34] Blieden J described claim 3 as a products liability claim. But as Professor Boberg21 suggests ‘products liability in our law has perhaps been puffed up a little beyond its true importance’. He thus contends that: ‘The reason for regarding it as a special form of Aquilian liability requiring its own dogmatic framework is not readily apparent. Wrongfulness is hardly a problem. As we have seen (above 31), wrongfulness is not a function of an act alone; it is a function of an act plus its consequences. To harm others physically or financially by producing or distributing a defective article is so socially undesirable (or objectively unreasonable, if you will) that the law should have no difficulty in branding it wrongful. There is therefore a duty to take reasonable care to avoid doing so (or, if you prefer it, to do so is an invasion of the injured party’s rights).’ [35] In Wagener v Pharmacare Ltd; Cuttings v Pharmacare Ltd22 this court, after surveying the academic writings on the subject and acknowledging that those writings had ‘appreciably assisted in shaping and determining the debate’ (para 8), reaffirmed that: (a) our common law has sufficient flexibility ‘which allows sound incremental development as society’s circumstances change’ (para 30); (b) the Aquilian remedy is presently adequate to protect a claimant’s right to bodily integrity; and (c) if strict liability is to be imposed, it is the legislature that must do it (para 38). [36] Claim 3 is asserted amongst others by Brotrade and various country-based distributors, each of whom alleged that they were owed a legal duty by Hirsch. Various claims have been alleged in the alternative by Chickenland, to whom those claims were ceded. It suffices for present purposes to consider just the one - the claim emanating from Brotrade. The action is Aquilian. Its ordinary requirements must thus be satisfied. A wrongful act is constituted in this case by the production by Hirsch of a defective article that causes physical or purely economic damage to Brotrade. The fault requirement will 20 MM Loubser ‘Concurrence of Contract and Delict’ 1997 Stell LR 113 at 124. 21 P Q R Boberg The Law of Delict Vol 1 Aquilian Liability (1984) p 194. 22 2003 (4) SA 285 (SCA) at 291. be satisfied by showing that Brotrade’s damage was reasonably foreseeable, that a reasonable person would have guarded against it, and that Hirsch failed to do so. [37] Brotrade’s claim is one for pure economic loss. As Prof Burchell makes plain: ‘It is a well-established rule that the negligent causing of physical injury or tangible property damage can give rise to a presumption of liability, but the negligent causing of pure economic loss . . . requires that the court will not simply jump to the rescue of the plaintiff on proof of negligent conduct causing harm but will require policy factors in favour of imposing liability on the defendant.’23 As explained by Harms JA in Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority:24 ‘ “Pure economic loss” in this context connotes loss that does not arise directly from damage to the plaintiff’s person or property but rather in consequence of the negligent act itself, such as a loss of profit, being put to extra expenses or the diminution in the value of property.’ It does not, I daresay, encompass within its scope the loss, through theft, of a tangible asset such as a motor vehicle as held in Viv’s Tippers (Pty) Ltd v Pha Phama Staff Services (Pty) Ltd.25 [38] According to Brand JA in Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd: 26 ‘Recognition that we are dealing with a claim for pure economic loss brings in its wake a different approach to the element of wrongfulness. This results from the principles which have been formulated by this court so many times in the recent past that I believe they can by now be regarded as trite. These principles proceed from the premise that negligent conduct which manifests itself in the form of a positive act causing physical damage to the property or person of another is prima facie wrongful. By contrast, negligent causation of pure economic loss is not regarded as prima facie wrongful. Its wrongfulness depends on the existence of a legal duty. The imposition of this legal duty is a matter for judicial determination involving criteria of public or legal policy consistent with constitutional norms. In the result, conduct causing pure economic loss will only be regarded as wrongful and therefore actionable if public or legal policy considerations require that such conduct, if negligent, should attract legal liability for the resulting damages (see eg Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) 23 Jonathan Burchell ‘The odyssey of pure economic loss’ 2000 Acta Juridica 99. 24 2006 (1) SA 461 (SCA) [2006] 1 All SA 6 para 1. 25 2010 (4) SA 455 (SCA) para 5. 26 2009 (2) SA 150 (SCA) para 12. ([2002] 3 All SA 741) paras 12 and 22; Gouda Boerdery BK v Transnet 2005 (5) SA 490 (SCA) ([2004] 4 All SA 500) para 12; Telematrix (supra) paras 13 - 14; Trustees, Two Oceans Aquarium Trust (supra) paras 10 - 12).’ [39] The enquiry here is whether as a matter of policy Hirsch should be held liable for the pure economic loss suffered Brotrade. That, according to Brand JA in Fourways Haulage para 16 and 17: ‘raises a question which is logically anterior: what are the considerations of policy that should be taken into account for purposes of the enquiry? In accordance with what criteria should the relevant considerations of policy be identified? Must we accept that policy considerations are by their very nature incapable of predetermination and that the identification of the policy considerations that should find application in a particular case is to be left to the discretion of the individual judge? Does this mean that in the context of pure economic loss the imposition of liability will depend on what every individual judge regards as fair and reasonable? I believe the answer to the last two questions must be 'no'. Liability cannot depend on the idiosyncratic views of an individual judge. That would cloud the outcome of every case in uncertainty. In matters of contract, for example, this court has turned its face against the notion that judges can refuse to enforce a contractual provision purely on the basis that it offends their personal sense of fairness and equity. Because, so it was said, that notion will give rise to legal and commercial uncertainty (see eg Brisley v Drotsky 2002 (4) SA 1 (SCA) (2002 (12) BCLR 1229) paras 21 - 25; South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) ([2004] 4 All SA 168) para 27). I can see no reason why the same principle should not apply with equal force in matters of delict. A legal system in which the outcome of litigation cannot be predicted with some measure of certainty would fail in its purpose. As pointed out by Lord Scott of Foscote in Lagden v O'Connor [2004] 1 AC 1067 (HL) para 86: “One of the main functions of the law of obligations, contractual or tortious, is to provide, or attempt to provide, a set of yardsticks for determining whether a legal injury has been inflicted on a person (the claimant) by another person (the defendant) and, if so, for determining the amount of the damages that the defendant must pay by way of reparation. If the two parties are unable to agree, an answer can be found by recourse to litigation. But the cost of litigation, often excessive both in absolute terms and in relation to the amount in dispute, and the inevitable delay, worry and anxiety that accompany court proceedings provide impelling reasons why the yardsticks by means of which legal liability is to be measured should be kept as simple and uncomplicated as practicable.” We therefore strive for certainty. The question is how can that be achieved in an area directed by considerations of public or legal policy? I believe we must accept at the outset that absolute certainty is unattainable. The moment this court took the first-tier policy decision - in Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A) - to abolish the absolute exclusion of liability for pure economic loss, it abandoned the bright line of absolute certainty. The second-tier policy decision as to when liability should be imposed must of necessity be accompanied by some degree of uncertainty, at least at the early stages of development in this area of the law. That much was recognised and predicted by Rumpff CJ in Administrateur, Natal itself (see 831B). This measure of resulting uncertainty also seems to be an experience shared by those jurisdictions where the same first-tier policy decision has been taken. Thus it was stated, for example, by Gaudron J in the Australian High Court, in Perre v Apand Pty Ltd (1999) 198 CLR 180 (HC of A) para 25: “The law as to liability for economic loss is a 'comparatively new and developing area of the law of negligence'. It has not yet developed to a stage where there has been enunciated a governing principle applicable in all cases. Perhaps it never will.” ’ [40] What then are the considerations of policy that are of particular relevance in this case? First, as always in claims of this kind, is the spectre of the imposition of liability in an indeterminate amount for an indeterminate time to an indeterminate class (Perre v Apand para 32). For, as Prof Burchell observes: ‘Problems of limiting the scope of potential indeterminate liability are undoubtedly the stuff of which delictual cases are made.’ According to Mark Radomsky, a director of Chickenland, Brotrade (Pty) was formed in 1997. The thinking within the group was that the retail business had to be separated from the restaurant business. With that in mind Brotrade was formed, which was to operate as the logistics and distribution entity within the Nando’s group. The evidence clearly establishes that Hirsch was aware not just of the existence of Brotrade, but also of the pivotal role that it played in the distribution of Chickenland’s products. Indeed, as Bloch testified and the correspondence exchanged between Hirsch and Chickenland confirmed, not only was Hirsch aware of the various countries internationally to which Chickenland’s products were being supplied but it was also well aware that Brotrade was the vehicle employed for such distribution. The loss claimed here is therefore by a single identifiable plaintiff. The claim by Brotrade is not likely to bring in its wake a multiplicity of actions. It is accordingly finite in its extent. [41] Second, there is no privity of contract between Brotrade and Hirsch. The former was thus unable to protect itself by contract or by any other means that I can conceive of. Brotrade could therefore not itself have taken any steps to guard against the harm. Third, the imposition of liability imposes no additional burden on Hirsch than that already imposed by law and good practice internationally in the industry. Hirsch’s commercial freedom is thus not further impaired in any way. Accordingly, as Van den Heever JA made plain in Herschel v Mrupe:27 ‘By putting into circulation potentially harmful things . . . the manufacturer is not merely exercising a legal right but encroaching upon the rights of others to be exposed, when going about their lawful occasions and when accepting the implied general invitation to acquire and use such commodities, to danger without warning and without their having a reasonable opportunity to become aware of such danger before use. In other words, it is an encroachment upon the rights of others to set hidden snares for them in the exercise of their own rights. To refrain from doing so is a duty owning to the world at large.’ (See also Ciba-Geigy (Pty) Ltd v Lushof Farms (Pty) Ltd & ‘n ander.)28 [42] Fourth, as van der Merwe and De Jager29 observe: ‘In accordance with the guide-lines provided by our case law, it is submitted that a manufacturer has a general duty to take reasonable steps to ensure that defective products do not reach the market or, if they do, to withdraw them from the market or to take other steps to ensure that no harm ensues from the presence of the product on the market. The criterion of reasonableness coupled with the community’s concept of what behaviour is reasonable in given circumstances is flexible enough to take into account such factors as the type of product, the nature of the manufacturer’s business enterprise, the customs and practices prevailing in a particular trade or industry, the amount of knowledge and expertise of potential purchasers and users of the product, abnormal use, and the specific stage in the production process during which a defect originated. The last-mentioned factor may influence the duties of a manufacturer in different ways. At the stage of planning or design the manufacturer must take into account the most recent knowledge available in its field. When the product is actually manufactured the manufacturer has a duty to inspect and to control; when it is released on the market he has the duty to provide potential users with directions for use and to warn them adequately against dangers inherent in the product. Should a defect be detected after a product has been released, the general duty to act reasonably in order to prevent damage could well be concretized in a duty to withdraw the product from the market.’ I agree that on the facts here present, Hirsch did indeed have a duty to withdraw the contaminated product from the market. That Chickenland and Brotrade, who were the innocent victims of Hirsch’s illegal conduct, did so to mitigate their loss, hardly serves to exonerate Hirsch from that duty. 27 1954 (3) SA 464 (A) at 486F. 28 2002 (2) SA 447 (SCA). 29 Schalk van der Merwe & Frederick de Jager ‘Products Liability: A recent unreported case’ 1980 SALJ 83. [43] In my view these are all strong policy considerations why Hirsch should be held liable. For, as Howie P stated in Wagener v Pharmacare Ltd; Cuttings v Pharmacare Ltd,30 a case where harm was caused to patients by a defective local anaesthetic, Regibloc: ‘In deciding the issues raised by the appeal it must be accepted, as regards the facts, that the Regibloc in question was manufactured by the respondent, that it was defective when it left the respondent’s control, that it was administered in accordance with the respondent’s accompanying instructions, that it was its defective condition which caused the alleged harm and that such harm was reasonably foreseeable. It must also be accepted, as far as the law is concerned, indeed it was not disputed, first, that the respondent, as manufacturer, although under no contractual obligation to the appellant, was under a legal duty in delictual law to avoid reasonably foreseeable harm resulting from defectively manufactured Regibloc being administered to the first appellant and, secondly, that the duty was breached. In the situation pleaded there would therefore clearly have been unlawful conduct on the part of the respondent: Ciba-Geigy (Pty) Ltd v Lushof Farms (Pty) Ltd en ‘n Ander.’31 [44] Having decided wrongfulness in Brotrade’s favour there remains causation. Factual causation can hardly be in issue. On the common cause facts, but for Hirsch’s negligence (which as I have already indicated is now admitted) Brotrade would not have suffered loss. That leaves legal causation. The question to be answered once again being whether the loss claimed by Brotrade is too remote. A court should be flexible in its approach to this enquiry (Fourway Haulage para 35). In my view, on the facts of this case, on either the direct consequences test or the foreseeability test the conclusion that one arrives at is the same. Applying the former - it is clear that the loss followed directly from Hirsch’s wrongful and negligent conduct. Applying the latter - it was reasonably foreseeable that because Sudan 1 was a proscribed substance, its presence would (not just could) have as its consequence a recall leading ineluctably to loss by Brotrade. Conclusion 30 2003 (4) SA 285 (SCA) at 291. 31 2002 (2) SA 447 (SCA). [45] It follows that Blieden J was correct in upholding each of Chickenland’s counterclaims. In the result the appeal must fail and it is accordingly dismissed with costs, such costs to include those consequent upon the employment of two counsel. _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES: For Appellant: M J Fitzgerald SC J Butler SC Instructed by: Deneys Reitz Inc Cape Town Webbers Bloemfontein For Respondent: A Subel SC J Blou SC Instructed by: Werksmans Sandton Symington & De Kok Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 17 March 2011 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Freddy Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd (20/10) [2011] ZASCA 22 (17 March 2011) Today the Supreme Court of Appeal (SCA) dismissed an appeal by the Freddy Hirsch Group (Pty) Ltd (Hirsch), against the judgment of Blieden J of the South Gauteng High Court, Johannesburg. On 29 August 1994, the respondent, Chickenland (Pty) Ltd (Chickenland), which is the primary operating entity within the Nandos Group applied in writing to Hirsch on the latter’s standard credit application form for a line of credit. Hirsch approved the application and took to supplying the latter with spice packs consisting of a blend of different spices prepared in accordance with the latter’s specifications. In signing the application on behalf of Chickenland one of its employees inscribed the words ‘standard conditions not checked’. During January 2004 the United Kingdom health authority in Manchester tested Nando’s extra hot peri-peri sauce and found it to be positive for Sudan 1 dye. Sudan 1 is a red dye that is used in colouring solvents, oils, waxes and shoe and floor polishes. It is considered to be a genotoxic carcinogen rendering it unfit for human consumption. It has been banned by the World Health Organisation and its presence is not permitted in foodstuff for any purpose in this country and most others internationally. Nandos was obliged by the Food Standards Agency of the UK to place newspaper advertisements informing consumers of their finding and were given 48 hours to withdraw any contaminated products from all supermarket shelves in the United Kingdom. Subsequent investigations identified cayenne pepper that had been sourced in India by Hirsch and supplied to Chickenland in certain of the spice packs as the contaminant. A world wide recall of Chickenland’s peri-peri sauces followed. A dispute having arisen between them, Hirsch, relying on the standard terms and conditions to be found on the reverse credit application, caused summons to be issued against Chickenland for payment of the sum of R1 368 861.69 in respect of goods sold and delivered by it to Chickenland. Chickenland admitted the claim, but counterclaimed against Hirsch for damages for breach of contract and delict. Each of the four counterclaims succeeded in the high court before Blieden J. On appeal Hirsch contended that the standard terms on the reverse of the credit application form contained certain clauses that exempted it from liability. The SCA, after a consideration of those clauses, concluded that they did not avail Hirsch in a situation such as this, where it had delivered something different to that bargained for and moreover, what was in effect an illegal banned substance. The SCA thus concluded that it was plainly improper for Hirsch to purport to contract out of liability in that fashion. The SCA then considered each of Chickenland’s counterclaims. The first was for the refund of the purchase price paid to Hirsch for the contaminated goods. The SCA held the contractual performance undertaken by Hirsch was illegal, but as Chickenland had performed under the agreement by paying the purchase price, it was entitled to its return. Claims 2 and 4 were claims for the wasted expenditure incurred by Chickenland in having to recall and, thereafter, replace the contaminated product. Before the SCA, Hirsch contended that having regard to the test for causation in a claim for damages for breach of contract, the loss suffered by Chickenland was too remote. The SCA held that Hirsch knew that the product was required for export purposes and that the spice packs had to comply with the legislative and other industry standards in the destination country. Accordingly, so the SCA concluded, the parties contemplated when they contracted that, if the spice packs were delivered by Hirsch with an illegal contaminant, Chickenland would be obliged to recall and replace all of the products affected by that contaminant that it, in turn, had supplied to its distributors and that Hirsch would be taken to have assumed liability for all such costs directly linked to that recall and replacement. It followed that Chickenland had established Hirsch’s liability for those special damages. In respect of the third claim, Hirsch contended that being a delictual claim for pure economic loss by Chickenland the court had to be satisfied that Hirsch’s conduct was wrongful. The SCA after referring to various considerations of policy, including the fact that Hirsch had released a prohibited foodstuff into the market, concluded that Hirsch’s conduct was indeed wrongful. It accordingly dismissed the appeal. --- ends ---

3600

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 677/2020 In the matter between: THERESA FORTUNATE MABASO APPELLANT and THE STATE RESPONDENT Neutral citation: Mabaso v The State (677/2020) [2021] ZASCA 98 (09 July 2021) Coram: MBHA and MBATHA JJA and CARELSE, PHATSHOANE and MABINDLA-BOQWANA AJJA Heard: 12 May 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 09 July 2021. Summary: Criminal Law – a confession by an accused shall not be admissible as evidence against his or her co-accused – a previous inconsistent statement by a hostile witness is only admissible to discredit that witness – no other evidence implicating appellant in the murder of the deceased – appeal upheld and conviction for murder set aside. _____________________________________________________________ ORDER ________________________________________________________________________ On appeal from: Mpumalanga Division of the High Court, Mpumalanga (Ngobeni AJ, sitting as court of first instance): The appellant’s application for condonation for the late filing of her Notice to Appeal, is granted. The respondent’s application for condonation for the late filing of the respondent’s heads of argument, is granted. The appeal is upheld. The appellant’s conviction for murder is set aside, and the order of the high court is replaced with the following order: ‘Accused 2 is found not guilty of murder as charged and is acquitted.’ JUDGMENT Mbha JA (Mbatha JA and Carelse, Phatshoane and Mabindla- Boqwana AJJA concurring): [1] On 25 April 2018, the appellant, Ms Theresa Fortunate Mabaso, who was accused 2, was convicted of murder by Ngobeni AJ in the high court, Circuit Local Division of the Eastern Circuit Division, Mbombela, now called the Mpumalanga Division (the high court). On 21 September 2018, the appellant and her co-accused, Mr Wiseman Mlamuli Ngomane (Mr Ngomane), who was accused 1, were both sentenced to life imprisonment for murder, after the high court found that there were no substantial and compelling circumstances justifying the imposition of a lesser sentence. Mr Ngomane was also sentenced to various periods of imprisonment for housebreaking with intent to commit murder, robbery committed with aggravating circumstances and for unlawful possession of a firearm and ammunition, which were ordered to run concurrently with the term of life imprisonment. This appeal, which is with leave of the high court, is against the appellant’s conviction. There is no appeal by Mr Ngomane. [2] The parties have given their written consent for the disposal of this appeal on the papers without oral argument in terms of s 19(a) of the Superior Courts Act 10 of 2013. There are two preliminary applications by the respective parties that must first be disposed of before delving into the appeal. First, the appellant applies, in terms of rule 12 of the Rules of the Supreme Court of Appeal (the rules), for condonation for her failure to comply with rule 7(1)(b) of the rules, by not filing a notice to appeal within the prescribed one month period after leave to appeal against her conviction for murder was granted by the high court. Second, the respondent applies for condonation for the late filing of its heads of argument. The parties are opposing each others respective application. [3] The appellant’s notice to appeal was filed simultaneously with the application for condonation on 19 August 2020. As leave to appeal against the conviction was granted on 21 September 2018, the appellant’s notice was filed approximately 23 months out of time. [4] The appellant has explained that she was convicted for murder on 25 April 2018 but that the high court did not provide reasons for its order on that day. The matter was then adjourned to 24 July 2018, and the high court ordered that she remain in custody. The high court handed down judgment and its reasons on 24 July 2018. The appellant subsequently decided to obtain new legal representation, which necessitated procuring a transcription of the entire proceedings to enable her new attorneys to familiarise themselves with the case. [5] The appellant has furnished correspondence showing that her new attorneys started writing to the Registrar, Pretoria, from 18 July 2018 requesting a transcript of the recordings. No less than 20 letters were sent to the office of the registrar in this respect. It was only on 23 March 2020 when the registrar informed the appellant’s attorneys that the transcription was ready for collection. However, this unfortunately coincided with the announcement and proclamation of the national state of disaster and the Alert Level 5 lockdown (the lockdown), which was put into place due to the Covid- 19 pandemic. The appellant’s attorneys were thus only able to obtain the record on 20 July 2020. [6] In my view, whilst the period of non-compliance for the filing of the notice was extraordinarily lengthy, the appellant has furnished a reasonable explanation for the delay. Furthermore, in light of the view I take of this appeal, which will be demonstrated later in the course of this judgment, and the fact that the respondent has not shown that it will suffer prejudice if the application was granted, I am accordingly of the view that it is in the interests of justice that the appellant’s non-compliance should be condoned. [7] The respondent’s heads of argument were filed three months out of time. Part of the explanation given is that there was an honest mistake that occurred in the respondent’s office relating to the allocation of the matter, which was exercebrated by the lockdown. It has not been shown that granting the condonation requested by the respondent will cause the appellant any recognisable prejudice. In the circumstances, I am satisfied that the respondent’s application for condonation ought likewise to be granted. [8] The background facts and the circumstances in relation to the count of murder, which is the subject matter of this appeal, are largely common cause. They are briefly as follows. During the early hours of the morning on 8 November 2013, three male persons, armed with a firearm and ammunition, approached the house of the deceased, Mr Sifiso Michael Mabuza, at stand number 1376, Langeloop Trust, Tonga, Mpumalanga. At the time, the deceased, who was a member of the South African Police Service (the SAPS) holding the rank of constable, and a minor child were sleeping in one of the bedrooms. [9] Two of the assailants forcefully gained entry into the house through a window whilst one of them remained outside and kept a lookout. After a physical struggle with the deceased, one of the two assailants shot him in the chest. The assailants robbed the deceased of his official SAPS issued firearm, after which all three fled the crime scene. The deceased died of a gunshot wound to the chest. [10] Mr Ngomane was indicted with Mr Sindi Richman Mvubu (Mr Mvubu) and Mr Victor Sibiya (Mr Sibiya) as accused 1 to 3 respectively, on all the five counts referred to in paragraph 1. Mr Sibiya died before the commencement of the trial. Mr Mvubu was, on 8 June 2016, convicted on all five charges consequent to his plea of guilty amplified by his statement, that was tendered in terms of s 112(2) of the Criminal Procedure Ac 51 of 1977 (the CPA). He was subsequently sentenced to 28 years’ imprisonment for the offences, 10 years of which were suspended for a period on certain conditions. Effectively, he had to serve 18 years’ imprisonment for the crimes. [11] In his statement in terms of s 112(2) of the CPA, marked exhibit ‘F’, Mr Mvubu implicated the appellant in the murder of the deceased. He stated that on the day before the incident, the appellant summoned him, together with Mr Ngomane and Mr Sibiya, to her place where she requested him to kill the deceased. The reason she had wanted the deceased killed was because the deceased had arrested her and confiscated her drugs and vehicle. He said the appellant gave him a deposit of R10 000 to execute the killing and promised to give him a further R16 000 when the deceased was killed. [12] On the day after he had been sentenced, and having agreed to testify as a State witness in the subsequent criminal trial of Mr Ngomane and the appellant, Mr Mvubu was brought before Captain Madala Nwele Ndlovu (Captain Ndlovu) of the SAPS, to whom he gave a further statement marked exhibit ‘E’, detailing his involvement in the crimes. In this statement, Mr Mvubu again implicated the appellant saying that on 7 November 2013 she phoned him and said that she wanted him to kill the deceased. He then met the appellant who explained to him that the deceased had arrested her and locked her up in the cells. He said the appellant told him she was prepared to pay him a sum total of R46 000, inclusive of a deposit of R10 000. She then paid him the deposit. Thereafter, he met Mr Ngomane and Mr Sibiya at a tavern where they planned the murder of the deceased. [13] Before the high court, a confession made on 6 January 2014 by Mr Ngomane, before a magistrate, Mr O E Moletsane, was handed in and accepted as an admission in terms of s 220 of the CPA. In this statement, which was marked exhibit ‘D’, Mr Ngomane implicated the appellant in the crime of murder by stating that she was the one who hired Mr Mvubu to kill the deceased and paid him R10 000 as a part payment of the total sum of R46 000, which she undertook to pay him for the killing. Mr Ngomane stated that the appellant’s reason for wanting to have the deceased killed was that the deceased had impounded her vehicle when it was found transporting dagga and illicit cigarettes. [14] The State led the evidence of various witnesses who gave viva voce evidence, none of which directly implicated the appellant. The State also led the evidence of Mr Mvubu in an attempt to corroborate the contents of both his plea statement in terms of s 112(2) of the CPA, and the statements he gave to Captain Ndlovu on 8 June 2014, marked ‘E’and ‘F’respectively. [15] It transpired that Mr Mvubu had also made another statement under oath marked exhibit ‘G’, to Warrant Officer M L Bhembhe on 30 November 2013. In this statement, Mr Mvubu alleged that the appellant undertook to pay him R60 000 if he killed the deceased. The appellant further undertook, according to this statement, to procure the murder weapon and then provided him with her cell phone numbers. However, he said that he never called the appellant. Later he received a call from another person advising him that the deceased had been killed. [16] The contents of Mr Mvubu’s statement marked exhibit ‘G’ are markedly in contrast to those in his statement marked exhibit ‘E’. In exhibit ‘E’, Mr Mvubu stated that the appellant offered him a total sum of R46 000, which included a R10 000 deposit that he shared with Mr Ngomane and Mr Sibiya. Importantly, he stated unequivocally, in contrast to what he said in exhibit ‘G’, that he was involved when they went to the deceased’s homestead where he was killed. Mr Ngomane was the person, according to Mr Mvubu, who entered the deceased’s house through the window and fired the fatal shot killing the deceased. The contract killing amount changes remarkably in Mr Mvubu’s plea statement marked exhibit ‘F’, where he mentioned the total amount to be paid by the appellant to be R26 000. [17] When Mr Mvubu testified, he denied that he ever pleaded guilty previously. On being questioned about his plea statement marked exhibit ‘F’, he said he could not remember his statement being reduced to writing and being read into the record before he was convicted and sentenced. Although he admitted to having taken part in the killing of the deceased, he stated in contradiction to both his statements marked exhibits ‘E’ and ‘F’, that Mr Ngomane was not present at the time and that it was instead the latter’s brother, Mr Mantinti Innocence Ngomane, who was the third person involved, and is the person who actually unlawfully entered the deceased’s home through a window. Furthermore, Mr Mvubu testified that their purpose for entering the deceased’s home was to steal and obtain firearms and not, as was recorded in both his statements, at the initiation of the appellant. [18] After a trial within a trial, after which the statement marked ‘E’ was ruled admissible, Mr Mvubu was declared a hostile witness in terms of the provisions of s 190 of the CPA. Under cross-examination by the State, Mr Mvubu denied that he was hired by the appellant to kill the deceased. He said that it was the police who insisted that he should say that the appellant was the person who hired him to commit the murder. [19] The appellant on the other hand testified that she was actively involved in dealing in dagga and that she was arrested and convicted on two occasions. She confirmed that on the last occasion when she was arrested, her Hyundai i20 motor vehicle, which she used to convey the dagga, was impounded. Upon her release, the deceased visited her at her home and told her that he was the person who had provided the information concerning her dealing in dagga to other police officals, as a result of which she was arrested and her vehicle was impounded. The deceased then suggested that they work together in illicitly selling the dagga, but she turned down his overtures. She further testified that the deceased even undertook to assist her to have her impounded vehicle released back to her. She denied ever instructing or hiring Mr Mvubu or anybody to carry out the murder of the deceased. [20] The high court accepted that the contents of exhibit ‘E’ consisted of direct evidence on how the murder of the deceased was committed by Mr Mvubu, Mr Ngomane and Mr Sibiya, and the role played by the appellant in the matter. It also found that Mr Mvubu had repeated the contents of exhibit ‘E’ in his guilty plea marked ‘F’, which was accepted into evidence, and that it was highly unlikely that he could have repeated what he knew to be false in his guilty plea, having regard to the consequences thereof about which he had been adequately warned. [21] The high court took into consideration the testimony of the appellant namely, that she was a self-confessed dealer in dagga, that she was arrested and as a result her vehicle was confiscated, and that the deceased had made overtures to assist her in receiving her vehicle back. The high court then concluded that the previous inconsistent statement was interlinked with all the evidence which proved the guilt of the appellant. [22] In its evaluation of the evidence, the high court correctly accepted that the State did not lead direct evidence implicating the appellant in the killing of the deceased. The high court also accepted as trite law, the common law principle that a previous inconsistent statement was only admissible to discredit the witness, but not as the evidence of the facts stated therein. The question that had to be answered, the high court reasoned, was whether a statement made by a hostile witness had sufficient evidential value, when evaluated and assessed with all the evidence tendered in its totality. The high court placed reliance in the matter of S v Mathonsi,1 where a full bench of the KwaZulu-Natal High Court, Pietermaritzburg, held that a court is entitled to make substantive use of the previous statement by a hostile witness and give the statement, as evidence, the appropriate weight, provided sufficient guarantees of reliability are present. The full bench further found that the statement could also be utilised for substantial purposes as an exeption to the hearsay rule, the basic principles being that a conspectus of all the evidence was required. [23] The only evidence that implicated the appellant in the deceased’s murder is that contained in Mr Mvubu’s statement marked exhibit ‘E’ and his plea of guilty made in terms of s 112(2) of the CPA, marked exhibit ‘F’, both made on 8 June 2016. [24] In my view, the high court, with respect, mischaracterised the reasoning of the full bench in Mathonsi.2 In Mathonsi the full bench held that evidence contained in a prior inconsistent statement is such that it would only be admissible if given in court. The high court failed to follow this important guideline prior to admitting Mr Mvubu’s prior inconsistent statements. [25] Furthermore, the statement marked Exhibit ‘E’ is a confession in which Mr Mvubu implicated the appellant. Section 219 of the CPA states in explicit language that ‘no confession made by any person shall be admissible as 1 S v Mathonsi 2012 (1) SACR 335 (KZP). 2 See fn 1 above. evidence against another person’. This rule has been applied consistently in various cases in this Court and the Constitutional Court. In Makhubela v S; Matjeke v S,3 the Constitutional Court confirmed that extra-curial confessions and admissions tendered by an accused are inadmissible against a co-accused and, therefore, cannot be used against a co-accused. In Nndwambi v S,4 this Court stated the following: ‘As the State has conceded, the admission incriminating the appellant should not have been sufficient to discharge the State’s onus of proving the appellant’s guilt beyond a reasonable doubt. The appellant denied any involvement in the commission of the offences and no evidence was led by the State other than that of the accused who incriminated his co- accused.’ [26] It follows that the high court clearly misdirected itself by failing to recognise that Mr Mvubu’s previous statement marked exhibit ‘E’, was only admissible to discredit him. It was not admissible as evidence against the appellant. [27] The admission that Mr Mvubu made in his plea statement in terms of s 112(2) of the CPA, exhibit ‘F’, in which he implicated the appellant must suffer the same fate. The high court ought not to have admitted it against the appellant. [28] There is another aspect which in my view should have been regarded as an insurmountable obstacle for the State, namely that Mr Mvubu was a single witness as against the appellant, as well as an accomplice. A reading of 3 Makhubela v S; Matjeke v S [2017] ZACC 36; 2017 (12) BCLR; 2017 (2) SACR 665 (CC) para 29. 4 Nndwambi v S [2018] ZASCA 99 para 3. See also Du Toit et al Commentary on the Criminal Procedure Act para 23-22 J. the judgment reveals that the high court failed to exercise the caution it was enjoined to do in evaluating Mr Mvubu’s evidence. It is a widely acknowledged rule that the evidence of an accomplice should be treated with extreme caution.5 [29] The contradictions in all three statements made by Mr Mvubu and his testimony, which are obviously material, should have alerted the high court to be on its guard and find Mr Mvubu to be an untrustworthy witness. Being a single witness, the high court ought to have found Mr Mvubu’s evidence to be unsatisfactory. [30] The only other evidence that implicated the appellant was the confession by Mr Ngomane marked exhibit ‘D’, in which the Mr Ngomane stated that he was recruited by Mr Mvubu to partake in the killing of the deceased. Other than being clearly inadmissible in terms of s 119 of the CPA, and on the basis of the case authority referred to earlier, this was hearsay evidence not corroborated by any other evidence. [31] In light of what I have stated above, the appellant’s conviction was improper and falls to be set aside. The appellant’s conviction has also been attacked on other bases, for example, that the appellant never received a fair trial as inter alia, the trial judge unnecessarily entered the arena by subjecting the appellant to unfair cross-examination. I see no reason to delve into the other complaints having already found that the conviction must be set aside. 5 Mulaudzi v S [2016] ZASCA 70 para 11. [32] In the circumstances, I make the following order: The appellant’s application for condonation for the late filing of her notice to appeal, is granted. The respondent’s application for condonation for the late filing of the respondent’s heads of argument, is granted. The appeal is upheld. The appellant’s conviction for murder is set aside, and the order of the high court is replaced with the following order: ‘Accused 2 is found not guilty of murder as charged and is acquitted.’ __________________ B H MBHA JUDGE OF APPEAL Appearances: For appellant: C G Jordaan Instructed by: Coert Jordaan Attorneys Inc, Nelspruit Giorgi & Gerber Attorneys, Bloemfontein For respondent: M R Molatudi with C V Mkhulise Instructed by: Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 09 July 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Mabaso v The State (677/2020) [2021] ZASCA 98 (09 July 2021) Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal against the order of the Mpumalanga Division of the High Court, Mpumalanga (the high court). The issue before the SCA was whether the evidence of a single witness was reliable and acceptable considering that the witness was declared a hostile witness. The appellant was convicted of murder and sentenced to life imprisonment on the basis of inconsistent statements, implicating the appellant, made by her co-accused. The high court accepted that the State did not lead direct evidence implicating the appellant in the killing of the deceased and that a previous inconsistent statement is only admissible to discredit the witness and not as the evidence of the facts stated therein. However, after evaluating the evidence, the high court concluded that the previous inconsistent statement was interlinked with all the evidence which proved the guilt of the appellant. The SCA held that the high court clearly misdirected itself by failing to recognise that the co-accused’s previous inconsistent statement, was only admissible to discredit him. It was not admissible as evidence against the appellant. The fact that the co-accused was a single witness against the appellant, as well as an accomplice, the SCA held further, was an insurmountable obstacle against the State. The SCA concluded that the contradictions in all three statements made by the co-accused and his testimony should have alerted the high court to be on its guard and find the co-accused to be an untrustworthy witness and consequently find his evidence to be unsatisfactory. The SCA therefore upheld the appeal. ~~~~ends~~~~

91

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 85/2016 In the matter between: MAHAEEANE MAHAEEANE FIRST APPELLANT MOTLAJSI THAKASO SECOND APPELLANT and ANGLOGOLD ASHANTI LIMITED RESPONDENT Neutral citation: Mahaeeane v Anglogold (85/2016) [2017] ZASCA 090 (07 June 2017) Coram: Maya AP, Fourie, Molemela, Gorven and Mbatha AJJA Heard: 22 March 2017 Delivered: 7 June 2017 Summary: Promotion of Access to Information Act 2 of 2000 : section 50 : meaning of ‗documents required‘ : right relied upon to claim damages : in the context of litigation, documents must be reasonably required to formulate a claim : test not met in present matter : records requested not reasonably required to exercise or protect right relied upon. __________________________________________________________________________ ORDER On appeal from: Gauteng Local Division of the High Court, Johannesburg (Sutherland J sitting as court of first instance): The appeal is dismissed with costs. JUDGMENT Gorven AJA (Maya AP and Fourie AJA concurring): [1] The appellants were previously both employed by the respondent in its gold mining operations. They were also both medically boarded by the respondent on the ground of having contracted silicosis. An application has been launched for the certification of a class action (the certification application). The class relevant to silicosis sufferers is defined as comprising ‗current and former mine workers who have silicosis and who work or have worked on the goldmines listed in annexure A to the Notice of Motion‘. The mine of the respondent at which the appellants worked is listed. There is another class defined for employees who contracted pulmonary tuberculosis. For the sake of simplicity, I shall refer only to the respondent and not to the other mines. The certification application was granted and is presently on appeal. There were some 56 applicants in the certification application. Although the appellants admittedly fall within the class relating to silicosis, they are not named applicants in that application. The same attorneys represent the appellants and the class. [2] This appeal concerns records requested under s 50(1) of the Promotion of Access to Information Act (the PAIA).1 This relates to private bodies and reads: ‗(1) A requester must be given access to any record of a private body if- (a) that record is required for the exercise or protection of any rights . . . .‘2 The provisions of s 7(1) of the PAIA are relied on by the respondent to exclude the operation of the PAIA. This provides: ‗(1) This Act does not apply to a record of a public body or a private body if- (a) that record is requested for the purpose of criminal or civil proceedings; (b) so requested after the commencement of such criminal or civil proceedings, as the case may be; and (c) the production of or access to that record for the purpose referred to in paragraph (a) is provided for in any other law.‘ [3] A list of some ten records was requested in terms of s 50(1) of the PAIA. The respondent reacted to the request in writing, recording that the appellants ‗are included in the group of persons on whose behalf the [certification application] has been brought‘. It further recorded that the request had been made after the commencement of the certification application. The respondent went on to contend that the PAIA did not apply as a result of the provisions of s 7(1) of the PAIA. [4] The resultant impasse prompted the appellants to bring an application in the Gauteng Local Division of the High Court, Johannesburg (the high court) before Sutherland J for access to the requested records. The high court found that the appellants were excluded by operation of s 7(1) of the PAIA and, in 1 Promotion of Access to Information Act 2 of 2000. 2 The full section 50(1) reads: ‗(1) A requester must be given access to any record of a private body if- (a) that record is required for the exercise or protection of any rights; (b) that person complies with the procedural requirements in this Act relating to a request for access to that record; and (c) access to that record is not refused in terms of any ground for refusal contemplated in Chapter 4 of this Part.‘ Subparagraphs (b) and (c) are not in issue in this appeal. addition, had not satisfied the test in s 50 of the PAIA of showing that the records were required for the exercise or protection of any rights. This appeal is with the leave of that court. [5] The attorney for the appellants testified that he was instructed to advise whether the appellants have a good claim against the respondent for damages ‗in respect of the harm and loss . . . suffered as a result of . . . having contracted silicosis‘. The ability to advise, it was submitted, depends largely on whether the respondent complied with its statutory duty of care to its employees. The attorney went on to aver: ‗The information requested is required in order for me to assess and advise the [appellants]: Whether or not the respondent complied with the general duty of care owed by it to the [appellants] to provide and maintain a safe and healthy work environment for its employees as stipulated in section 5 of the [Mine Health and Safety Act 29 of 1996] (the MHSA), Whether the respondent complied with the provisions of the law and the extent of such compliance.‘3 The attorney then addressed each of the ten records requested in an attempt to motivate this need. [6] These ten records can be summarised as: (a) Measurements of dust exposure levels for the appellants for their period of employment. (b) The record of medical surveillance of the appellants, including x-rays, lung function results and doctor‘s examination notes along with lung biopsies and CT scan results for the period of their employment. (c) The record of incapacity hearings convened in respect of the appellants. (d) The hazardous work service records of the appellants for the period of their employment. 3 Paragraph numbering omitted. (e) The mine manager‘s written reports of any investigations into the declared unfitness of the appellants. (f) The mine manager‘s reports on any investigation into silicosis or health threatening occurrences of breathable silica dust during the period of their employment. (g) The mine manager‘s record of significant dust hazards identified and pneumoconiosis risks assessed by him during the period of their employment. (h) The health and safety training documentation, policies and educational material used to educate and prepare the appellants for safely working in the mine. (i) The Code of Practice prepared by the mine manager concerning the health and safety of employees working with silica dust during the period of their employment. (j) The Health and Safety Policy of the mine relating to dust exposure during the period of their employment. Each of these ten records referred to the specific legislation which, it was averred, gave rise to the statutory duty in respect of that record. [7] The respondent submits that the application is a stratagem to obtain discovery in advance for the class action. It points in this regard to the sequence of events. The first appellant was certified as having contracted silicosis during September 2004 and the second appellant during September 2009. The two appellants had both instructed their attorneys to investigate a claim against the respondent by November 2011. The certification application was launched by the appellants‘ attorney, omitting them as applicants, during December 2012. The request under the PAIA was submitted on behalf of the appellants by their attorney in August 2013. The respondent contends that the appellants were omitted in order to escape the import of s 7(1) of the PAIA which precludes such an application where proceedings are pending.4 [8] In addition, the respondent submits that the appellants have not made out a case under s 50(1) for the records. It says that the right asserted to seek compensation in delict for personal injury is not in dispute but the records are not required for that purpose. The stated reason for the request was so that the records could ‗assist in determining whether [the respondent] complied with its statutory and/or common law and/or constitutional obligations . . . regarding dust levels, adequate medical care and examinations, proper training and dust exposure‘ during the period the appellants were employed by it.5 The respondent submits that the request therefore does not match the right asserted. As mentioned above, the respondent also relies on s 7(1) of the PAIA to preclude the appellants from using the PAIA to obtain the records. The respondent contends in this regard that the appellants are members of the class action, the requested records are required for those proceedings which have commenced and that the rules of court concerning discovery provide for the production of the records requested. [9] In the papers, the appellants contend that they are not parties to the certification application. They say that, if the class action is certified, they might not become parties to any action arising from the certification if the legal advice they receive is to the effect that there are no prospects of their succeeding in a claim. [10] As I read these two sections of the PAIA, the appellants bear the onus to show that the request falls within the ambit of s 50. If this onus is discharged, 4 There are two other requirements as will appear from the section when set out below. 5 This phrase came from the request for documents delivered to the respondent which was a precursor to the application. the question arises whether the provisions of s 7(1) exclude any of the requested records from the operation of the PAIA. [11] The first enquiry is accordingly whether the appellants discharged the onus of meeting the requirements of s 50(1)(a). In this regard, this court has held that an applicant ‗need only put up facts which prima facie, though open to some doubt, establish that he has a right which access to the record is required to exercise or protect.‘6 [12] The leading case on s 50 of the PAIA is Unitas Hospital v Van Wyk & another.7 In that matter, the husband of the respondent died while he was a hospital patient. She contended that his death was brought about by the negligence of the nursing staff and that she had an action for damages suffered through his death. She applied under the PAIA for access to a report with a view to instituting that action. This court held that the report was of a general nature and not one relating specifically to treatment received by her husband. It was held that ‗it can be accepted with confidence that Mrs Van Wyk did not require the Naudé report to formulate her claim for the purposes of instituting an action.‘ She did not require it for the exercise or protection of any right. She already had access to whatever information her experts would require to advise her on the formulation and assessment of her claim. She had already been provided with a complete set of hospital records, including the notes made by the nurses who cared for him throughout his time in hospital. This court then went on to find that what was therefore being asserted was a right to pre-action discovery. 6 Claase v Information Officer, South African Airways (Pty) Ltd 2007 (5) SA 469 (SCA) para 8. 7 Unitas Hospital v Van Wyk & another 2006 (4) SA 436 (SCA) para 19. [13] This court has held that what is meant by the phrase, ‗required for the exercise or protection of any rights‘ in s 50(1), gives rise to a fact based enquiry and does not allow for abstract determination.8 This court has mostly approached the test by deciding what those words do not mean: ‗So, for example, it is said that it does not mean the subjective attitude of ―want‖ or ―desire‖ on the part of the requester; that, at the one end of the scale, ―useful‖ or ―relevant‖ for the exercise or protection of a right is not enough, but that, at the other end of the scale, the requester does not have to establish that the information is ―essential‖ or ―necessary‖ for the stated purpose . . . .‘9 It involves something more than that the information would be of assistance, which is a minimum threshold requirement.10 As a positive formulation, the furthest this court has been prepared to go is what was said by Comrie AJA in Clutchco (Pty) Ltd v Davis:11 ‗I think that ''reasonably required'' in the circumstances is about as precise a formulation as can be achieved, provided that it is understood to connote a substantial advantage or an element of need.‘ And the Constitutional Court12 has approved this approach: ‗―Required‖ in the context of s 32(1)(b) does not denote absolute necessity. It means ―reasonably required‖. The person seeking access to the information must establish a substantial advantage or element of need. The standard is accommodating, flexible and in its application fact-bound.‘13 What must be covered in an application is the following: ‗[A]n applicant has to state what the right is that he wishes to exercise or protect, what the information is which is required and how that information would assist him in exercising or protecting that right.‘14 8 Unitas Hospital at para 6. 9 Unitas Hospital para 16. 10 Unitas Hospital para 17. 11 Clutchco (Pty) Ltd v Davis 2005 (3) SA 486 (SCA); [2005] 2 All SA 225 para 13. 12 In the minority judgment of Cameron J in My Vote Counts NPC v Speaker of the National Assembly & others [2015] ZACC 31; 2016 (1) SA 132 (CC) para 31. The majority judgment did not deal with this issue. 13 The references in this passage are omitted. Section 32(1)(b) is a section of the Constitution of the Republic of South Africa, 1996 requiring the legislature to enact legislation to give effect to the right of access to information. The cases cited are Clutchco and Unitas Hospital. 14 Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC & others 2001 (3) SA 1013 (SCA) para 28. [14] With that in mind, I turn to consider the case made out by the appellants on each of these aspects. The facts of their case must be considered. The first aspect is the right relied on which the appellants wish to exercise or protect. In response to the section of the form, ‗Indicate which right is to be exercised or protected‘, the appellants stated: ‗Our client requires the requested information to properly assess the merits in exercising his right to claim damages from [the respondent] for the wrongful exposure to harmful levels of noxious dust causing him to develop Silicosis while working for [the respondent].‘ The right which the appellants wish to exercise is therefore the ‗right to claim damages‘. This implicates s 34 of the Constitution which gives a right to access courts. Because the right relied on is narrowly stated, there is no need to consider the nature of the rights which might qualify.15 The balance of the response to this section goes beyond asserting the right and deals with the third aspect of the enquiry ‗how that information would assist . . . in exercising that right‘. This aspect of that response is expanded upon in the response to the question as to why ‗the record requested is required . . . .‘ These two aspects have been conflated in the response to the first requirement. [15] In the application, the attorney representing the appellants who deposed to the affidavit, said the following regarding the right which they assert: ‗In order to advise my clients in relation to a possible claim for damages against the respondent I require access to information held by the respondent, which is relevant to any assessment of the merits of the [appellants‘] claim. . . . Whether or not the [appellants] have a good claim for damages against the respondent turns substantially on the extent to which the respondents complied with the statutory duty of care owed by them to their employees under the mine health and safety legislation applicable at the relevant time. . . . 15 As was undertaken in Bullock NO & others v Provincial Government, North West Province & another 2004 (5) SA 262 (SCA) para 19. The information requested is reasonably required to determine whether or not the [appellants] have adequate grounds to seek a remedy against the respondent. . . . The information requested is required in order for me to assess and advise the [appellants] . . . [w]hether or not the respondent complied with the general duty of care owed by it to the [appellants] to provide and maintain a safe and healthy work environment for its employees as stipulated in section 5 of the MHSA. . . . The information requested is required in order for me to assess and advise the [appellants] . . . [w]hether the respondent complied with the provisions of the law and the extent of such compliance.‘ The attorney then dealt with each of the ten requests, saying mostly that the information in question ‗will go to show‘ whether or not the respondent complied with various statutory duties. None of these dealt with the right asserted. They all dealt with the third aspect, being the reason that the records were required. [16] As was conceded by the respondent, the appellants have a right to seek compensation in delict for personal injury or, as they put it, the right to claim damages. In order to exercise that right, an action must be brought against the respondent. The question is whether the records requested are required for the exercise or protection of that right. [17] It seems clear that the underlying reasons given for why the records are required do not relate to the exercise of the right to claim damages but to the evaluation of whether the appellants should do so or not. The reasons given, therefore, do not meet the test of the records being required to ‗exercise or protect‘ the right relied upon. This situation can be contrasted with that in Company Secretary, Arcelormittal South Africa Ltd & another v Vaal Environmental Justice Alliance.16 In that matter, the Environmental Master Plan developed by Arcelormittal was requested on the following basis: ‗The requested documents are necessary for the protection of the s 24 constitutional rights and are requested in the public interest. VEJA requires the requested documents to ensure that ArcelorMittal South Africa Limited carries out its obligations under the relevant governing legislation, including the National Environmental Management Act 107 of 1998, the National Environmental Management: Waste Act 59 of 2008, and the National Water Act 36 of 1998. VEJA seeks to ensure that the operations of ArcelorMittal South Africa Limited are conducted in accordance with the law, that pollution is prevented, and that remediation of pollution is properly planned for, and correctly and timeously implemented.‘17 The right asserted was that to a non-harmful environment and ‗to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures . . .‘.18 It can be seen that the right asserted and the reason why the records were required to exercise or protect it accorded with each other. [18] Even if it can be said that the reasons relate to the right, the question is whether the records are reasonably required to exercise or protect the right relied on. In the present matter, the proposed defendant and its details are clearly known to the appellants. So also is the cause of action. At least some of the facts are within the knowledge of the appellants. In the application papers, the respondent admitted that silicosis is a progressive and incurable disease caused by inhaling silica dust. It was also admitted that silicosis is common in 16 Company Secretary, Arcelormittal South Africa Ltd & another v Vaal Environmental Justice Alliance [2014] ZASCA 184; 2015 (1) SA 515 (SCA). 17 Paragraph 8. The emphasis is that of the judgment. 18 Section 24 of the Constitution of the Republic of South Africa, 1996 which reads: ‗Everyone has the right- (a) to an environment that is not harmful to their health or well-being; and (b) to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that- (i) prevent pollution and ecological degradation; (ii) promote conservation; and (iii) secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.‘ gold mine workers who are exposed to harmful quantities of silica dust whilst working underground in mines and that this dust is generated in the course of mining activities. The respondent admits that the appellants were dismissed from employment on the basis that they had contracted silicosis. On a level of causation of the disease in the appellants, the only averment not admitted is that the appellants have not been exposed to silica dust other than while employed on the mine. This is peculiarly within the knowledge of the appellants. This means that the only records which the appellants do not have in their possession are those which will assist in proving whether or not the respondent adhered to its statutory, common law and constitutional legal duties. [19] In this regard, the draft particulars of claim (the particulars) annexed to the certification application achieve prominence. The substantive part runs to over 65 pages, although approximately half of these deal with the asbestosis claim which does not apply to the appellants. They set out in detail, over nearly three pages, what the respondent ‗knew, or ought reasonably to have known‘ about the harm of being exposed to silica dust and the manner in which silicosis can be prevented. Arising from that knowledge, the duties of the respondent are pleaded, including statutory duties, the common law duty of care and constitutional obligations. These run to over four pages. The particulars go on to plead the basis on which the class action members aver that the respondent breached its statutory duties. These refer in detail to legislation and specific conduct which fell short of the statutory requirements. These breaches run to some 18 pages. Strict liability under the statutes is then pleaded and, in the alternative, a negligent breach of duties which is said to give rise to delictual liability. The particulars go on to plead breaches of the common law duty of care which the class members contend were owed to them by the respondent. These run to some nine pages. The alleged breach of constitutional duties is then pleaded running to one page and incorporating conduct pleaded in paragraphs 112 to 138 comprising some 35 pages. The particulars then plead the causal connection between the silicosis contracted and the actionable conduct of the respondent. From all of this it can be seen that the appellants are clearly in a position to formulate their claim. [20] The above deals with the question of whether the records are reasonably required to exercise or protect the right asserted by the appellants, to claim damages from the respondent from their having contracted silicosis. As indicated, a right to claim damages is invoked. This will necessitate court proceedings. It is necessary to avoid the unwelcome spectre of applications under the PAIA being brought to obtain premature discovery. It seems to me that a rule of thumb which will avoid this is to enquire whether, in the context of future litigation to exercise the right relied on, the records requested are reasonably required to formulate a claim. This seems to me to have been the implicit test applied in Unitas Hospital. If needed to formulate a claim, it can be said that they are reasonably required under s 50(1) of the PAIA. As I have said, the appellants do not need the requested records to formulate their claim. [21] It may be argued that some of the records are reasonably required as evidence to prove the formulated claim. Since, however, the machinery of discovery applies in an action, most, if not all, of the records will become available to the appellants in order to exercise the right to claim. After all, discovery is required of documents ‗relating to any matter in question‘ in an action. No case has been made out in the present matter that any of the requested records will not be discoverable. The issue whether the obligation to discover is co-extensive with records reasonably required to exercise the right to claim need therefore not detain us in the present matter. As such, I am of the view that the records requested are not reasonably required to exercise the right of the appellants to claim damages from the respondent. [22] This places the present matter on all fours with Unitas Hospital where this court found that Mrs Van Wyk did not require the Naudé report to formulate her claim.19 It also renders the appellants subject to the dictum in Unitas Hospital that they are not – ‗entitled, as a matter of course, to all information which will assist in evaluating [their] prospects of success against the only potential defendant. On that approach, the more you know, the better you will be able to evaluate your chances against your opponent. The corollary of this thesis therefore seems to be that the requester will, in effect, always be entitled to full pre-action discovery.‘20 [23] I have up to now dealt with the case made out on the papers. It must be borne in mind that the launch of the certification application predated the request under the PAIA. In Children's Resource Centre Trust & others v Pioneer Food (Pty) Ltd & others,21 it was held that an application for certification of a class action is akin to matters where ‗necessary preliminary proceedings have been held to constitute the bringing or commencement of suit‘.22 In that matter, the court of first instance refused the application, including an order sought permitting the issue of summons prior to certification in order to interrupt prescription. This court held that, because a certification application is a necessary precursor to ‗proceedings to pursue a class action there is much to be said for the proposition that, for purposes of prescription, service of the application for certification would be service of process claiming payment of the debt for the purposes of s 15(1) of the Prescription Act‘. It 19 Paragraph 19. 20 Paragraph 22. 21 Children's Resource Centre Trust & others v Pioneer Food (Pty) Ltd & others [2012] ZASCA 182; 2013 (2) SA 213 (SCA). 22 Paragraph 89. Footnote 65 cited The Merak: T B & S Batchelor & Co Ltd (Owners of Cargo on the Merak) v Owners of SS Merak [1965] 1 All ER 230 (CA) at 238 to the effect that: ‗[T]o bring suit, it is said, means to pursue the appropriate remedy by the appropriate procedure.‘ Dave Zick Timbers (Pty) Ltd v Progress Steamship Co Ltd 1974 (4) SA 381 (D) at 384A – D; IGI Insurance Co Ltd v Madasa 1995 (1) SA 144 (TkA) at 147B – C. seems to me that, although the dictum above is obiter, it accords with principle and must find application here. [24] The logical corollary is that a certification application must be regarded as the ‗bringing or commencement of suit‘ of the class action. Counsel for the appellants, when confronted with this dictum accepted that to be the position in the present matter. Accordingly, the class action proceedings must be regarded as having commenced with the launch of the certification application. At the time that the request under the PAIA was made, therefore, the class action must be held to have commenced. [25] But the present position goes even further. The class action has now been certified. The class action is what is termed an ‗opt-out‘ class action. This includes all members of a certified class in the action unless they opt out. In dealing with the significance of this, I can do no better than to cite the words of Professor Silver, quoted in Children’s Resource Centre Trust, to the effect that a class action is – ‗a procedural device that expands a court's jurisdiction, empowering it to enter a judgment that is binding upon everyone with covered claims. This includes claimants who, not being named as parties, would not ordinarily be bound. A class-wide judgment extinguishes the claims of all persons meeting the class definition rather than just those of named parties and persons in privity with them, as normally is the case. Judges and scholars sometimes treat the class action as a procedure for joining absent claimants to a lawsuit rather than as one that permits a court to treat a named party as standing in judgment on behalf of them. This is a mistake. . . . Class members neither start out as parties nor become parties when a class is certified.‘23 What is of importance is that, as was said in Children’s Resource Centre Trust: 23 Paragraph 17. ‗In class actions the party bringing the action does so, on behalf of the entire class, every member of which is bound by the outcome of the action, so that a separate action by a member of the class after judgment can be met with a plea of res judicata.‘24 It is, of course, for this reason that members falling within a certified class must be given the opportunity to opt out or, if it is an opt-in class action, to opt in. [26] All of this means that, at present, the appellants are included in the class action which has been certified. This much was correctly conceded by their counsel at the hearing. It also means that the proceedings relating to the class action in question have commenced. As such, the documents cannot be said to be required to exercise or protect the right to claim damages since the class action to do so has commenced on their behalf. It seems to me that the substratum of the application brought by the appellants accordingly no longer exists. Counsel accepted that events had overtaken the application when certification had taken place. He sought, however, to submit that the appellants now require the information to determine whether they should opt out. But this was not the case made out on the papers. It is also doubtful, in the light of the approach in Unitas Hospital mentioned above, whether this would bring the claimed right within the ambit of s 50(1) of the PAIA. [27] For the above reasons, therefore, the appellants have not met the threshold test required by s 50(1) of the PAIA to ‗prima facie establish that access to the record is required to exercise or protect‘ the right relied upon.25 In the light of this, I consider it unnecessary to deal with the respondent‘s further defence to the application by way of s 7(1) of the PAIA. There is accordingly no basis on which to interfere with the order granted by Sutherland J. The appeal must fail. 24 Paragraph 16. 25 Claase fn 6, para 8. [28] The following order is made: The appeal is dismissed with costs. ________________________ T R Gorven Acting Judge of Appeal Mbatha AJA: [29] I have had the benefit of reading the judgment of my colleague, Gorven AJA, from which I differ in several respects. He reaches the conclusion that the appeal stands to be dismissed. He bases this conclusion on the finding that the appellants have not satisfied the criteria set out in s 50(1) of the Promotion of Access to Information Act 2 of 2000 (the PAIA). [30] In my respectful view, the appellants have satisfied the criteria set out in s 50(1) of the PAIA, and the civil proceedings in question have not commenced for purposes of s 7(1) thereof. The appeal should accordingly succeed and my conclusion is founded on the reasons set out below. [31] The appeal centres around the dismissal of an application brought in terms of s 82 of the PAIA26 to compel the respondent to provide access to 26 The court hearing an application may grant any order that is just and equitable, including orders─ (a) confirming, amending or setting aside the decision which is the subject of the application concerned; (b) requiring from the information officer or relevant authority of a public body or the head of a private body to take such action or to retrain from taking such action as the court considers necessary within a period mentioned in the order; (c) granting an interdict, interim or specific relief, a declaratory order or compensation; (d) as to costs; or (e) condoning con-compliance with the 180-day period within which to bring an application, where the interests of justice so require. records to the appellants. Its determination rests upon the interpretation of the provisions of ss 7(1) and 50(1) of the PAIA. [32] The application was dismissed by the high court on the basis that the appellants did not meet the threshold set out in s 50(1). [33] As pointed out in the main judgment which sets out the background facts from which the dispute arose, the first and second appellants instructed their attorney (Mr Richard Spoor) on 14 September 2011 and 14 November 2011, respectively, to investigate the merits of their claims for damages against the respondent. Their applications for access to information in terms of the PAIA were submitted to the respondent on 18 September 2013. On 22 October 2013 the respondent refused both applications. During December 2012 Mr Spoor had also launched an application for the certification of a class action on behalf of current and former mineworkers, excluding the appellants, against the mining industry in respect of silicosis and tuberculosis related injury. The certification judgment in Nkala v Harmony Gold Mining Company Limited27 was delivered by the Gauteng Local Division, Johannesburg on 13 May 2016, almost three years after the submission of the request for information by the appellants. [34] The appeal is opposed on the basis that the appellants failed to meet the threshold in s 50(1) of the PAIA. The right to request access to the records of a private body is governed by s 50(1) of the PAIA. The provisions read: ‗(1) A requester must be given access to any records of a private body if─ (a) that record is for the exercise or protection of any rights; (b) that person complies with the procedural requirements of this Act relating to a request for access to that record; and 27 Nkala & others v Harmony Gold Mining Company Limited & others [2016] ZAGPJHC 97; 2016 (5) SA 240 (GJ). (c) access to that record is not refused in terms of any ground for refusal contemplated in Chapter 4 of this Part.‘ As appears from their wording, the provisions are peremptory if the criteria in subsections (a) to (c) are met. [35] The initial right which the appellants sought to protect was the right to assess their potential claims for damages against the respondent for having contracted silicosis at the respondent‘s mines during the tenure of their employment. However, when the matter was argued before us, the appellants‘ argument had shifted in that they requested the information for purposes of making a decision of whether or not to opt out of the class action. But this is understandable as their appeal had been overtaken by the events. Certification had since been granted in the Nkala judgment which also stipulated a date by which they should opt out of the class action, should they so wish. [36] The right of access to information is guaranteed by s 32 of the Constitution, which provides: ‗(1) Everyone has the right of access to─ (a) any information held by the state; and (b) any information that is held by another person and that is required for the exercise or protection of any rights. (2) National legislation must be enacted to give effect to this right, and may provide for reasonable measures to alleviate the administrative and financial burden on the state.‘ [37] The PAIA is the national legislation that gives effect to the right of access to information as contemplated in s 32 (2) of the Constitution. Its purpose was explained by Jafta J in PFE International Inc28 as follows: ‗In accordance with the obligation imposed by this provision, PAIA was enacted to give effect to the right of access to information, regardless of whether that information is in the 28 PFE International Inc (BVI) & others v Industrial Development Corporation of South Africa Ltd [2012] ZACC 21; 2013 (1) SA 1 (CC) para 4. hands of a public body or a private person. Ordinarily, and according to the principle of constitutional subsidiarity, claims for enforcing the right of access to information must be based on PAIA.‘ [38] Transparency and access to information are required in order to allow people to enjoy other fundamental rights. Thus, for example, the preamble of the PAIA recognises that:29 ‗The system of government in South Africa before 27 April 1994, amongst others, resulted in a secretive and unresponsive culture in public and private bodies which often led to an abuse of power and human rights violations; Section 8 of the Constitution provides for the horizontal application of the rights in the Bill of Rights to juristic persons to the extent required by the nature of the rights and the nature of those juristic persons.‘ [39] Both the Constitution, in s 32(1)(b) and the PAIA (in s 50(1)(a)) refer to ‗any rights‘. In my view, this could be ‗any right‘ in terms of the Bill of Rights in Chapter 2 of the Constitution, or ‗any right‘ created in common law. In construing these words, the court should, as far as the language of the PAIA permits, adopt a generous and purposive interpretation that gives people the full measure of its protections and that promotes the values of the Constitution. As the Constitutional Court held in S v Mhlungu: ‗A constitution is an organic instrument. Although it is enacted in the form of a statute it is sui generis. It must broadly, liberally and purposively be interpreted so as to avoid ―the austerity of tabulated legalism‖ and so as to enable it to continue to play a creative and dynamic role in the expression and the achievement of the ideals and aspirations of the nation, in the articulation of the values bonding its people and in disciplining it‘s Government.‘30 [40] The provisions of s 2(1) of the PAIA also bear relevance. They read: 29 The Preamble ‗Promotion of Access to Information Act 2 of 2000.‘ 30 S v Mhlungu & others [1995] ZACC 4; 1995 (3) SA 867 para 8. See also Government of the Republic of Namibia & another v Cultura & another 2000 & another 1994 (1) SA 407 at 418. ‗When interpreting a provision of this Act, every court must prefer any reasonable interpretation of the provision that is consistent with the objects of this Act over any alternative interpretation of the provision that is inconsistent with those objects.‘ The objects of the PAIA are contained in s 9 of the Act, which provide in relevant part: ‗(e) … to promote transparency, accountability and effective governance of all public and private bodies…‘ Access to information is a constitutionally entrenched right. Any refusal of access to information is a limitation of that right and must therefore be approached as the exception rather than the rule. In his minority judgment in Unitas Hospital,31 Cameron JA said: ‗We must in my view consider the extent to which it is appropriate, in the case of any private body, to further the express statutory object of promoting ―transparency, accountability and effective governance‖ in private bodies. This statutory purpose suggests that it is appropriate to differentiate between different kinds of private bodies. Some will be very private, like the small family enterprise in Clutchco. Effective governance and accountability, while important, will be of less public significance. Other entities, like the listed public companies that dominate the country's economic production and distribution, though not ―public bodies‖ under PAIA, should be treated as more amenable to the statutory purpose of promoting transparency, accountability and effective governance.‘ [41] Regarding the approach a court should adopt in determining whether a record is ‗required for the exercise or protection of any rights‘ Morison AJ said in M & G Limited held:32 ‗The words ―required for the exercise or protection of any rights‖ should not be interpreted or applied restrictively. There is no basis for a concern that privacy, commercial confidentiality, trade secrets and the like would be in jeopardy if s 50(1)(a) is given a meaning, or is applied in a manner, that sets a relatively low threshold.‘ In Clutchco (Pty) Ltd v Davis Comrie AJA said:33 31 Unitas Hospital para 30; M & G Limited v 2010 FIFA World Cup Organising Committee [2010] ZAGPJHC 43; 2011 (5) SA 163 (GSJ) para 356. 32 M & G Limited & others v 2010 FIFA World Cup Organising Committee South Africa Limited & another [2010] ZAGPJHC 43; 2011 (5) SA 163 (GSJ) para 364. ‗I think that ―reasonably required‖ in the circumstances is about as precise a formulation as can be achieved, provided that it is understood to connote a substantial advantage or an element of need. It appears to me, with respect, that this interpretation correctly reflects the intention of the legislature in s 50(1)(a).‘ In Unitas Hospital v Van Wyk & another, Brand JA said:34 ‗Generally speaking, the question whether a particular record is ―required‖ for the exercise or protection of a particular right is inextricably bound up with the facts of that matter.‘ And para 18:35 ‗I respectfully share the reluctance of Comrie AJA to venture a formulation of a positive, generally applicable definition of what ―require‖ means. The reason is obvious. Potential applications of s 50 are countless. Any redefinition of the term ―require‖ with the purpose of restricting its flexible meaning will do more harm than good. To repeat the sentiment that I expressed earlier: the question whether the information sought in a particular case can be said to be ―required‖ for the purpose of protecting or exercising the right concerned, can only be answered with reference to the facts of that case having regard to the broad parameters laid down in the judgment of our courts, albeit, for the most part, in a negative form.‘ I respectfully agree with these remarks. [42] The respondent asserts that the provisions of s 7(1) of PAIA come into play because proceedings have commenced with the granting of the certification application by the high court in the Nkala judgment and that the appellants can have access to the requested documents in terms of Rule 35 of the Uniform Rules of Court. I hold a different view. Class actions are sui generis in nature, and should not be considered as the ordinary issuing of proceedings. Section 38 of the Constitution provides that ‗anyone listed in the section has the right to approach a competent court alleging that a right in the Bill of Rights has been infringed or threatened‘. It can be an individual person or anyone acting as a member of a class. This is a dualistic approach which allows individual persons to exercise their rights and approach the courts in their own regard or as a class. 33 Clutchco (Pty) Ltd v Davis [2005] ZASCA 16; 2005 (3) SA 486 (SCA) para 13. 34 Unitas Hospital v Van Wyk & another [2006] ZASCA 34; 2006 (4) SA 436 (SCA) para 6. 35 Unitas Hospital v Van Wyk & another para 18. In the latter instance, a member of a class is automatically a co-plaintiff in a matter, which may affect his rights, of which he may have no knowledge. The process may become known to him only after the certification application has been granted or later, when he is invited to exercise the right to opt out. A certification application should therefore not be a bar to individuals from approaching the courts in the exercise and protection of their rights. [43] The appellants were both dismissed from employment on the grounds of medical incapacity for having contracted silicosis. The extent and nature of such an illness and the cause thereof need to be determined. This information will assist the appellants in exercising and protecting their rights. [44] The appellants‘ requests related to the personal information of their employment experiences in terms of their medical surveillance during the tenure of their employment, and more general information about the respondent‘s mining operations, and their safety and health practices. They were all qualified by the use of the words ‗including but not limited to personal dust exposure levels‘. This gave the respondent the option to exclude what it perceived as irrelevant for the appellants‘ purposes. The requests were in line with the provisions of s 50(3) of the PAIA as they constituted a request for access to the records containing personal information36 of the requesters. This cannot be said to have been a so-called fishing expedition,37 as it is information concerning the appellants and relating to a specific period during which they worked for the respondent. The first appellant was employed by the respondent from 3 January 1987 until 19 August 2003. The second appellant was employed by the 36 Section 1 of PAIA defines personal information as information not limited to the following: ‘(a) information relating to the race, gender, sex, pregnancy, marital status, national, ethnic or social origin, colour, sexual orientation, age, physical or mental health, well-being, disability, religion, conscience, belief, culture, language and birth of the individual; (b) information relating to the education or the medical, criminal or employment history of the individual or information relating to financial transactions in which the individual has been involved…‘. 37 See Van Wyk v Unitas Hospital paras 44 – 46. respondent from 13 August 1988 until 30 March 2006. In the Nkala judgment, the duration of the class period has been certified to commence from 12 March 1965.38 This information in my view is reasonably required by the appellants for the exercise or protection of their rights as envisaged in s 50(1).39 [45] Class actions are a novelty in our jurisprudence. There is no legislation in place that regulates the legal processes in such mass actions. To illustrate this point, the requirements for a certification of a class action were recently laid down by this Court in the Children’s Resource Centre Trust judgment.40 [46] In my view, not all interlocutory applications give rise to the commencement of civil proceedings. So whilst civil proceedings may commence either by way of summons or applications instituted by a person with the necessary locus standi, there are the exceptions to the general rule. For example, in IGI Insurance Co Ltd v Madasa it was held:41 ‗An order to serve summons by edictal citation is not an ancillary steps to the commencement of an action. This is illustrated by decision that an application to sue in forma pauperis does not constitute the commencement of an action. Kriek J deals with this aspect in the case of Dave Zick Timbers (supra at 384 A-D): ―I was referred by Counsel to the cases of Behr v SA Railway & Harbours 1924 OPD 309 and Brummer v SA Railway & Harbours 1930 OPD 106. Both judgments consider the provisions of section 64 of Act 22 of 1916 which provided that no action shall be brought against the Railway Administration ‗unless the same commenced within 12 months after the cause of action arose‘, 38 Nkala v Harmony Gold Mining Company Limited para 51. 39 In particular South African labour law protects employees, and this is even more important in the mining sector due to the conditions that employees are still exposed to for inadequate wages. For example, see the recent Constitutional Court judgment Association of Mineworkers and Construction Union and Others v Chamber of Mines of South Africa & others [2017] ZACC 3; 2017 (3) SA 242 (CC) where Cameron J stated, ‗Behind that question, with its lawyerly remoteness, lies the grievous struggle for better wages and conditions for the generations of mineworkers who have laid the foundations for this country‘s wealth. And at its fore is an increasingly intense contest between unions about which will represent the workers in that struggle now.‘ 40 Trustees for the time being of Children's Resource Centre Trust & others v Pioneer Food (Pty) Ltd & others [2012] ZASCA 182; 2013 (2) SA 213 (SCA) para 26. 41 IGI Insurance Co Ltd v Madasa at 119. and in both the court came to the conclusion that an application for leave to sue in forma pauperis did not constitute the commencement for of an action. In the former case McGregor J said that such an application is not a proceeding— ‗… introduced in order to obtain redress or the recognition of a right. But, in order to be put in a position to prosecute the proceedings for redress, or the like. So that the interlocutory, or rather ancillary and preliminary, proceeding does not appear to be a commencement of the action as contemplated by the section.‘‖‘ [47] In terms of Rule 40(1)(b) of the Uniform Rules of Court: ‗(a) a person who desires to bring or defend proceedings in forma pauperis, may apply to the registrar who, if it appears to him that he is a person such as is contemplated by paragraph (a) of subrule (2), shall refer him to an attorney and at the same time inform the local society of advocates accordingly. (b) such attorney shall thereupon inquire into such person‘s means and the merits of his cause and upon being satisfied that the matter is one in which he may properly act in forma pauperis, he shall request the said society to nominate an advocate who is willing and able to act and upon being so nominated such advocate shall act therein.‘ In terms of the Rules Regulating the Conduct of the Proceedings of the Supreme Court of Appeal of South Africa:42 ‗15(1) Any party who is a natural person and who is of the opinion that he or she is indigent may request the registrar for leave to prosecute or defend an appeal in forma pauperis.‘ The Legal Dictionary43 describes the phrase ‗in forma pauperis‘ as one ‗that indicates the permission given by the court to an indigent to initiate a legal action without having to pay for court fees or costs due to his or her lack of financial resources.‘ [48] The process of certifying a class action has similar traits and purpose to proceedings in forma pauperis as it gives the members of the class action an opportunity to claim damages irrespective of the indigency of the class members. It requires the court to safeguard the interests of the class members 42 SCA rule 15(1). The Free Dictionary by Farlex ‗In Forma Pauperis’ Available at: http://legaldictionary.thefreedictionary.com/In+Forma+Pauperis (accessed on 25 May 2017). by way of requirements like those set out in the Children’s Resource Centre Trust case, which must be met before it can grant the certification order. It is unlike other interlocutory applications where it is a mere pre-requisite or a process to establish locus standi to proceed with an action. It also gives an opportunity to a class member to decide whether or not to opt out. When a court deals with such matters the ambit of justice should not only be limited to substantive relief but it must also be extended to procedural justice as well. In light of the nature of such proceedings, it cannot be said that they have commenced before an opportunity is extended to members of the class to make an informed decision whether to continue to be part of the class or opt out. A fair balance needs to be achieved in line with rights of the individual members as enshrined in the Bill of Rights. [49] A restrictive interpretation of s 7(1) of the PAIA should be applied in this case, as advocated in PFE International v IDC where the Constitutional Court held: ‗When constructing section 7(1) it must be borne in mind that the purpose of PAIA is to give effect to the right of access to information. On the contrary, section 7 excludes the application of PAIA. A restrictive interpretation of the section is warranted so as to limit the exclusion to circumstances contemplated in the section only. A restrictive meaning of s 7(1) will thus ensure greater protection of the right.‘44 [50] There is no indication on the respondent‘s papers whether the requests for information by the appellants were ever considered, save that the refusal was because of ‗the proceedings‘ which had commenced. None of the grounds of refusal appearing in ss 66, 67 or 68 of the PAIA were raised by the respondent. 44 PFE International Inc (BVI) & others v Industrial Development Corporation of South Africa Ltd para 18. [51] I conclude that counsel for the appellants wrongly conceded that proceedings had commenced with the certification application. It is trite that the courts are not bound by wrong legal concessions.45 [52] As previously stated, there is no legislation governing class actions in South Africa. The applicable rules to class actions are being developed by our courts. In their quest to develop the law on class actions, courts should take into account the legitimate interest of the litigants and protect their constitutional rights instead of curtailing them. This in my view was not the intended result by this court in the Children’s Resource Centre Trust case. [53] It would be an anomaly that the rights of appellants to exercise or protect their rights may be curtailed by a certification application which may not even materialise in a class action or may be abandoned. In the event that it materialises, they may be placed in a position where they should be able to make an informed decision, whether to opt out or not. In Ferreira v Levin NO & others, O'Regan J at para 229 stated: ‗Existing common law rules of standing have often developed in the context of private litigation. As a general rule, private litigation is concerned with the determination of a dispute between two individuals, in which relief will be specific and, often, retrospective, in that it applies to a set of past events. Such litigation will generally not directly affect people who are not parties to the litigation. In such cases, the Plaintiff is both victim of the harm and the beneficiary of the relief.‘46 The appellants therefore need to be well-versed and informed as to the consequences of a failure to opt out in a class action. 45 City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5 para 34. 46 Ferreira v Levin NO & others; Vryenhoek & others v Powell NO & others [1995] ZACC 13; 1996 (1) SA 984 (CC) para 229. [54] A similar sentiment was expressed in Mukaddam where the court held that the rules of court must facilitate and not hinder access to courts.47 A pragmatic approach, in particular to the development of the law in relation to class actions, should be adopted in line with the rights enshrined in the Constitution. [55] I align myself with the persuasive views of Mojapelo DJP in Goldfields Ltd & others v Motley Rice48 where he states: ‗The certification application is thus a jurisdictional hurdle or threshold which mineworker applicants must overcome before they may institute the class action. ‗The two proceedings, i.e. the class certification application and the class action proceedings, are separate and distinct, although the one may lead to the other. Each has its own legal requirements and will lead to its own judgment.‘49 [56] As I have said, s 39(2) of the Constitution provides 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. This Court in Children’s Resource Centre Trust was developing the common law. It cannot be accepted that in developing the common law, it disregarded the individual rights of the members of the class action by stating that the certification application amounts to the commencement of civil proceedings. In Dendy v University of Witwatersrand50 this Court stated as follows: ‗That courts are enjoined to develop the common law, if this is necessary, is beyond dispute. That power derives from ss 8(3) and 173 of the Constitution. Section 39(2) of the Constitution makes it plain that, when a court embarks upon a course of developing the common law, it is obliged to ―promote the spirit, purport and objects of the Bill of Rights.‖‘ 47 Mukaddam v Pioneer Foods (Pty) Ltd & others ZACC 23; 2013 (5) SA 89 (CC) para 32. 48 Gold Fields Limited & others v Motley Rice LLC, In re: Nkala v Harmony Gold Mining Company Limited & others [2015] ZAGPJHC 62; 2015 (4) SA 299 (GJ). 49 Gold Fields Limited and Others v Motley Rice para 16–17. 50 Dendy v University of the Witwatersrand & others [2007] ZASCA 30; [2007] 3 All SA 1 (SCA) para 22. [57] In MEC for Roads and Public Works Eastern Cape51 this court emphasized what Chaskalson J stated in the Amod judgment. It held that – ‗It is abundantly clear, therefore, that the interpretation of the provisions of PAIA must be informed by the Constitution (see s 39(2) of the Constitution), which obliges every court to promote the spirit, purport and objects of the Bill of Rights when interpreting any legislation.‘52 This court further stated that the requirements of Section 7(1)(a), (b) and (c) are cumulative and all three must co-exist for the operation of the Act to be excluded.53 [58] Having found that the proceedings have not commenced with the launching of the certification application, it is unnecessary to address the other requirements of s 7(1) of the PAIA. [59] As pointed out above, the respondent contended that the request for information by the appellant was a fishing expedition, as Mr Spoor‘s firm was involved in the certification application as well and that they already had sufficient information to advise the appellants as they had submitted draft particulars of claim in the certification application. The respondent extensively relied on the Unitas judgment which discouraged fishing expeditions or pre- litigation discovery.54 However, this Court in Unitas held that, it was not appropriate to formulate a positive, generally applicable definition of ‗require‘ because ultimately whether or not information was required depended on the particular facts of the case. The facts in Unitas are distinguishable from the facts in this matter as the respondent is in possession of all the material that the appellants require to exercise their rights unlike Mrs Van Wyk in Unitas. The 51 MEC for Roads and Public Works Eastern Cape & another v Intertrade Two (Pty) Ltd [2006] ZASCA 33; 2006 (5) SA 1 (SCA). 52 MEC for Roads and Public Works Eastern Cape para 11. 53 MEC for Roads and Public Works Eastern Cape para 12. 54 Unitas Hospital v Van Wyk & another above. knowledge of the attorney or his involvement in a class action is knowledge to a broader claim of the member of the class action, but not sufficient to give legal advice to these particular clients. There is no alternative source for the appellants, save for the PAIA process to access their personal records from the employer. [60] As stated above, s 9(e) of the PAIA sets out the objects of the Act as being ‗generally, to promote transparency accountability and effective governance of all public and private bodies.‘ The lives of multitudes of indigent mine workers are at stake, including the appellants. A general refusal will not be in line with the objects of the Act. [61] The application in the court a quo was based on a different premise other than that the information was requested for purposes of being advised whether to opt out or not. This Court has the discretion to deal with an issue that was not pleaded, as long as it does not materially affect the gist of the application and it will lead to the same conclusion as it relates to the exercise and protection of rights. This route has been followed in our courts as in Middleton v Carr55 where the court said: ‗…as has often been pointed out, where there has been full investigation of a matter, that is, where there is no reasonable ground to thinking that further examination of the facts might lead to a different conclusion, the court is entitled to, and generally should treat the issue as if it had been expressly and timeously raised. But unless the court is satisfied that the investigation has been full, in the above sense, injustice may easily be done, if the issue is treated as being before the court.‘ 55 Middleton v Carr 1949 (2) SA 374 (A) at 385–386. [62] For these reasons, I would uphold the appeal. __________________ YT Mbatha Acting Judge of Appeal Molemela AJA: [63] Like my sister, Mbatha AJA, I respectfully disagree with both the outcome of the appeal and the reasoning of the judgment of Gorven AJA (the majority judgment), albeit for slightly different reasons. The facts of this matter and the issues to be decided have been eloquently set out in the majority judgment and need not be repeated here. [64] I must point out from the outset that I agree that ‗required‘ in the context of s 32(1)(b) of the Constitution does not denote ‗absolute necessity‘ and means ‗reasonably required‘.56 Indeed, the same meaning can also be attributed to the phrase ‗required for the exercise or protection of any rights‘ set out in s 50(1)(a) of the PAIA. It is crucial to bear in mind that s 2(1) of the PAIA enjoins courts to, when interpreting a provision of PAIA, prefer a reasonable interpretation that is consistent with the objects of the Act. Furthermore, the objects of the PAIA stipulate that ‗courts should generally encourage transparency, accountability and effective governance in private institutions‘.57 [65] In paragraph 17 of the main judgment it is stated that ‗ …the underlying reasons given for why the records are required do not relate to the exercise of 56 My Vote Counts NPC v Speaker of the National Assembly & others [2015] ZACC 31; 2016 (1) SA 132 (CC) para 31. 57 Section 9 of the PAIA. the right to claim damages but to the evaluation of whether the appellants should do so or not. The reasons given, therefore, do not meet the test of the records being required to ―exercise or protect‖ the right relied upon.‘ I disagree with that view because it, with respect, pays lip service to the fact that the nature of the enquiry envisaged in s 50(1) of the PAIA is fact-based.58 The information that was requested on behalf of the appellants is set out in detail in the majority judgment and I need not repeat it. Significantly, the requested records included, inter alia, information pertaining to the measurement of the appellants‘ exposure to silica dust levels during the period of their employment, including measures taken by the respondents to protect the appellants from contracting silicosis. The importance of this information is illustrated by the fact that in the Nkala judgment, the High Court recognised that ‗ultimately each class member must prove his claim in its entirety if he is to succeed….in other words, even after the common issues are dealt with and finalised there nevertheless remains the issue of each mineworker having to prove his own case.‘59 [66] In argument before us, it was contended on behalf of the appellants that they require the records in question for purposes of deciding whether to opt out of class action. To deny the appellants‘ request on the basis that this was not the case made out in their papers simply fails to take into account that the appellants‘ request for the information was made prior to the granting of the certification order. When the certification order was granted, it was coupled with an opting out clause stipulating a certain deadline. In my view, the information sought by the appellants relates to the exercise of the right to claim damages arising from, inter alia, the statutory duty of care owed by the respondents to them as their employees. The appellants have, in my view, 58 Unitas Hospital v van Wyk & another above para 18. 59 Nkala & others v Harmony Gold Mining Company Limited & others above para 77. ‗established an element of need‘ in respect of the records they are seeking.60 I therefore agree that the requested information is critical to the appellants‘ decision regarding whether or not to opt out of the class action. Such information will undoubtedly assist them in the formulation of their own individual claims should they decide to opt out.61 An important consideration is that class members who have opted out have actively excluded themselves from being members of the class and are therefore no longer allowed to be part of the class action.62 It is therefore imperative that a member of a class faced with a choice of opting out of a class action by a certain date be afforded the opportunity to make an informed decision. As I see it, this necessitates that the class member be granted such documents as would assist him or her, as the requester, to either avoid being part of the litigation or in the formulation of the requester‘s separate claim. [67] The seriousness of a decision whether or not to litigate and the importance of granting access to the information requested were aptly described by Cameron J in the following terms in his minority judgment in Unitas (The majority judgment did not take issue with the dicta expressed in the passage below): ‗[I]nstitution of proceedings is an immense step. It involves a massive commitment in costs, time, personnel and effort. And it is fraught with risk. Where access to a document can assist in avoiding the initiation of litigation, or curtailing opposition to it, the objects of a statute suggest that access should be granted.‘63 I echo these sentiments. 60 My Vote Counts NPC v Speaker of the National Assembly & others (supra) at para 31. 61 That class members who opt out can still pursue their claims individually is evident from the Amended Notice which is Annexure B(1) of the certification court order. Also see the requirements prescribed in Federal Rule 23(b)(3) and 23(c)(2) of the Federal Rules of Civil Procedure in the United States of America; Sherman EF (1987) ―Class Actions and Duplicative Litigation‖, Indiana Law Journal Vol 62: Issue 3, Art 2. 62 Cannon v Funds for Canada Foundation; 1250264 Ontarion Inc. v Pet Valu Canada Inc. 63 Unitas Hospital v Van Wyk above para 48. [68] The majority judgment found that the draft particulars of claim annexed to the certification application are detailed and tend to show that ‗the appellants are clearly in a position to formulate their claim‘. As correctly argued by the appellants, there are no facts relating to the present appellants in the draft particulars of claim. I am of the view that even if it were to be accepted that the draft particulars of claim as they stand are indeed detailed in relation to all class members, the detailed nature of such draft particulars would be a neutral factor. Draft pleadings are not cast in stone and may be amended.64 [69] In taking the facts of this particular case into account, due consideration must be paid not only to the fact that this is a class action potentially involving up to 500 000 class members65 whose date of employment could date back to as far back as 1965, with only 56 mineworkers being applicants in the certification applications, but also to the fact that the deadline for exercising the right to opt out was 31 January 2017.66 More importantly, thousands of class members would depend on the attorneys of the 56 representative plaintiffs to timeously invoke the discovery procedures envisaged in Rule 35 of the Uniform Rules of Court67 on their behalf. This brings me to the provisions of s 7 of the PAIA. [70] It is common cause that the records requested by the appellants are requested for the purpose of civil proceedings as contemplated in s 7 (1)(a) of the PAIA. The majority judgment correctly points out that during the hearing of the appeal, counsel for the appellants conceded that proceedings have 64 Ibid para 43. 65 Nkala & others v Harmony Gold Mining Company Limited & others para 7. 66 Clause 9 of the order made by the court in Nkala states: ‗It is ordered that the members of the classes will be bound by the judgment or judgments in the first stage of the class action against the mining companies, unless they give written notice to Abrahams, Spoor, or the LRC by 31 January 2017, that they wish to be excluded as members of any of the classes against each or any of the respondents.‘ 67 In their article with the title Limiting Relitigation by Defendant Class Actions from Defendant’s Viewpoint, published in The John Marshall Review Volume 4 Issue 3, Theodore and Anderson observe that ‗if the class member's exposure is great enough, he may be less than content at not being in control of his destiny and at being "foreclosed by" the ideas of other class members who are participating representatives‘. commenced as contemplated in s 7(1)(b) of the PAIA. Significantly, an acceptance that this concession was correctly made does not necessarily lead to a conclusion that the appellants are precluded from requesting information in terms of the provisions of s 7 of the PAIA. It merely takes us to the next leg of the enquiry envisaged in s 7(1)(c) of the PAIA: whether the production of or access to the requested record is provided for ‗in any other law.‘ This is so because s 7(1) of the PAIA bars the provision of requested records only if all the three criteria specified in that section have been met. The crucial question is whether the Uniform Rules of Court provide mechanisms in terms of which the appellants may request the records and thus equate to any other law as contemplated in s 7 (1)(c) of the PAIA. In my view, the answer is in the negative for the reasons that follow. First, the relatively long time that it may take for a class action case to reach trial should not be under-estimated.68 Secondly, as correctly argued by the appellants, the certification of class action does not oblige the representative plaintiffs to institute action. It must be borne in mind that in terms of Rule 35 of the Uniform Rules of Court, discovery notices are normally filed after litis contestatio. In this particular case, the court in the Nkala judgment expressly acknowledged that given the magnitude of the class action, the stage when litis contestatio would be reached was still ‗a very long way off‘.69 It is therefore not inconceivable that even if the representative plaintiffs did decide to institute action, they could file the discovery notices just before or well after the deadline for opting out. The potential prejudice for the appellants and the rest of the class members is self-evident. [71] The respondents‘ contention that the representative plaintiffs have the right , with leave of the court to seek earlier discovery of documents in terms of Rule 35(1) of the Uniform Rules of Court, does not detract from the fact that 68 In Mandeville v The Manufacturers Life Insurance Company 2014 ONCA 417 (CanLII) the certification application was argued in 2002 but the trial was only finalized in 2008. 69 Nkala & others v Harmony Gold Mining Company Limited & others above para 210. they are not obliged to do so. In my view, the discovery procedures open to the representative plaintiffs in terms of Rule 35 of the Uniform Rules of Court should not serve as a bar to the thousands of class members who may, immediately upon receiving notice of a class action, wish to request access to records for purposes of assessing the viability of their claims with a view to deciding whether or not to opt out. Put differently, the representative plaintiffs should not have the exclusive right to request information on behalf of all class members before the deadline for opting out has passed. [72] Having considered the objects of the PAIA and all the circumstances of this case, including the magnitude of the class action, the unprecedented range of legal representatives involved in the matter,70 the narrow parameters pertaining to the exercise of the right to opt out in this particular case and the demonstrable lack of assurance that invoking Rule 35 would yield the result sought by the appellants, I agree with the appellants‘ argument that the provisions of Rule 35 do not equate to procedure ‗provided for in any other law‘ as contemplated in s 7 of the PAIA. Consequently, even if it were to be accepted that the records, which are reasonably required by the appellants, are for the purpose of civil proceedings which have already commenced, there is no legal impediment to the appellants‘ request and they are therefore fully entitled to the requested information. [73] For all the reasons mentioned above, I am of the view that the request for the records meets the threshold envisaged in s 50(1) of the PAIA and that such a request is not precluded by the provisions of s 7 of the PAIA. In my view, the facts of this case illustrate the inadequacy of the current discovery procedures provided by the Uniform Rules of Court for purposes of class action proceedings. This emphasizes the need to heed the Law Commission‘s 70 Nkala & others v Harmony Gold Mining Company Limited & others supra para 9. recommendation of the promulgation of legislation that will lay down the procedure applicable to class actions in South Africa.71 [74] For all these reasons, I would uphold the appeal with costs. _______________ MB Molemela Acting Judge of Appeal 71 South African Law Reform Commission Project 88 ‗The Recognition of Class Action in South African Law’ at para 3.1.2; Cilliers et al, Herbstein and van Winsen, Civil Practice of the High Court of South Africa (2009) 199 – 201 submit that appropriate legislation and rules of court are needed for class actions. Appearances For the Appellants: A Bester (with him R Itzkin) Instructed by: Richard Spoor Incorporated, Johannesburg Webbers, Bloemfontein For the Respondent: P Kennedy SC (with him I Currie) Instructed by: Edward Nathan Sonnenbergs, Johannesburg Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 07 June 2017 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. MAHAEEANE & ANOTHER v ANGLOGOLD ASHANTI LIMITED The Supreme Court of Appeal today handed down judgment in an appeal resulting from an application brought in the Gauteng Local Division of the High Court, Johannesburg. In the application, the appellants sought to obtain records in the possession of the respondent including those relating to: steps taken by the respondent to create a safe working environment in its mines; its compliance with its statutory health and safety duties; steps taken to monitor the health of the appellants; any reports on these matters relevant to silicosis and similar records. It was contended that the records were required to enable the appellants to assess their prospects of successfully suing the respondent for damages caused by their having contracted silicosis. The appellants had both been employed in gold mines run by the respondent for many years. Silicosis is common in gold mine workers who are exposed to harmful quantities of silica dust whilst working underground in mines. This dust is generated in the course of mining activities. The appellants were dismissed from employment on the basis that they had contracted silicosis. This much was common cause. It was disputed that their silicosis had resulted from their employment in the respondent’s mines. The first appellant was certified as having contracted silicosis during September 2004 and the second appellant during September 2009. By November 2011, both the appellants had instructed Richard Spoor Incorporated, a firm of attorneys, to represent and advise them. During December 2012, this firm of attorneys launched an application to certify a class action. The class sought to be certified included persons such as the appellants who had worked on the respondent’s gold mines and had contracted silicosis. There were 56 applicants in the certification application but the appellants were not cited as applicants. A detailed set of draft particulars of claim was annexed to the certification application. The request for records under the PAIA was submitted on behalf of the appellants by their attorney in August 2013. The respondent contended that this amounted to an application for pre-litigation discovery and a fishing expedition. The high court refused the application for records, holding that there was alternative legislation available to the appellants to obtain the records. In addition, it found that the records were not reasonably required for the exercise or protection of any rights. The high court granted the appellants leave to appeal against this refusal. The Supreme Court of Appeal was divided three to two. Two minority judgments would have upheld the appeal and granted access to the records. The majority upheld the order of the high court dismissing the application. It did so on the basis that the right relied upon was that to claim damages in a court of law. Since the appellants were able to formulate their claim adequately without the records in question, as demonstrated by the detail in the draft particulars of claim annexed to the certification application, it could not be said that the records were reasonably required to exercise of protect that right. In addition, since the class action had subsequently been certified, this signalled the commencement of proceedings and the appellants were included in that action until they opted out. That being the case, there was a further reason why the records were not reasonably required to exercise or protect the right to claim damages, because the machinery of discovery was available to them. The appeal was accordingly dismissed.

2369

non-electoral

2013

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 215/12 Reportable In the matter between: DIRK JOHANNES CRAFFORD Appellant and THE SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED Respondent Neutral citation: Crafford v South African National Roads Agency Limited (215/2012) [2013] ZASCA 8 (14 March 2013) Coram: Brand and Leach JJA and Schoeman, Plasket and Saldulker AJJA Heard: 21 February 2013 Delivered: 14 March 2013 Summary: Claim for damages arising out of a collision between a motorist and a kudu at night ─ appellant alleging collision due to respondent’s negligent failure to mow the grass in the road reserve ─ no direct evidence as to how the collision occurred ─ appellant failing to prove that the respondent’s alleged negligence the cause of the collision. ___________________________________________________________________ O R D E R ___________________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Louw J sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. ___________________________________________________________________ J U D G M E N T __________________________________________________________________ LEACH JA (BRAND JA AND SCHOEMAN, PLASKET AND SALDULKER AJJA concurring): [1] The superstition that Friday the 13th is an unlucky day proved to be true in the case of the appellant on 13 January 2006. Late that Friday night he was driving home along the R510 national roadway between Thabazimbi and Ellisras when his motor vehicle collided with a kudu cow. The impact was considerable, the kudu having been propelled through the windscreen into the interior of the vehicle. Most unfortunately, the appellant was severely injured in the process. [2] The respondent was at the time responsible for the maintenance of both the road on which the collision occurred and the road reserve immediately adjacent thereto and, in due course, the appellant sued the respondent for damages suffered as a result of his injuries. His claim was essentially founded on an averment that the respondent or its employees had negligently failed to cut the grass alongside the road and had allowed it to grow so high that it had prevented him from seeing the kudu until it entered the road, at which stage it was too late to avoid a collision. This the respondent denied. [3] When the matter came to trial in the North Gauteng High Court, Pretoria, the hearing proceeded solely in respect to the question of liability with the issues relating to the appellant’s damages standing over for later determination. The high court held that the appellant had failed to establish that the condition of the grass alongside the road had caused the collision and dismissed the appellant’s claim. With the leave of the high court the appellant appeals to this court against that order. [4] Before October 2004 the R510 and its road reserve had been the responsibility of the Limpopo Provincial Government. However, on 22 October 2004 the road was declared to be a national road under s 40(1) of The South African National Roads Agency Limited and National Roads Act 7 of 1998, whereupon the respondent assumed responsibility for the maintenance and care of both the road and its reserve. In the 15 month period that elapsed from then until the incident giving rise to the appellant’s claim, the grass in the road reserve at the scene of the collision had not been mown but been left to grow wild (mowing the road reserve alongside the R510 had commenced but had not yet been completed). It is upon this omission that the appellant founded his claim for damages. [5] It is trite that an injured party who seeks to recover damages in a situation such as this must establish that the omission sued upon was (a) negligent, (b) wrongful – in the sense that it was a failure which as a matter of public and legal policy should be regarded as actionable – and (c) caused the alleged loss. This third element requires proof of the omission complained of having been in fact a cause of the loss suffered – commonly known as factual causation – and, once that is established, that the loss is not too remote but sufficiently linked to the loss to attract liability – so called legal causation.1 [6] All three of these elements, negligence, wrongfulness and causation, were placed in issue, both in this court and in the court a quo. The high court’s decision to dismiss the appellant’s claim as the condition of the grass on the road reserve had not been shown to have caused the plaintiff’s collision with the kudu, is solely one of factual causation. [7] The classical formulation for deciding whether an omission caused the loss allegedly suffered is the so-called ‘but for’ test. This involves an enquiry as to whether, but for the omission, the loss probably would not have occurred. In this regard, the question is not one of mathematical percentage but, rather, what is more likely. As was explained by this court in Minister of Finance & others v Gore NO,2 a judgment recently referred to with approval by the Constitutional Court:3 ‘[A]pplication of the “but for” test is not based on mathematics, pure science or philosophy. It is a matter of common sense, based on the practical way in which the ordinary person's mind works against the background of everyday-life experiences. Or, as was pointed out in similar vein by Nugent JA in Minister of Safety and Security v Van Duivenboden: “A plaintiff is not required to establish the causal link with certainty, but only to establish that the wrongful conduct was probably a cause of the loss, which calls for a sensible retrospective analysis of what would probably have occurred, based upon the evidence and what can be expected to occur in the ordinary course of human affairs rather than metaphysics.”’4 1 See in this regard eg Siman & Co (Pty) Ltd v Barclays National Bank Ltd 1984 (2) SA 888 (A) at 914F-H and Delphisure Insurance Brokers v Dippenaar 2010 (5) SA 499 (SCA) para 28. 2 Minister of Finance v Gore NO 2007 (1) SA 111 (SCA) para 33. 3 See Lee v Minister of Correctional Services [2012] ZACC 30 para 47. 4 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) ([2002] 3 All SA 741) para 25. [8] Bearing these principles in mind, I turn to consider whether the court a quo correctly held that the appellant had failed to prove the element of factual causation. Although it was common cause that the collision had occurred on the R510 national road some 50 kilometres from Thabazimbi, the precise scene was a matter of some dispute at the hearing, the respective parties having identified two places a few hundred metres from each other as being where the impact had occurred. In my view, nothing really turns on this and it can be accepted that it was on a straight stretch of tarred road running approximately east to west. The road surface was approximately 7,6 metres in width while the road reserves both to the north and to the south of the edges of the roadway were approximately 15 metres wide. After the collision the appellant’s motor vehicle was found stationary on the trafficable surface of the roadway, and the inference is irresistible that the kudu cow was on the road at the time of impact. [9] There was considerable dispute at the trial in regard to the condition of the road reserve at the material time, in particular in regard to the length and density of the grass. It can be accepted that there were clumps of a grass known as hyperthelia dissoluta that can grow to at least two metres in height but, unfortunately, no photographs were taken shortly after the incident nor was there any detailed evidence from which it is possible to reliably determine the length and density of the grass at the place where the impact occurred at the relevant time. Despite this difficulty, it can be accepted that the grass had been allowed to grow tall and was, in places, in clumps sufficiently large and dense to have seriously affected an approaching driver’s ability to see kudu on the road reserve ahead. [10] It must be mentioned that photographs handed in at the trial show that the road passes through fairly thick bushveld where kudu are likely to abound. The road reserve to the north of the road was at the time separated from the surrounding veld only by a standard stock-proof fence which, so the evidence establishes, kudu are capable of clearing with no difficulty at all. Moreover, not only were there nearby traffic signs warning of the possible presence of kudu, but the appellant, who used the road regularly to travel between his home on a game farm near Ellisras and his work in Pretoria, had on several occasions seen kudu next to the road, both by day and at night. [11] The plaintiff unfortunately sustained severe head and facial injuries which has given rise to retrograde amnesia, and he has no recall of the circumstances under which the collision occurred. However, despite the appellant’s inability to describe what happened, it was argued on his behalf that the most probable inference to be drawn from the known facts is that the kudu with which he collided was not visible to him by reason of the long uncut grass until it emerged into the roadway at a time when it was too late to take effective avoiding action. [12] It takes little imagination to think of various circumstances in which the collision may have taken place. The kudu may have been in the road as the appellant approached but was not seen by him until it was too late; the appellant may have seen the kudu crossing the road at a safe distance ahead and relaxed his vigilance, only for it to turn back when the vehicle was close by; the kudu may have come bounding over the stock fence and across the road reserve, either in fright or because the bull of the herd on the other side of the road barked a call. These are but a few scenarios that readily spring to mind, but the list is truly endless. What has to be considered is whether the scenario advanced by the appellant, namely, that the kudu emerged into the roadway from a position in which it had been obscured by the long grass in the road reserve at a time when it was too late to take effective avoiding action, has been factually established as being what probably occurred [13] The appellant’s argument is that he proved that the collision occurred in these latter circumstances as a result of the necessary inferences which are to be drawn from the other known facts. Of course it is necessary at all times to distinguish between speculation on the one hand and factual inference legitimately drawn from proven objective facts on the other. An inference of fact can only properly be drawn if the other proven facts justify doing so. If they do not, the inference sought to be drawn becomes mere speculation. [14] Where, as here, a court is asked to draw inferences of fact in relation to an alleged negligent omission in determining whether factual causation has been established, the enquiry is further complicated by requiring ‘the substitution of a hypothetical cause of lawful conduct for the unlawful conduct of the defendant and the posing of the question as to whether in such case the event causing harm to the plaintiff would have occurred or not’.5 As was observed by this court in Gore NO, inferential reasoning is required in such circumstances to determine ‘what would have happened if the wrongful conduct is mentally eliminated and hypothetically replaced with lawful conduct?’6 Accordingly it becomes necessary to consider whether it has been shown by inference drawn from the known facts that the kudu with which the appellant collided would probably have been visible to him early enough for effective avoiding action to be taken had the road reserve been mown short. [15] In considering that issue, it must be remembered that the incident occurred late at night at a time when the appellant’s ability to see the road and the adjacent road reserve ahead of him was considerably compromised, his range of vision having been restricted to the area illuminated by his headlights. Of course drivers do not necessarily have to be able to stop within the range of their headlights at all times, but a kudu which ventures into a main road at a place beyond the lights of an approaching vehicle might well be difficult to avoid if a driver cannot stop in time 5 Siman & Co at 915E-F. 6 Gore NO para 32. once it becomes visible. In addition, the evidence in this case established that even if the grass had been cut, the appellant’s lights would not have illuminated the whole of the road reserve but only about that half closest to the road ie up to about eight metres from the edge of the road. Thus neither a kudu on the road reserve beyond that range nor one beyond the fence would have been visible in the appellant’s lights. [16] It must also be remembered that notwithstanding their large size, kudu are extremely difficult to see at night. Not only is this a matter of common experience but the parties’ experts were agreed that ‘kudu are by way of skin colouring and habits well camouflaged and are difficult to see’ and that they are ‘more difficult to see at night, even when light sources like headlights of cars are present’. This was also borne out by the evidence of Mr Du Toit, called on behalf of the plaintiff, and the information contained in the annexures to his expert’s report to which he referred, which established that, as kudu are difficult to see at night and often move into and across roadways despite the presence of fences, collisions with them are all too common an occurrence on roads traversing rural areas in which kudu are regularly found. [17] A further consideration is the speed at which kudu are capable of travelling. The evidence established that a kudu trots at about 30 kph and can run at 50 kph or faster. Consequently, during the 1.5 seconds which the evidence established it takes the average driver to visualise, perceive and react to the sudden appearance of danger, kudu will travel approximately 12.5 metres if it is trotting and approximately 20 metres if running. Over the same period, a motor vehicle driven at 100 kilometres per hour (as the appellant testified he would have been driving) will cover about 40 metres. It is readily apparent from this exercise that a kudu on a road reserve trotting towards the adjacent road from a position beyond the range of an approaching vehicle’s lights will only become visible at best a second or so before it reaches the road itself, and that a motorist approaching at 100 kph, then 50 metres or so away at that stage will hardly have the opportunity to react, let alone to take effective avoiding action, before reaching the animal. [18] While I am acutely aware of the difficulties attendant upon attempting to make mathematical calculations in matters of this nature, based as they are on estimates as to positions, speeds and motions which may not be at all reliable, it is nevertheless an exercise ‘useful as a check’7 that shows how difficult it may be to avoid colliding with a moving kudu while driving along a road at night, even where there is nothing to obstruct visibility alongside the roadway. 7 Per Ogilvie Thompson AJ in Van der Westhuizen v SA Liberal Insurance Co Ltd 1949 (3) SA 160 (C) at 168, a comment subsequently approved by this court – see eg Netherlands Insurance Co of SA Ltd v Brummer 1978 (4) SA 824 (A) at 831E-F. [19] The truth of the matter is that even had the grass alongside the road been short at the time, one does not have sufficient information to determine how the collision probably took place. The list of imponderables is infinite. We do not know whether the kudu came from the northern or southern side of the road, nor whether it was trotting or running. Even accepting that the appellant was driving at about a 100 kph, one has no idea how, in what manner and at what speed the kudu moved as the gap between it and the motor vehicle closed. It may have moved slowly into the road from a position in which it was standing behind a large clump of grass close to the road but, equally possibly, it may have come at a run from the bushveld beyond the road reserve, clearing the fence and charging towards the road into the roadway directly in front of the vehicle, giving the appellant no chance to see it. To find that any one of these scenarios is in fact what probably occurred would be to indulge in impermissible speculation. [20] Moreover, even if the grass in the reserve had been short, it would also be a matter of speculation to find that the kudu would have become visible when there was still sufficient space between it and the approaching appellant for successful avoiding action to be taken. Possibly it could have been seen in time but, bearing in mind the restricted view of the road reserve that the appellant would have had in his headlights and the difficulty one has of seeing a kudu at night even when they fall within the range of a vehicle’s lights, the kudu may well not have been visible to the appellant until a very late stage even if his ability to see had not been compromised by the long grass there was on the night of the collision. Certainly that is no less probable than the kudu becoming visible when there was sufficient time and space to avoid it ─ or, for that matter, that the collision occurred in any other way. [21] Without knowing where the kudu came from, how it moved, the manner in which it came to be in the road, and where it and the appellant’s motor vehicle were in relation to each other at any material time, it is really impossible to determine solely from the fact of a collision where the kudu would have been and at what stage it would have become visible to an approaching motorist, irrespective of the length of the grass alongside the road. In my view there are thus insufficient objective facts from which it can be inferred that if the grass alongside the road had been kept short the appellant would have seen the kudu earlier than he did, let alone that on seeing it he would have had sufficient time and space to have reacted and slowed his vehicle sufficiently to avoid a collision. The appellant therefore failed to establish on a balance of probabilities that if the grass had been kept short the collision would not have occurred. [22] I am accordingly of the view that the trial court correctly concluded that the appellant had failed to discharge the onus of establishing that the state of the road reserve caused the collision. This renders it unnecessary to consider the elements of negligence and wrongfulness as, even if they were to be determined in the appellant’s favour, his claim would still fail. [23] I need to mention one final matter. It is important for the administration of justice that the roll of this court is not clogged by cases which should properly have been referred to a full bench of the high court. The inappropriate granting of leave to appeal to this court has been adversely commented on regularly in the past.8 Section 20(2)(a) of the Supreme Court Act 59 of 1959 requires a high court granting leave to appeal to direct that the appeal be heard by a full court ‘unless it is satisfied that the questions of law and of fact and the other considerations involved in the appeal are of such a nature that the appeal requires the attention of (this court)’. This is clearly not such a case. Although the damages claimed by the plaintiff were substantial, it is a relatively straightforward factual matter involving well-settled legal principles. Leave to appeal should clearly have been granted not to this court but to a full court. [24] Be that as it may, the appeal is dismissed with costs, including the cost of two counsel, including the costs of two counsel. _____________________ L E Leach Judge of Appeal 8 See eg Shoprite Checkers (Pty) Ltd v Bumpers Schwarmas CC 2003 (5) SA 354 (SCA). APPEARANCES: For Appellant: J F Mullins SC (with him J D du Plessis) Instructed by: Van Zyl Le Roux Inc, Pretoria Honey Attorneys, Bloemfontein For Respondent: J D Maritz SC (with him T Potgieter) Instructed by: Savage Jooste & Adams, Pretoria Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 14 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 Neutral citation: Crafford v South African National Roads Agency Limited (215/2012) [2013] ZASCA 8 (14 March 2013) The appellant, Mr Dirk Johannes Crafford, was severely injured when the motor vehicle he was driving along the national road between Thabazimi and Ellisras collided with a kudu late at night on 13 January 2006. He subsequently instituted action for damages against the South African National Roads Agency Limited, in the Pretoria High Court, contending that the collision and the injuries he had suffered as a consequence had been due to its negligent failure to keep the grass on the road reserve mown short, which resulted in him not having seen the kudu until it was too late to take avoiding action. As a result of a head injury sustained in the collision, Mr Crafford was unable to describe how the collision occurred and the high court held that he had not established that the long grass on the road reserve at the time had caused the collision. His claim was therefore dismissed. Mr Crafford appealed to the Supreme Court of Appeal which today held that he had indeed failed to establish liability on the part of the South African National Roads Agency. The court found that even if the grass on the road reserve had been short, it would be a matter of speculation to find that the kudu would have become visible when there was still sufficient time and space available for effective avoiding action to be taken. The appeal was therefore dismissed. ---ends---

487

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1039/2015 In the matter between: e.tv (PTY) LTD FIRST APPELLANT NATIONAL ASSOCIATION OF MANUFACTURERS OF ELECTRONIC COMPONENTS (First Group) SECOND APPELLANT SOS SUPPORT PUBLIC BROADCASTING COALITION THIRD APPELLANT MEDIA MONITORING AFRICA FOURTH APPELLANT and MINISTER OF COMMUNICATIONS FIRST RESPONDENT MINISTER OF TELECOMMUNICATIONS AND POSTAL SERVICES SECOND RESPONDENT INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA THIRD RESPONDENT UNIVERSAL SERVICE AND ACCESS AGENCY OF SOUTH AFRICA FOURTH RESPONDENT SOUTH AFRICAN BROADCASTING CORPORATION SOC LIMITED FIFTH RESPONDENT ELECTRONIC MEDIA NETWORK LTD SIXTH RESPONDENT ASSOCIATION OF COMMUNITY TELEVISION – SA SEVENTH RESPONDENT SOUTH AFRICAN COMMUNICATIONS FORUM EIGHTH RESPONDENT SENTECH SOC LTD NINTH RESPONDENT CELL C (PTY) LTD TENTH RESPONDENT TELKOM SOC LTD ELEVENTH RESPONDENT TELLUMAT (PTY) LTD TWELFTH RESPONDENT NATIONAL ASSOCIATION OF MANUFACTURERS OF ELECTRONIC COMPONENTS (Second Group) THIRTEENTH RESPONDENT Neutral Citation: e.tv (Pty) Ltd v Minister of Communications (1039/2015) [2016] ZASCA 85 (31 May 2016) Coram: Lewis, Saldulker, Swain and Mbha JJA and Baartman AJA Heard: 9 May 2016 Delivered: 31 May 2016 Summary: Legality: an amendment by the Minister of Communications of the Digital Broadcasting Migration Policy in 2015 that did not follow a process of consultation was irrational and in breach of the principle of legality: amendment did not achieve its purpose and was thus irrational and invalid on that basis too: the Minister purported to bind regulatory authorities and broadcasters and thus acted ultra vires: amendment reviewed and set aside. ___________________________________________________________________ ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Prinsloo J sitting as court of first instance). 1 The appeal is upheld with the costs of two counsel. 2 The respondents are ordered to pay the costs of the appeal jointly and severally. 3 The order of the court a quo is set aside and replaced with the following: ‘ (a) The application is granted with the costs of two counsel where so employed. (b) Clause 5.1.2(B)(a) of the Digital Migration Policy is declared unlawful and invalid and is accordingly set aside.’ ___________________________________________________________________ JUDGMENT Lewis JA (Saldulker, Swain and Mbha JJA and Baartman AJA concurring) [1] This appeal concerns the legality of an amendment to the Broadcasting Digital Migration Policy (the policy), made by the Minister of Communications, Ms Faith Muthambi, in March 2015. The policy has had a long gestation. It was first published in 2008 by the then Minister, Ms Ivy Matsepe-Casaburri. It was amended in 2012 by her successor, Ms Dina Pule, and again in 2013 by her successor, Mr Yunus Carrim. The amendment in early 2015 by the present Minister is alleged to have been effected unlawfully for a number of reasons, both substantive and procedural. [2] The first appellant, e.tv (Pty) Ltd, a national television broadcaster, supported by several other parties, has challenged the amendment, but the application to review it and set it aside was opposed not only by the Minister, who is the first respondent, but also by other broadcasters, including the South African Broadcasting Corporation SOC Ltd (SABC), the fifth respondent, and Electronic Media Network Ltd (M-Net), the sixth respondent, as well as a group of representatives of the National Association of Manufacturers of Electronic Components (NAMEC), the thirteenth respondent (the NAMEC second group). The first group in NAMEC, the second appellant, supports e.tv’s application to set aside the amendment, as does SOS Support Public Broadcasting Coalition (SOS), the third appellant, and Media Monitoring Africa (MMA), the fourth appellant. The latter bodies are associations formed in the public interest and have no financial interest in the outcome of the dispute. None of the parties question the standing of the different groups representing NAMEC which take different positions. [3] The policy was published in terms of s 3(1) of the Electronic Communications Act 36 of 2005 (ECA). Both the Constitution and the ECA empower the Minister of Communications to make policy regarding broadcasting. The policy in question deals with digital migration of broadcasting signals. The process of dealing with migration to digital broadcasting of a television signal began in 2005, following a global trend. At present, signals sent to television aerials (terrestrial television) are in analogue form. This is the process through which the majority of the population in the country receives their television broadcast. There are only two free-to-air commercial terrestrial broadcasters at present, the SABC and e.tv. There are also a number of community broadcasters who use analogue signals, as does M-Net, but it charges a fee to subscribers who use it. Other licensed broadcasters who charge a fee for broadcasting use digital signals which are received through a satellite dish and a decoder. Digital Migration [4] Terrestrial television, which is free-to-air, is presently available on four channels, three run by the SABC, and one by e.tv. Analogue technology entails the transmission of the television picture and the sound in their entirety. The policy was designed to change this to require that all signals be broadcast digitally. Digital broadcasting entails converting the picture and the sound into compressed digital information and transmitting it so compressed. When the signal is received it is converted by a device back into a full picture and sound on the viewer’s television set. The reason for changing to digital technology is to free up signal space for other purposes, and is universally acknowledged to be a necessary process. Indeed, South Africa co-ordinates its use of the signal spectrum with other countries to ensure that there is no interference between broadcasting signals. The International Telecommunications Union, to which South Africa is a party, has agreed that there should be a switch from analogue to digital broadcasting, the due date for which was June 2015. That did not happen for a variety of reasons, not least of which is the current litigation. The process in terms of which the shift from analogue signals to digital signals will take place is referred to as the ‘digital migration process’ as all terrestrial viewers will have to migrate from receiving analogue broadcasts to receiving them in digital form. Digital migration has thus not yet occurred. [5] The migration process is unfortunately costly, because most people in South Africa do not possess television sets that have an in-built device to convert signals broadcast digitally: these are becoming increasingly common, but are unaffordable at present by the majority of television viewers who are poor. Television sets that do not have built-in devices to convert the digital signal will require set-top boxes (ST boxes or STBs, as they are referred to in the policy) to receive and convert the digital signal. Such boxes will not be required indefinitely, but at least for the foreseeable future while the majority of people in the country still possess television sets that can receive only analogue signals. [6] It is estimated that more than eight million households currently rely on terrestrial television. Thus at least eight million ST boxes will have to be manufactured and supplied at a cost of some R600 each. This amount is beyond the reach of at least five million households. The government has resolved to subsidize the cost of five million ST boxes and provide them at no cost to those who need them. Encryption/decryption or conditional access [7] The contested issue is whether the subsidized ST boxes should be manufactured so as to enable them to decrypt signals that are encrypted. e.tv wishes to encrypt the signals that it transmits for a variety of reasons, and so considers that the subsidized ST boxes should have decryption capability (referred to, generally as ‘encryption capability’). The first group of NAMEC, which will manufacture the ST boxes, also argues that encryption is desirable, as do SOS and MMA. e.tv initially took a different stance in 2008, but subsequently changed its approach. The SABC, M-Net and the second group of NAMEC oppose the introduction of decryption capability. It is not necessary to determine which approach is better, although the debate has some bearing on the legality of the 2015 policy as amended, and I shall turn to it in due course. Encryption is also referred to as conditional access. [8] It is agreed by all concerned, however, that the ST boxes should have some form of technological control. This would determine the extent to which ST boxes can be managed from and interact with the point from which a broadcast emanates. The first policy, published in 2008, stated that the ST boxes would ‘have a control system to prevent STBs from being used outside the borders of South Africa and to disable the usage of stolen STBs’ (clause 5.1.2.2). It also provided that ST boxes would have ‘capabilities to unscramble the encrypted broadcast signal so that only fully compliant STBs made or authorized for use in South Africa can work on the network’ (clause 5.1.2.7). In order for ST boxes to have decryption capability they must be loaded with particular software, hardware and decryption keys. [9] But there appears to be some confusion about the control requirement in subsequent iterations of the digital migration policy. In February 2012, Minister Pule published amendments to the policy, and clause 5.1.2.7 was changed. It provided that ST boxes should: ‘include a STB control system that will protect the investment by government in its STB subsidy scheme, as well as the electronic manufacturing industry. A robust STB control will also benefit consumers by ensuring that they do not have to own multiple boxes. Government believes that the needs of consumers should be at the forefront of the DTT [digital terrestrial television] process; the STB control system provided will be interoperable with other systems’. There is no express reference to encryption. But the national standard for ST boxes, formulated by the South African Bureau of Standards and published by Ms Pule in June 2012, makes it clear that conditional access was intended. [10] The standard states that: ‘The main functional elements specified for security are: a) a secure over-the-air software and bootstrap loader; b) a mechanism to prevent STB decoders from functioning in non-RSA DTT networks; c) STB control system that will enable mass messaging. Detailed security requirements are not specified in this document. The STB decoder manufacturer is responsible for the implementation of the security requirements specified by the free-to-air individual broadcasting service licensees in South Africa and for the proper configuration of the chipsets. Manufacturers can obtain the security requirements from the free-to-air individual broadcasting service licensees in South Africa . . . .’ (My emphasis.) [11] Implicit in this is the requirement that ST boxes should have encryption capability. It was thus understood by all parties that encryption, or conditional access, was required in terms of the 2012 policy. That this was the position adopted by Minister Pule is underscored by the answering affidavit in an application brought by e.tv against the Minister in 2012 (e.tv v Minister of Communications & others [2012] ZAGPJHC 268 per GC Pretorius AJ) in which e.tv challenged the validity of a decision by Minister Pule that the ST boxes be manufactured and supplied by Sentech Ltd. The deponent on behalf of the Minister stated, in relation to the appointment of Sentech as the ST box manufacturer, that Sentech had over the years operated a full conditional access system for encrypting content and gained experience in operating such a system. It continued: ‘However, for the existing Conditional Access to meet the requirements of the STB control as defined in the policy and subsequently in terms of the SABS (SANS 862) standard, there was a need for Sentech’s system to be upgraded.’ I shall refer to the judgment of the high court as e.tv 2012 and discuss it more fully later. [12] It is to be noted that all pay television operators, like M-Net and Multichoice (DSTv) (both owned by Naspers Ltd) broadcast using encryption technology to ensure that only fee-paying subscribers can watch their broadcasts. e.tv argues that it is necessary also for free-to-air broadcasters to prevent the importation or sale of poor quality products. SOS and MMA argue in addition that, to ensure high quality broadcasting (in high definition format), and to prevent piracy, encryption is necessary for terrestrial television as broadcasters will not be able to acquire high- quality programmes from studios unless they can assure them of the security of broadcasts. This is necessary to meet the objectives for which they campaign – open, competitive and high-quality broadcasting. The Minister, the SABC and M-Net argue otherwise. Whether e.tv and the other appellants are correct is not, as I have said, in issue. What is at issue is whether the policy was radically changed after 2012. [13] In December 2013 a different Minister of Communications, Mr Yunus Carrim, gave notice that he intended to change the policy. In his statement published for comment, he said that the proposed amendments would ensure that the ‘extent of monopolisation’ would be reduced and competition encouraged ‘by creating space for new players in the pay television market’. This cannot be done without encrypting broadcast signals. Cognisant of the decision in e.tv 2012, that held that an attempt by Minister Pule to determine who would manufacture the ST boxes was invalid, Minister Carrim said that while government has the right to make policy on ST Box control, it could not prescribe the supplier, the operator of the control system, or the type of control to be used. He said that ‘broadcasters are free to decide whether they want to use control or not’. That was said in the context of denying that a decision had been made about the management of a control system, and stating that government was not prescribing encryption or conditional access. He also stated that the cost per ST box for control would be about R20, and that broadcasters wanting to use a control system would have to pay government for that cost. Minister Carrim presented these proposals to cabinet on 18 February 2014. [14] e.tv and other broadcasters made submissions to the department in early 2014. e.tv and SOS welcomed the compromise proposed – that broadcasters who wished to encrypt their signals could do so at their own cost. SOS issued a press statement noting that the Carrim proposals were a ‘valiant compromise’, the result of which was that ‘STBs would have the capacity to have a control mechanism through encrypted television signals, but that this potential would only be implemented if broadcasters wish to do so’. [15] The SABC and M-Net, on the other hand, opposed the proposed amendment. The SABC said in its submission that, in the public interest, there should not be conditional access for free-to-air broadcasting. It would detrimentally affect consumers, driving up the cost of ST boxes, and the global trend was against it. M- Net claimed that the Minister did not have the power to prescribe conditional access, citing the decision in e.tv 2012 as authority in this regard. It is thus clear that the 2013 proposed amendments were understood by all concerned to permit encryption capability on the subsidized ST boxes, albeit at the broadcaster’s expense. [16] However, the proposed amendments were not made. After the general elections in May 2014 the department of communication was divided into two departments and Ms Faith Muthambi became Minister of Communications. (The other department was that of Telecommunications and Postal Services). [17] No progress was made in so far as digital migration was concerned throughout 2014. But on 18 March 2015 the Minister published amendments to the policy. In effect, encryption capability was dropped from the subsidized ST boxes. The SABC and M-Net have argued that the amended clauses are no different in substance from those in the 2012 policy and in the proposed 2013 amendments. The provisions referred to earlier, and the responses to the Carrim proposals, show that not to be correct. [18] Clause 5 of the policy was amended by the insertion of new provisions. These are: ‘5.1.2(A) In keeping with the objectives of ensuring universal access to broadcasting services in South Africa and protecting government investment in subsidized STB market, STB control system in the free-to-air DTT will be non-mandatory. 5.1.2(B) The STB control system for the free-to-air DTT STBs shall- (a) not have capabilities to encrypt broadcast signals for the subsidized STBs; and (b) be used to protect government investment in subsidized STB market thus supporting the local electronic manufacturing sector. 5.1.2(C) Depending on the kind of broadcasting services broadcasters may want to provide to their customers, individual broadcasters may at their own cost make decisions regarding encryption of content.’ (My emphasis.) [19] The result of this is that the subsidized ST boxes will not have encryption capability. If e.tv or any other broadcaster wishes to broadcast encrypted signals it shall have to bear the costs of supplying five million ST boxes at its cost, which is prohibitive and defeats the object Minister Carrim sought to achieve. This new approach has drawn different responses and interpretations, and the Minister herself claims that it does not preclude e.tv from supplying the necessary software for decryption after the ST boxes have been manufactured. I shall turn to that argument shortly. [20] The core of the appellants’ complaint is that, despite Minister Muthambi’s statement, on publication of the amended policy, that she had taken into consideration submissions made by stakeholders on the amendments proposed in December 2013, she did not consult them, nor the statutory bodies charged with the implementation of the ECA, ICASA (the Independent Communications Authority of South Africa established by s 3 of the Independent Communications Authority Act 13 of 2000 and referred to in the ECA as ‘the Authority’) or USAASA (the Universal Service and Access Agency of South Africa established by s 80 of the ECA, and referred to in the ECA as the ‘Agency’). Both ICASA and USAASA were cited as respondents by e.tv, but neither has opposed the relief sought and we do not know what their respective positions are. They have been entirely silent in the litigation. [21] The grounds of review raised by e.tv in its application before the court a quo were that the amendment, not being preceded by a consultation process, was unlawful and should be set aside; that although it was an amendment of a policy, it nonetheless amounted to administrative action (the implementation of policy) and should be set aside under the Promotion of Administrative Justice Act 3 of 2000 (PAJA); that it was irrational and thus breached the principle of legality, and that it was ultra vires. Prinsloo J in the Gauteng Division of the High Court (Pretoria) rejected all of e.tv’s arguments and refused the application. He based much of his reasoning on the assumption that the 2015 amendment was not different in substance from that adopted in 2012, and the proposed amendments advanced in 2013. The learned judge did, however, grant leave to appeal not only to e.tv but also to SOS, the first NAMEC group, and MMA, which were cited as respondents by e.tv, but which supported its application. Was consultation necessary? [22] Section 3 of the ECA is headed ‘Ministerial Policies and Policy Directions’. Section 3(1) provides that: ‘[T]he Minister may make policies on matters of national policy applicable to the ICT [information, communications and technology] sector, consistent with the objects of this Act and of the related legislation in relation to- . . . (d) the application of new technologies pertaining to electronic communications services, broadcasting services and electronic communication network services; . . . Section 3(1A), inserted in the ECA in 2007, provides that: ‘The Minister may, after having obtained Cabinet approval, issue a policy direction in order to- (a) initiate and facilitate intervention by Government to ensure strategic ICT infrastructure investment; and (b) provide for a framework for the licensing of a public entity by the Authority [ICASA] . . . .’ Section 3(2) deals with the issuing of policy directions to either ICASA or USAASA in relation to certain matters. [23] Section 3(5) is at the centre of the dispute. It reads: ‘When issuing a policy under subsection (1) or a policy direction under subsection (2) the Minister- (a) must consult the Authority or the Agency, as the case may be; and (b) must, in order to obtain the views of interested persons, publish the text of such policy or policy direction by notice in the Gazette- (i) declaring his or her intention to issue the policy or policy direction; (ii) inviting interested persons to submit written submissions in relation to the policy or policy direction in the manner specified in such notice in not less than 30 days from the date of the notice; (c) must publish a final version of the policy or the policy direction in the Gazette.’ [24] Section 3(6) deals with amendments to policy directions. It reads: ‘The provisions of subsection (5) do not apply in respect of any amendment by the Minister of a policy direction contemplated in subsection (2) as a result of representations received and reviewed by him or her after consultation or publication in terms of subsection (5). (My emphasis.) [25] Interestingly, the requirement of publication and consultation in respect of policies was introduced only in 2014. Yet previous policy amendments were in fact published and there was consultation and submissions were made, as evidenced by Minister Carrim’s proposed amendments published for comment in December 2013. [26] The question thus arises as to whether Minister Muthambi was obliged by the ECA to publish the amendment she introduced and to consult about it before it was ‘enacted’. She does not deny that consultation was necessary. Rather, in the Department’s answering affidavit, the Acting Director-General of the Department of Communications asserted that the submissions of e.tv and other stakeholders made in response to Minister Carrim’s proposed amendments were taken into account by the current Minister and that she had ‘met with various stakeholders on aspects of the BDM policy to attempt to reach agreement’. Those stakeholders were not identified, however, and e.tv states, without any contradiction, that it was not consulted about the difference in approach taken by Minister Muthambi. [27] The Minister also maintains that it is still open to e.tv to provide technology for decryption in the subsidized ST boxes, at its expense, despite the wording of clause 5.1.2(B)(a) which states that the ST boxes ‘shall not have capabilities to encrypt broadcast signals’. The answering affidavit also states that it is open to free-to-air broadcasters to ‘invest in whatever technology they want in their own STBs and the relevant manufacturers will manufacture such STBs to meet their requirements’. This would require the television viewer to use at least two ST boxes which is what the previous versions of the policy wished to avoid. The appellants point out that it is not possible to ‘retrofit’ the subsidized STBs with decryption capability, and that the Minister had adopted contradictory positions in this regard. Which option is the Minister saying is possible? Providing an additional ST box for each viewer, or, despite the express wording of the amended policy, fitting the subsidized ST boxes with encryption capability? [28] The contradictory positions adopted show, as e.tv points out, considerable confusion, first as to the effect of her amendment, and second as to the meaning of the previous policy and proposed amendments to that, which I discussed earlier, the last of which was that free-to-air broadcasters could provide encryption capability on the government subsidized STBs at their expense. Had the Minister consulted interested parties such as the appellants she might have understood the position better and dispelled the confusion. I shall discuss the varied responses of Minister Muthambi, and her apparent confusion, in relation to the review ground of irrationality. [29] Accepting, as I do, that the amendment does introduce a completely different provision in relation to conditional access in the policy, what required the Minister to consult interested parties and, especially, ICASA and USAASA? The court a quo found that even if s 3(5) of the ECA obliged the Minister to have consulted on an amendment to the policy, she had done so by considering the submissions made pursuant to the proposed amendments in 2013. But that conclusion was premised on the assumption that the encryption amendment in 2015 was not markedly different from the proposed amendment in 2013, which in my view is not correct. The interpretation of s 3(5) of the ECA [30] e.tv argues that one must interpret the word ‘issue’ in s 3(5) so as to include ‘amend’. The word should not be confined to the original ‘enactment’ of the policy. This would achieve the purpose of s 3(5), which is to promote openness and proper consultation in the process of shaping policy that affects the public. All the more so, it would not undermine the roles to be played by ICASA and USAASA. Such an interpretation would also, it is argued, give effect to the fundamental values of the Constitution – openness, transparency and accountability (Doctors for Life International v Speaker of the National Assembly & others [2006] ZACC 11; 2006 (6) SA 416 (CC) paras 110-116). [31] Although a fundamental tenet of statutory interpretation is that words should be given their ordinary linguistic meaning, this is subject to certain ‘riders’: statutory provisions should be interpreted to give effect to the purpose of the statute; they must be properly contextualized; and they must be construed consistently with the Constitution: Cool Ideas 1186 CC v Hubbard & another [2014] ZACC 16; 2014 (SA) 474 (CC) para 28. [32] Requiring consultation prior to effecting an amendment would also, argue the appellants, facilitate the involvement of ICASA and USAASA: s 3(4) of the ECA provides that both bodies, in exercising their powers and duties under the Act and related legislation, must consider both policies and policy directions made by the Minister. And s 3(9) provides that ICASA may make recommendations to the Minister on policy matters in accordance with the Act. Section 4 of the ECA empowers ICASA to make regulations on a variety of matters including technical matters necessary or expedient for the regulation of certain services. It makes no sense for significant policy amendments to be made by the Minister with no obligation to consult ICASA, USAASA or other interested parties. [33] The legislature expressly provided in s 3(6) that amendments to policy directions need not be published or be subject to a consultation process if they were the result of submissions made after publication or consultation. It is silent as to policy amendments. The court a quo held that the inference to be drawn from the distinction is that amendments to a policy, as opposed to a policy direction (which would usually be a direction to one of the statutory bodies), need not be published or made subject to a consultation process in terms of the ECA. The finding is puzzling, for it seems to me to be quintessentially a situation where a member of the Executive should be consulting on important matters of public concern. [34] In my view, s 3(6) simply excludes the need to publish amendments to policy directions. That means that amendments to policies must be published. The default position is that policy amendments must be published for comment and there must be consultation about them. There is no need to strain at the construction of the word ‘issue’. Section 3(6) makes it quite clear that only amendments of policy directions, made as a result of representations received, need not be published again for comment. Policy amendments, on the other hand, must be published for comment and a process of consultation followed. This construction gives effect to the constitutional values of openness, participation and accountability and thus achieves the purpose of s 3 of the ECA. In any event, the principle of legality itself imposes the obligation. The principle of legality [35] In Kouga Municipality v Bellingan & others [2011] ZASCA 222; 2012 (2) SA 95 (SCA) this court held that a bylaw determining liquor trading hours passed in 2006 was invalid because it had not been published as required by s 160(4)(b) of the Constitution and s 12(3)(b) of the Local Government: Municipal Systems Act 32 of 2000. The argument of the Municipality was that it had published the bylaw in 2004 for comment. This court rejected the argument since the version published for comment in 2004 was markedly different from that enacted in 2006. Cloete JA said (para 9) that the significant differences between the two versions: ‘lead to the inevitable conclusion that the Municipality did not comply with the provisions of the Constitution or the Systems Act . . . . The Municipality contended that the 2004 and 2006 publications were part of one continuous process. But the changes to the bylaws made available pursuant to the first publication in 2004 were far-reaching. . . . [N]ot every change has to be advertised otherwise the legislative process would become difficult to implement; but here the two sets of proposed bylaws were so markedly different that republication of the revised draft was necessary to meet the legislative requirements of the Constitution and the Systems Act. That did not happen. The second publication in 2006 could not have served to alert the public that the Municipality intended to adopt an amended bylaw to regulate liquor trading hours.’ [36] The same view was taken in relation to publication and consultation in Earthlife Africa (Cape Town) v Director-General: Department of Environmental Affairs and Tourism & another 2005 (3) SA 156 (C) paras 62 and 63. There Griesel J held that where a decision-maker is apprised of new information before making the decision, an interested party ought to be afforded a hearing in respect of that new fact. [37] There are of course differences between bylaws, administrative decisions and policies. But the same principle underlies the requirement of publication of a policy for comment: openness and accountability, the foundations of a democratic State, require the participation of those affected. The court a quo recognized this principle but considered that the 2015 encryption amendment was not markedly different from the 2013 proposals published for comment. As I have indicated, that was simply incorrect. The SABC and M-Net also do not contend that the principle in Kouga is not applicable when dealing with policy amendments. They argue that the court a quo correctly found that there was no marked difference between the 2015 amendments and previous versions of the policy. That argument cannot be sustained. [38] Where a policy or policy amendment impacts on rights (and in this case on powers and duties in the case of ICASA and USAASA) it is only fair that those affected be consulted. Fairness in procedure, and rationality, are at the heart of the principle of legality. In Albutt v Centre for the Study of Violence and Reconciliation & others [2010] ZACC 4; 2010 (3) SA 293 (CC) the Constitutional Court dealt with the President’s power to pardon offenders in terms of s 84(2)(j) of the Constitution. The President had announced a special pardoning dispensation for offenders convicted of politically motivated crimes, but who had not participated in the Truth and Reconciliation Commission process. One of the questions raised was whether, before exercising the power to pardon, the President was required to afford a hearing to the victims of the offences. Ngcobo CJ said that the question to be asked was whether such a hearing was rationally related to the achievement of the objects of the process. He said (paras 50-51): ‘All this flows from the supremacy of the Constitution. The President derives the power to grant pardon from the Constitution and that instrument proclaims its own supremacy and defines the limits of the powers it grants. To pass constitutional muster therefore, the President’s decision to undertake the special dispensation process, without affording victims the opportunity to be heard, must be rationally related to the achievement of the objectives of the process. If it is not, it falls short of the standard demanded by the Constitution. The Executive has a wide discretion in selecting the means to achieve its constitutionally permissible objectives. Courts may not interfere with the means selected simply because they do not like them, or because there are more appropriate means that could have been selected. But, where the decision is challenged on the grounds of rationality, courts are obliged to examine the means selected to determine whether they are rationally related to the objective sought to be achieved. What must be stressed is that the purpose of the enquiry is to determine not whether there are other means that could have been used, but whether the means selected are rationally related to the objective sought to be achieved. And if, objectively speaking, they are not, they fall short of the standard demanded by the Constitution.’ [39] In Minister of Home Affairs & others v Scalabrini Centre & others [2013] ZASCA 134; 2013 (6) 421 (SCA) Nugent JA (para 69) said that the process by which a decision is taken, in contradistinction to the merits of the decision, might be ‘impeached for want of rationality’. That was the view too of the Constitutional Court in Democratic Alliance v President of the Republic of South Africa & others [2012] ZACC; 2013 (1) SA 248 (CC), where Yacoob ADCJ said (para 34): ‘It follows that both the process by which a decision is made and the decision itself must be rational. Albutt is authority for the same proposition.’ And (para 36): ‘The means for achieving the purpose for which the power was conferred must include everything that is done to achieve that purpose. Not only the decision employed to achieve the purpose, but also everything done in the process of taking that decision, constitutes means towards the attainment of the purpose for which the power was conferred.’ [40] In Scalabrini, the Director-General of Home Affairs had taken a decision to close down a refugee reception office in Cape Town. He had done so without consulting the Standing Committee for Refugee Affairs, as he was obliged to do. He had in fact simply informed the Standing Committee of the decision which he had already taken. Moreover, his representative in Cape Town, although charged specifically with consulting various stakeholders, including the respondent, an organization that assists refugees, did not do so properly. [41] This court concluded that the failure to consult was not rational. Not all decisions taken without consulting interested parties would be irrational, said Nugent JA (para 72). But in this case the duty had arisen because of the particular circumstances. ‘Such a duty will arise only in circumstances where it would be irrational to take the decision without such consultation, because of the special knowledge of the person or organization to be consulted, of which the decision-maker is aware. Here the irrationality arises because the Director-General, through his representatives, at the meeting . . . acknowledged the necessity for such consultation. That he did so is not surprising, bearing in mind that the organisations represented at that meeting included not only the Scalabrini Centre, with its close links to the refugee community, but also the United Nations High Commissioner for Refugees, and organisations close to the challenges relating to alleged refugees.’ [42] The duty to consult arises from the value of fairness underlying the principle of legality. It is recognized in English law too. In R (on the application of Moseley) v Haringey London Borough Council [2014] UKSC 56 the court held that a public authority’s duty to consult before making a decision could arise in several ways including the common law duty to act fairly. The court (para 25) repeated the requirements of fairness in the consultation process set out in the earlier decision of R v Brent London Borough Council, ex p Gunning (1985) 84 LGR 168: ‘First, that consultation must be at a time when proposals are still at a formative stage. Second, that the proposer must give sufficient reasons for any proposal to permit of intelligent consideration and response. Third, . . . that adequate time must be given for consideration and response, and, finally, fourth, that the product of consultation must be conscientiously taken into account in finalizing any statutory proposals.’ [43] Failure to consult where a marked change in policy is made, and the Minister’s failure to consult ICASA and USAASA is, e.tv argues, especially serious because the encryption amendment has implications for the statutory and regulatory mandates of the two bodies. As the independent authority created to regulate broadcasting, ICASA’s independence is enshrined in the Constitution (s 192). It licenses broadcasters and determines the terms of their licences. If a broadcasting licensee, such as e.tv, encrypts its signal, and the five million ST boxes subsidized by government do not have encryption capability, then e.tv might breach the conditions of its licence, and the digital migration regulations passed in 2012 (GN R1070, GG 36000, 14 December 2012). [44] USAASA also has a role to play in implementing the policy. The ST boxes will be subsidized out of its budget, in turn allocated by the Department of Telecommunications and Postal Services. It would be the body procuring the ST boxes and it is most curious that the Minister did not consult that body where the costs were of great importance. The Minister did not claim to have consulted either ICASA or USAASA. And as I have indicated earlier, they did not play any role in this dispute and we do not know what their stance is. [45] In my view, the failure by Minister Muthambi to consult ICASA and USAASA is even more egregious given their statutory duties. (The court a quo considered that they must in fact have been consulted. But it based this conclusion on flimsy evidence and the Minister says nothing in response to the e.tv allegations about failure to consult these bodies.) So too the failure to consult the appellants, all of whom had an interest in the policy, was quite simply irrational. Thus the ECA’s silence on the requirement of consultation in respect of the amendment of the policy is of no moment. The Minister was required by the principle of legality, which encompasses the obligation to act rationally, to consult the statutory bodies and all broadcasters with an interest in the digital migration process. Minister Muthambi’s failure to consult, based upon her misunderstanding of what the 2015 amendment signified, was taken in a procedurally unfair manner, and was irrational. Irrationality in the amendment itself [46] Minister Muthambi sought to achieve two goals that were not consonant with the amended policy itself. She intended to indicate that government would not subsidize encryption, but that free-to-air broadcasters would have the right to encrypt their broadcasts. This would have been no different from the proposals made by Minister Carrim in 2013. But that is not what the amendment states nor what it achieves. Her response to the appellants’ objections is that the only issue that e.tv did not want to accept was that it pay for encryption facilities itself. But in fact the amended clause 5.1.2(B)(a) expressly prohibits encryption for the subsidized ST boxes, despite the further clause inserted (5.1.2(C)) which states that ‘individual broadcasters may at their own cost make decisions regarding encryption of content’. Government had made a ‘political decision’, she said, that it would not bear the costs of encryption, and thus would not permit encryption capability of the subsidized ST boxes. [47] Yet, the policy permitted broadcasters to broadcast their signals in encrypted form. So the poorest members of society would not have access to television of high quality, including high definition display. (The SABC and M-Net deny that this assertion is correct, but as I have said, this appeal is not concerned with whether the one view or the other is right.) The result is that if e.tv or any other broadcaster wishes to encrypt its signal it will have to provide additional ST boxes to the five million households that are given ST boxes by government. That does not achieve the purpose of the policy. Rationality review is ‘about testing whether there is a sufficient connection between the means chosen and the objective sought to be achieved’: Minister of Defence and Military Veterans v Motau & others [2014] ZACC 18; 2014 (5) SA 69 (CC) para 69 fn 101. [48] The rationality of the 2015 amendment must be determined at the time when it was made. The court a quo’s view that the advantages or disadvantages of encryption in some way impacted the rationality enquiry was thus at odds with the requirement of objective rationality underlying the decision itself. Minister Muthambi did not object to e.tv’s wish to encrypt its signals. She wished to ensure that broadcasters were free to decide whether or not they wanted to encrypt signals, but not at government’s expense. But the policy does not achieve this. [49] By precluding the subsidized ST boxes from having encryption capability the Minister has made it impossible for e.tv and other broadcasters to broadcast encrypted signals to television viewers who have subsidized ST boxes. This may place e.tv in breach of its licence conditions. It is not possible for e.tv – or anybody else – to fit these ST boxes with encryption capability after manufacture. It would be required to manufacture additional ST boxes for the five million households that cannot afford them and distribute them at no charge. It cannot do that. The cost would exceed two years of its revenue, some R3 billion. [50] The effect of this, as pointed out by the first group of NAMEC, is that once the analogue signal is switched off, free-to-air broadcasters will not be able to encrypt their signals and all those with television sets that do not have ST boxes with encryption capability will not be able to access high-definition content that can compete with the pay-television broadcasts. This is the view also of the Competition Commission, which advocates conditional access, as well as that of SOS and MMA. All the appellants advocate encryption in order, inter alia, to facilitate competition amongst broadcasters. The effect of the amendment is that high-quality television will not be available to the poorest in our society, and competition will be stifled. The ability of free-to-air broadcasters to encrypt their signals, as allowed for in in clause 5.1.2(C), is thus illusory. The Minister has thus not achieved her purpose and the amendment is irrational for that reason alone. [51] That irrationality is exacerbated by the Minister’s own misunderstanding of the effect of the amendment. The appellants, the SABC and M-Net agree that the five million subsidized ST boxes will not have encryption capability. The result is that if e.tv encrypts its signal, its broadcasts will not be seen by those who have only the subsidized ST boxes. If e.tv wishes to avoid that result it will have to spend some R3 billion in providing additional ST boxes with encryption capability to five million households at no cost to them. [52] The Minister recognized this in responding to e.tv’s founding affidavit. The Acting Director-General stated that e.tv misunderstood the effect of the amendment. He said: ‘Paragraph 5.1.2(B)(a) is a policy statement that in respect of the free STBs government shall not incur the costs of providing encryption capabilities. In 5.1.2(C), it is made clear that the FTA broadcaster is free to provide encryption broadcasts at its own cost. This means that the FTA broadcasters would bear the cost of providing encryption capabilities. It is up to the FTA broadcaster to elect the means for providing such encryption capabilities, and the manufacturer to supply them, to ensure that its broadcasts are received.’ The Acting Director-General stated later: ‘It is correct that the 5 million subsidized STBs shall not be able to decrypt encrypted signals. This is due to the fact that the government will not spend money to install encryption capabilities in such STBs. The reason for this is simply that encryption capability is not required for purposes of broadcasting digital migration policy for which the government is providing subsidized STBs.’ [53] On the other hand he stated elsewhere: ‘As I understand it, there is nothing preventing the applicant from developing its own software that would enable its viewers to receive and view encrypted broadcast signals. The applicant may even investigate the possibility of doing so through the government subsidized STBs as long as it pays for it. It is correct that the encryption amendment was intended to clarify government’s position that government subsidized STBs will not have encryption capability. The need for this clarification came as a result of the submissions made to the Minister despite the fact that encryption capability was removed from the Policy in February 2012.’ That is not correct, as I have shown. On this interpretation e.tv could encrypt the government subsidized boxes at a cost of only R100 million, which would be commercially feasible. [54] Which position of the Minister are we to accept? They are at variance and the commercial implications are stark. The Minister’s confusion as to the effect of the amendment shows its irrationality, and for that reason too it is in breach of the principle of legality and invalid. The appeal must succeed on the ground that the amendment was made in an irrational and thus unlawful manner and is inherently irrational as well. The ultra vires challenge [55] In addition to the rationality challenge, e.tv contends that the encryption amendment is ultra vires in terms of the ECA. This is because the Minister is not permitted to make binding decisions on ST box control issues that affect free-to-air broadcasters. The Minister is empowered by the ECA and the Constitution to make policies, but she cannot regulate. The regulatory authority is ICASA. e.tv argues that by purporting to prohibit subsidized ST boxes from having encryption capability (‘shall not have capabilities to encrypt broadcast signals for the subsidized STBs’) the Minister has transgressed her policy-making powers. [56] Section 192 of the Constitution requires national legislation to ‘establish an independent authority to regulate broadcasting in the public interest, and to ensure fairness and a diversity of views broadly representing South African society’. That legislation is the ICASA Act referred to above, section 4 of which determines ICASA’s functions and powers. In Trinity Broadcasting (Ciskei) v Independent Communications Authority of South Africa [2003] ZASCA 119; 2004 (3) SA 346 (SCA) Howie P confirmed that ICASA is ‘an independent arbiter and it must be left to act independently, without governmental pressure, real or apparent, of any kind’ (para 32). [57] ICASA is given regulation-making powers by s 4 of the ECA. It is specifically given the power to regulate broadcasting services in chapter 9 of the ECA. The Minister, by contrast, is given no regulatory powers in respect of broadcasting by the ECA, nor can she make binding determinations. That was the effect of the decision in e.tv 2012, which held that the Minister does not have the power to prescribe to free-to-air broadcasters how they should manage ST boxes, or to prescribe or make binding decisions relating to ST box control. The decision of Pretorius AJ in e.tv 2012 was not appealed against by Minister Pule, who announced that the department accepted the decision. So too did the SABC and M-Net. [58] The court in e.tv 2012 stated (paras 37 and 38): ‘If one has regard to the clear distinction in the ECA between the authority and power of the Minister to make policy, and the power and obligation of ICASA to consider such policy when regulating the broadcasting industry, it is clear to me that the Minister does not have the power to prescribe to free-to-air broadcasters how they should manage set top boxes. Even if she had such powers, her decision would have been administrative action as part of policy execution rather than policy formation. It follows from what I have set out that the Minister has no legal power to prescribe or make binding decisions relating to set top box control.’ [59] The SABC, M-Net and the second group of NAMEC argue that the policy amendment is different from the direction to appoint Sentech as the manufacturer and supplier of the ST boxes. That is correct. But Minister Muthambi purported to bind free-to-air broadcasters. M-Net argues that the amendment must be interpreted in its context: the policy provides that it is the framework for digital migration, and is published to inform and guide the process. It aims to establish a policy environment within which the migration process is implemented and will assist government to meet its commitments to the ‘people of South Africa as well as the global community, especially the developing world’. M-Net points out that the words ‘will’ and ‘shall’ are used interchangeably, and that the use of ‘shall’ in this context does not impose any duty. [60] But the effect of the encryption amendment, as the Minister states in response to the application, is that the government will not subsidize the costs of encryption. The subsidized ST boxes will have no such capability. That has the effect of requiring free-to-air broadcasters to procure ST boxes with encryption capability for the eight million households that rely on terrestrial television. It will not be able to recover the costs from the five million households that cannot afford them. That seems to me to be a decision that has binding effect. [61] e.tv relies for its argument that the amendment is ultra vires on Minister of Education v Harris [2001] ZACC 25; 2001 (4) SA 1297 (CC). That matter concerned a challenge to a policy enacted in terms of the National Education Policy Act 27 of 1996. The policy purported to determine the age at which children could first attend an independent school. Harris challenged the validity of the policy on the ground that the Minister did not have decision-making powers in terms of that Act. The Constitutional Court held that the Act did not confer on the Minister the power to make decisions. [62] The policy stated that it gave notice of the ‘age requirements for the admission of learners to an independent school or different grades at such a school’. It continued: ‘A learner must be admitted to grade 1 if he or she turns seven in the course of’ a calendar year. ‘A learner who is younger than this age may not be admitted to grade 1. . . .’ [63] Sachs J said (para 11): ‘Policy made by the Minister in terms of the National Policy Act does not create obligations of law that bind provinces, or for that matter parents or independent schools. . . . There is nothing in the Act which suggests that the power to determine policy in this regard confers a power to impose binding obligations. In the light of the division of powers contemplated by the Constitution and the relationship between the Schools Act [The South African Schools Act 84 of 1996] and the National Policy Act, the Minister’s powers under section 3(4) are limited to making a policy determination and he has no power to issue an edict enforceable against schools and learners. Yet the manifest purpose of the notice is to do just that.’ [64] M-Net seeks to distinguish Harris on the basis of the peremptory language in the notice; the objective of the notice, which was to achieve uniformity between independent and state schools by extending a rule in the Schools Act to independent schools and the fact that the Minister did not dispute that he purported to bind independent schools. [65] The SABC argues that ICASA, like the authorities regulating schools, must consider policies but does not have to follow them. The policy, it argues, does not fetter ICASA. Nothing in the policy prevents ICASA from making a decision that the subsidized ST boxes would have encryption capability. [66] In my view, Minister Muthambi has issued an edict. She has decreed that the subsidized ST boxes shall not have encryption capability. USAASA has said nothing on this score. It cannot make a financial decision that is not consonant with the policy. The Minister’s decision does purport to bind. And that is borne out by the statements in the answering affidavit that say that government will not bear the costs of encryption and that if e.tv wishes to broadcast an encrypted signal it must provide the ST boxes to consumers at its cost. That, as has already been said, makes it commercially impossible for e.tv to encrypt its broadcast signals despite the statement in clause 5.1.2(C) that it is free to do so. [67] In my view Minister Muthambi did purport to issue a binding direction, which she was not entitled or empowered to do. For this reason too the encryption amendment is invalid. The court a quo thus incorrectly found that the amendment was not ultra vires. The appeal must succeed on this ground as well. The PAJA challenge [68] e.tv, in the court a quo, challenged the policy amendment on the basis that it amounted to administrative action (implementation of a policy). It failed in this respect as well. On appeal, it maintains the challenge, but did not argue it at the hearing. In view of the findings that I have made as to the irrationality of the amendment, and as to it being ultra vires, it is not necessary to consider this ground of review as well. Costs [69] The last issue is that of costs. The four appellants are entitled to the costs of the appeal, including those occasioned by the employment of two counsel. The respondents should bear joint and several liability for these costs. The appellants are also entitled to the costs of the application in the court a quo. Order [70] For these reasons I order that: 1 The appeal is upheld with the costs of two counsel. 2 The respondents are ordered to pay the costs of the appeal jointly and severally. 3 The order of the court a quo is set aside and replaced with the following: ‘ (a) The application is granted with the costs of two counsel where so employed. (b) Clause 5.1.2(B)(a) of the Digital Migration Policy is declared unlawful and invalid and is accordingly set aside.’ _______________________ C H Lewis Judge of Appeal APPEARANCES For the First Appellant: S Budlender (with him J Berger and R Tshetlo) Instructed by: Norton Rose Fulbright South Africa Inc., Sandton Webbers, Bloemfontein For the Second to Fourth Appellants: M du Plessis (with him L Kelly) Instructed by: Nortons Inc, Sandton McIntyre & Van der Post, Bloemfontein For the First Respondent: N H Maenetje SC (with him K Tsatsawane) Instructed by: Gildenhuys Malatji Inc, Pretoria Honey Attorneys, Bloemfontein For the Fifth Respondent: A R Bhana SC (with him J Mitchell) (Heads of Argument also prepared by A Friedman) Instructed by: Ncube Incorporated Attorneys, Rosebank Phatshoane Henney Attorneys, Bloemfontein For the Sixth Respondent: D N Unterhalter SC (with him M Norton SC) Instructed by: Werksmans Attorneys, Sandton Matsepes Inc, Bloemfontein For the Thirteenth Respondent: T Motau SC (with him L Kutumela) Instructed by: Mota Attorneys, Waterkloof Glen Motaung 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 31 May 2016 STATUS Immediate e.tv (Pty) Ltd v Minister of Communications [2016] ZASCA 85 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. In a judgment handed down today, the SCA found that, in amending the Broadcasting Digital Migration Policy in 2015, the Minister of Communications, Ms Faith Muthambi, had acted irrationally both procedurally and substantively. It thus reviewed and set aside the amendment, and upheld the appeal aginst the decision of the Gauteng Division of the High Court. The policy was first published in 2008. It was designed to facilitate South Africa’s shift from analogue terrestrial television to digital terrestrial television which is necessary to free up signal space. Viewers who presently receive analogue broadcast signals (via aerials) will require set top boxes (STBs) to watch television in the digital terrestrial environment. The majority of viewers in the country will need STBs to convert the digital signal on their televisions. The poorest television viewers will not be able to afford STBs, which will cost some R600 each. The government proposes to subsidize the procurement of STBs required by five million households. It is estimated that there are eight million viewers who still rely on terrestrial television. (Other viewers use a satellite dish and decoder which can decrypt encryted signals.) The amendment to the policy precluded free-to-air broadcasters from encrypting their television signals as it stated that the subsidized STBs would not have encryption capability. An STB that is equipped with encryption technology can decrypt signals that are encrypted. This is the technology used by pay television broadcasters such as M-Net and DSTv. There is a debate as to whether encyption is desirable for free-to-air broadcasts. The appeal did not concern the merits of that debate, but the process that preceded the amendment and its rationality were at issue. The amendment constituted a fundamental departure from previous iterations of the policy. The policy first published in 2008 was that the subsidized set top boxes would have encryption technology. It was amended in 2012 but there was no change in this regard. In 2013 the then Minister, Mr Yunus Carrim, published various amendments for comment. He proposed that free-to-air broadcasters such as the first appellant, e.tv (Pty) Ltd, pay for encryption technology on the subsidized STBs. e.tv welcomed the 2013 amendments. The SABC, M-Net and DSTv opposed them. Encryption capability would enable free-to-air broadcasters such as e.tv to offer paid subscription services in competition with M-Net and DSTv. Encryption was supported by two public interest organizations, SOS Support Public Broadcasting Coalition and Media Monitoring Africa, as well as some members of the National Association of Manufacturers of Electronic Components. The proposed amendments were not effected. In early 2015 Minister Muthambi published the encryption amendment which precludes the subsidized STBs from having encrytion technology. She did this without consulting interested persons and the two bodies established to regulate and distribute television, the Independent Communications Authority of South Africa (ICASA) and the Universal Service and Access Agency of South Africa (USAASA). e.tv brought an urgent application for an order reviewing and setting aside the encryption amendment on the basis that there had been no consultation and that the amendment was inherently irrational. It stated that the subsidized STBs ‘shall not have capabilities to encrypt broadcast signals’ and that ‘individual broadcasters may at their own cost make decisions regarding encryption of content’. The Gauteng Division refused the application on the basis that the Minister had consulted about the 2013 proposed amendments, and that the amendment was not irrational. e.tv, supported by a group of NAMEC, SOS and MMA, appealed against this decision. The Minister, the SABC, M-Net and a second group of NAMEC opposed the appeal. The SCA found that the amendment was a fundamental departure from previous policy; that the Minister was required by the Electronic Communications Act 36 of 2005 to consult ICASA, USAASA, and broadcasters before changing policy, and that she had not done so. The amendment was thus made unlawfully. It was also irrational as it sought to achieve two purposes: avoid government paying for the encryption of the subsidized STBs and allow free-to-air broadcasters to pay for encryption. By precluding encryption of the subsidized STBs she did not achieve that result. The SCA also held that the Minister had exceeded her powers

3771

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1012/2020 LCC Case No: 59/2018 In the matter between: TIMOTHY MALULEKE N.O. APPELLANT (in his capacity as trustee of the (Applicant in the Court a quo) Hlaniki Trust IT 1101/2007) and DANIEL PHELLIMON SIBANYONI FIRST RESPONDENT (First Respondent in the Court a quo) CITY OF TSHWANE METROPOLITAN MUNICIPALITY SECOND RESPONDENT (Second Respondent in the Court a quo) THE DIRECTOR-GENERAL: DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM THIRD RESPONDENT (Third Respondent in the Court a quo) Neutral citation: Timothy Maluleke N.O. v Daniel Phellimon Sibanyoni and Others (Case no 1012/2020) [2022] ZASCA 40 (04 April 2022) Coram: MOCUMIE, MOLEMELA AND CARELSE JJA AND MUSI AND SMITH AJJA Heard: 23 February 2022 Delivered: 04 April 2022 Summary: Land – Land Reform –Extension of Security of Tenure Act 62 of 1997 (ESTA) – termination of right of residence – were occupiers given an effective opportunity to make representations before termination of right to residence in terms of s 8(1)(e) – if not, was the termination of right of residence just and equitable. ORDER On appeal from: Land Claims Court, Randburg (Spilg J, sitting as court of first instance): judgment reported sub nom Timothy v Sibanyoni and Others (LCC/24/2009) [2009] ZALCC 8 (5 August 2020) The appeal is dismissed. No order as to costs. JUDGMENT Carelse JA (Mocumie, Molemela and Carelse JJJA and Musi and Smith AJJA – concurring) [1] The central issue in this appeal is whether the termination of the first respondent’s (Mr Sibanyoni) right to reside on a farm was just and equitable both in substance and procedure in terms of s 8(1) of the Extension of Security of Tenure Act 62 of 1997 (ESTA). This appeal is with leave of the Land Claims Court (LCC). [2] The appellant, the Hlaniki Trust (the Trust) sought the eviction of Mr Sibanyoni, under ESTA from portion 5 (a portion of Portion 4) of the farm Tweefontein 541, Registration Division JR, Province of Gauteng (farm) measuring 498,8842 hectares. In 2015, the Trust bought the farm, from the previous owner, the Tweefontien Trust represented by Ms Viljoen without knowing about Mr Sibanyoni’s occupation. [3] Mr Sibanyoni, at the time of the application was 56 years old. He resided in a labourer’s cottage on the farm with his wife, niece, nephew and mother. Subsequent to the launch of the application, Mr Sibanyoni’s mother has since died. [4] Both Mr Sibanyoni’s parents resided on the farm. He was born and raised there. According to him, his late father and the previous owner had a verbal agreement in terms of which they were given rights to a portion of the farm which they used for cropping and grazing as part payment for their labour. [5] The Trust disputed the agreement. It alleges that it was only in 2017, when the sheriff attempted to serve documents on Mr Johannes Sibanyoni, (the older brother of the appellant, Mr Sibanyoni) that it became aware that Mr Sibanyoni and his family resided on the farm. Furthermore, the Trust alleges that Mr Sibanyoni and Mr Johannes Sibanyoni shared a labourer’s cottage on the farm. [6] Disputing this, Mr Sibanyoni contends that he lived in a separate labourer’s cottage on the farm. It is not disputed that Mr Sibanyoni has 30 cows and a number of goats and chickens. According to Mr Sibanyoni he was employed as a seasonal worker. However, it is common cause that he is not, and never was, employed by the Trust. [7] In its founding affidavit, the Trust alleges that Mr Sibanyoni moved onto the farm after 4 February 1997 without the necessary consent. Notwithstanding this contention by the Trust, at the hearing of this appeal, the Trust conceded that Mr Sibanyoni is, in fact, an occupier.1 Initially in issue, was whether Mr 1 ‘Occupier’ means a person residing on land which belongs to another person. and who has or on 4 February 1997 or thereafter had consent or another right in law to do so, but excluding— (a) a labour tenant in terms of the Land Reform (Labour Tenants) Act, 1996 (Act No. 3 of 1996); and Sibanyoni arrived on the farm before or after 1997. However, during argument, the Trust conceded that Mr Sibanyoni arrived on the farm before 4 February 1997. Section 9(2) (c) of ESTA requires compliance with section 10 of ESTA, if the person to be evicted was already an occupier on 4 February 1997, and compliance with s 11 if the person became an occupier after 4 February 1997. It follows that the provisions of s 102 and not s 113 in terms of ESTA apply. (b) a person using or intending to use the land in question mainly for industrial. Mining, commercial or commercial farming purposes, but including a person who works the land himself or herself and does not employ any person who is not a member of his or her family; and (c) a person who has an income in excess of the prescribed amount. 2 Section 10 of ESTA provides that: ‘(1) An order for the eviction of a person who was an occupier on 4 February 1997 may be granted if— (a) the occupier has breached section 6(3) and the court is satisfied that the breach is material and that the occupier has not remedied such breach; (b) the owner or person in charge has complied with the terms of any agreement pertaining to the occupier’s right to reside on the land and has fulfilled his or her duties in terms of the law, while the occupier has breached a material and fair term of the agreement, although reasonably able to comply with such term, and has not remedied the breach despite being given one calendar month’s notice in writing to do so; (c) the occupier has committed such a fundamental breach of the relationship between him or her and the owner or person in charge, that it is not practically possible to remedy it, either at all or in a manner which could reasonably restore the relationship; or (d) the occupier— (i) is or was an employee whose right of residence arises solely from that employment; and (ii) has voluntarily resigned in circumstances that do not amount to a constructive dismissal in terms of the Labour Relations Act. (2) Subject to the provisions of subsection (3), if none of the circumstances referred to in subsection (1) applies, a court may grant an order for eviction if it is satisfied that suitable alternative accommodation is available to the occupier concerned. (3) If— (a) suitable alternative accommodation is not available to the occupier within a period of nine months after the date of termination of his or her right of residence in terms of section 8; (b) the owner or person in charge provided the dwelling occupied by the occupier: and (c) the efficient carrying on of any operation of the owner or person in charge will be seriously prejudiced unless the dwelling is available for occupation by another person employed or to be employed by the owner or person in charge. A court may grant an order for eviction of the occupier and of any other occupier who lives in the same dwelling as him or her. And whose permission to reside there was wholly dependent on his or her right of residence if it is just and equitable to do so, having regard to— (i) the efforts which the owner or person in charge and the occupier have respectively made in order to secure suitable alternative accommodation for the occupier; and (ii) the interests of the respective parties. Including the comparative hardship to which the owner or person in charge. The occupier and the remaining occupiers shall be exposed if an order for eviction is or is not granted. 3 Section 11 provides as follows: ‘(1) If it was an express, material and fair term of the consent granted to an occupier to reside on land, that the consent would terminate upon a fixed or determinable date, a court may on termination of such consent by effluxion of time grant an order for eviction of any person who became an occupier of the land in question after 4 February 1997, if it is just and equitable to do so. (2) In circumstances other than those contemplated in subsection (1), a court may grant an order for eviction in respect of any person who became an occupier after 4 February 1997 if it is of the opinion that it is just and equitable to do so. [8] The LCC dismissed the application for the eviction of Mr Sibanyoni and his family. It is common cause that if this Court finds that the Trust did not comply with s 8 of ESTA, it would be dispositive of the matter. There would be no need to deal with s 94, and 10 of ESTA. [9] This Court in Aquarius Platinum (SA) (Pty) v Bonene and Others5 re- affirmed the principle that ESTA envisages a two–stage eviction procedure. The first is a notice terminating the occupier’s right to reside, thereafter a second notice of eviction in terms of s 9(2)(d)6 should be given to the occupier. Several letters purporting to terminate Mr Sibanyoni’s right to reside were sent to him. However, it is not disputed that Mr Sibanyoni received a letter dated 12 February 2018, terminating his right to reside on the farm. It is trite that until an occupier’s right to reside is terminated through the withdrawal of an owner’s consent, an (3) In deciding whether it is just and equitable to grant an order for eviction in terms of this section. the court shall have regard to- (a) the period that the occupier has resided on the land in question; (b) the fairness of the terms of any agreement between the parties; (c) whether suitable alternative accommodation is available to the occupier; (d) the reason for the proposed eviction; (e) the balance of the interests of the owner or person in charge. the occupier and the remaining occupiers on the land.’ 4 Section 9 provides as follows: ‘(1) Notwithstanding the provisions of any other law, an occupier may be evicted only in terms of an order of court issued under this Act. (2) A court may make an order for the eviction of an occupier if— (a) the occupier’s right of residence has been terminated in terms of section 8; (b) the occupier has not vacated the land within the period of notice given by the owner or person in charge; (c) the conditions for an order for eviction in terms of section 10 or 11 have been complied with; and (d) the owner or person in charge has, after the termination of the right of residence, given— (i) the occupier; (ii) the municipality in whose area of jurisdiction the land in question is situated; and (iii) the head of the relevant provincial office of the Department of Land Affairs, for information purposes, not less than two calendar months’ written notice of the intention to obtain an order for eviction, which notice shall contain the prescribed particulars and set out the grounds on which the eviction is based: Provided that if a notice of application to a court has, after the termination of the right of residence, been given to the occupier, the municipality and the head of the relevant provincial office of the Department of Land Affairs not less than two months before the date of the commencement of the hearing of the application, this paragraph shall be deemed to have been complied with.’ 5 Aquarius Platinum (SA)(Pty) Ltd v Bonene and Others [2020] ZASCA 7; 2020 (5) SA 28 (SCA);Sterklewies (Pty) Ltd t/a Harrismith Feedlot v Msimanga and Others [2012] ZASCA 77. 6 Ibid, s 9 (2)(d). occupier cannot be evicted. Mr Sibanyoni refused to vacate, as a result thereof, on 5 April 2018, the Trust launched an eviction application against Mr Sibanyoni and all those who occupy through him. [10] Section 9(2)(a) of ESTA requires that the occupier’s right of residence must have been terminated in terms of Section 8 of ESTA, which in relevant part, reads as follows: ‘8. Termination of right of residence. – (1) Subject to the provisions of this section, an occupier’s right of residence may be terminated on any lawful ground, provided that such termination is just and equitable, having regard to all relevant factors and in particular to – (a) the fairness of any agreement, provision in an agreement, or provision of law on which the owner or person in charge relies; (b) the conduct of the parties giving rise to the termination; (c) the interests of the parties, including the comparative hardship to the owner or person in charge, the occupier concerned, and any other occupier if the right of residence is or is not terminated; (d) the existence of a reasonable expectation of the renewal of the agreement from which the right of residence arises, after the effluxion of time; and (e) The fairness of the procedure followed by the owner or person in charge, including whether or not the occupier had or should have been granted an effective opportunity to make representations before the decision was made to terminate the right of residence.’ (Emphasis added.) Section 9(3) provides: ‘(3) For the purposes of subsection (2)(c), the Court must request a probation officer contemplated in section 1 of the Probation Services Act, 1991 (Act No 116 of 1991), or an officer of the department or any other officer of the department or any other officer in the employment of the State, as may be determined by the Minister, to submit a report within a reasonable period – (a) on the availability of suitable alternative accommodation to the occupier; (b) indicating how an eviction will affect the constitutional rights of any affected person, including the rights of the children, if any, to education; (c) pointing out any undue hardships which an eviction would cause the occupier; and (d) On any other matter as may be prescribed. [11] The requirements for an eviction order are located in s 9(2) under ESTA. The right of residence of an occupier can, subject to certain exceptions which are not relevant in this case, only be terminated if it is just and equitable to do so, having regard specifically to five factors set out in s 8(1) of ESTA. [12] In Port Elizabeth Municipality v Various Occupiers7 Sachs J analysed the phrase ‘just and equitable’ with reference to The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE) and said: ‘The phrase “just and equitable” makes it plain that the criteria to be applied are not purely of a technical kind that flow ordinarily from the provisions of land law. The emphasis on justice and equity underlines the central philosophical and strategic objective of PIE. Rather than envisage the foundational values of the rule of law and the achievement of equality as being distinct from and in tension with each other, PIE treats these values as interactive, complimentary and mutually reinforcing. The necessary reconciliation can only be admitted by close analysis of the factual specifics of each case. The court is thus called upon to go beyond its normal functions and to engage in active judicial management according to equitable principles of ongoing stressful and law-governed social process. This has major implications for the manner in which it must deal with the issuers before it, how it could approach questions of evidence, the procedure it may adopt, the way in which it exercises its powers and the orders it makes. The Constitution and PIE require that in addition to considering the lawfulness of the occupation the court must have regard to the interests and circumstances of the occupiers and pay due regard to . . . broader considerations of fairness and other constitutional values, so as to produce a just and equitable result.’ (Footnotes omitted.) These remarks apply with equal force to ESTA.8 7 Port Elizabeth Municipality v Various Occupiers [2004] ZACC 7; 2005 (1) SA 217 (CC) paras 35 & 36. 8 See Herman Diedericks v Univeg Operations South (Pty) Ltd t/a Heldervue Estates LCC 18/2011. [13] The question that arises is whether the termination of Mr Sibanyoni’s residence was just and equitable as required by s 8(1) of ESTA. This requires a court to consider ‘all relevant factors’ and, in particular, the subparagraphs (a) to (e). The nature of the enquiry has been laid down by the Constitutional Court in Snyders and Others v De Jager9 where it was said: ‘Section 8(1) makes it clear that the termination of a right of residence must be just and equitable both at a substantive level as well as at a procedural level. The requirement for the substantive fairness of the of the termination is captured by the introductory part that requires the termination of a right of residence to be just and equitable.’ ESTA demands fairness and equity in all dealings with occupiers. [14] The Trust submits that a court is called upon to determine ex post facto, whether the termination of the right of residence was lawful as well as just and equitable. I agree that the enquiry into whether the termination of the right of residence is lawful and just and equitable occurs ex post facto. However, this does not mean that the occupier must first be evicted. It only means that it happens after the termination, while the occupier still resides on the premises. [15] In this case subparagraphs (a) and (b) of s 8(1) do not apply. The Trust does not rely on any agreement to seek the eviction of Mr Sibanyoni and neither is any reliance placed on the conduct of Mr Sibanyoni or any of his family members. [16] Regarding subparagraph (c), the Trust alleges that not terminating Mr Sibanyoni’s right of residence will result in hardship for the Trust. In its founding affidavit10 the Trust contends that, ‘. . . it is suffering considerable hardship on account of being prevented from developing the area of the Farm in which the First Respondent resides. Furthermore, by virtue of the First Snyders and Others v De Jager [2016] ZACC 55; 2017 (3) SA 545 (CC) para 56. 10 Founding Affidavit para 28. Respondents continued occupation, the Applicant is prevented from accommodating current and/or prospective employees of the Applicant on the Farm. It is unjust and inequitable for the First Respondent to continue residing on the Applicants’ Farm without giving any benefits to the Applicant and depriving its current and / or prospective employees of accommodation.’ [17] In response thereto, Mr Sibanyoni contends that: ‘I hereby submit that me and my family have been occupying the portion of the farm that we are currently occupying, for a long period of time and it has not previously been an impediment to the development of the farm. Considering the size of the portion that we are occupying and its positioning on the farm, without assuming or suggesting that I am knowledgeable in this regard, it cannot reasonably be considered to be a disturbance to any prospective development, unless the contrary can be proven, in which case the Applicant is put to the proof thereof.’11 [18] With regard to subparagraph (c), on the issue of comparative hardship, the LCC held that the termination of Mr Sibanyoni’s right of residence will have a devastating impact and consequences for him. The information of the proposed development is scant and lacks particularity. No plans pertaining to the alleged development was attached to its founding affidavit. The further contention that the cottage was required for its employees and for operational needs of the farm appeared unfounded as there was no evidence as to how many labourers currently occupy the property or any other details or information pertaining to the operational requirements of the Trust and the farm. The Trust had to do more than make mere assertions that it will suffer hardship if it did not terminate Mr Sibanyoni’s right of residence. [19] Counsel for the Trust correctly submits that the onus is on the Trust to place information before the Court to enable it to have regard to the criteria listed under s 8(1)(a) to (e) and any other relevant factors. I agree that the hardship that Mr Sibanyoni would suffer if evicted far outweighs that of the Trust. 11 Answering Affidavit para 31. [20] It bears mentioning that the attitude of the Trust concerning the issue of alternative accommodation for Mr Sibanyoni and his family cannot be countenanced by any court. On the issue of alternative accommodation, the Trust submitted that it had established that there is a nearby township which could accommodate Mr Sibanyoni and his family. The Trust, thereby, ignores the undisputed fact that Mr Sibanyoni has livestock which require grazing land. This is not, ordinarily, possible in a township. [21] Subparagraph (d) is not applicable. As far as s 8(1)(e) is concerned, the Trust contends in its Founding Affidavit that: ‘The Applicant submits that the procedure followed has been fair and that the First Respondent has been given ample opportunity and time to vacate the Farm and will be given an opportunity to make representations before the Honourable Court.’ [22] In Snyders12 the Constitutional Court held: ‘In any event, even if it were to be accepted that Ms De Jager terminated Mr Snyders’ right of residence, she has failed to show, as is required by section 8(1) of ESTA, that there was a lawful ground for that termination and that, in addition, the termination was just and equitable. At best for Ms De Jager she purported to show no more that there was a lawful ground for the termination of the right of residence. She did not go beyond that and place before the Magistrate’s Court evidence that showed that the termination of Mr Snyder’s right of residence was just and equitable. . . . Counsel for the Snyders family also contended that the Magistrates Court should not have issued an eviction order because the Snyders family had not been afforded any procedural fairness by way of an opportunity to be heard before they were required to vacate the property. It is common cause that the Snyders family were never invited to make representations to Ms De Jager on why they should not be required to vacate the house before they were actually required to vacate it. In my view, the submission by Counsel for the Snyders family has merit. ESTA requires the termination of the right of residence to also comply with the requirement of procedural fairness to enable this person to make representations why his or her right of 12 Footnote 9, paras 72 and 75. residence should not be terminated. This is reflected in section 8(1)(e) of ESTA. A failure to afford a person that right will mean that there was no compliance with this requirement of ESTA This would render the purported termination of the right of residence unlawful and invalid. It would also mean that there is no compliance with the requirement of ESTA that the eviction must be just and equitable. . ..’ [23] The Trust submitted13 that the procedure adopted by it was fair. However, it is not stated what procedure is referred to. More telling is the further allegation that Mr Sibanyoni will have the opportunity to make representations before a court. This misconstrues the provisions of s 8(1)(e) which expressly states: ‘ ‘the fairness of the procedure followed by the owner or person, including whether or not the occupier had or should have been granted an effective opportunity to make representations before the decision was made to terminate the right of residence.’(Emphasis added.) In this case it is common cause that the Trust did not engage with Mr Sibanyoni before terminating his right of residence. [24] Counsel for the Trust submitted that para 75 in Snyder’s was obiter. I disagree. The Constitutional Court dealt with both the issue of substantive fairness and procedural fairness which were before it. Paragraph 75 dealt specifically with procedural fairness. [25] The approach of the LCC on the issue of s 8(1)(e) cannot be faulted. The LCC held that: ‘Furthermore as I will indicate later, the fairness of the procedure followed must of necessity be case specific and a weighting must be given to it relative to the other factors. It may well be definitive in some cases while in others it may only be a factor carrying little or no weight. In short; whether it will be the silver bullet cannot be determined in isolation at this preliminary stage bearing in mind the extent of the disputed facts.’ 13 See para 19 of this judgment. [26] It is apparent from the record that the Trust was only prepared to engage with the erstwhile owner of the farm and not the occupier. There is no plausible reason why the Trust did not engage with Mr Sibanyoni before it terminated his right of residence. Given the particular hardship for Mr Sibanyoni that will flow from an eviction, in my view this is a case where there ought to have been ‘an effective opportunity to make representations before the decision was made to terminate the right of residence’ in terms of s 8(1)(e) of ESTA. According to Mr Sibanyoni, he was born on the farm. What is therefore clear is the fact that Mr Sibanyoni was on the farm prior to 4 February 1997. Had the Trust engaged Mr Sibanyoni before it terminated his right of residence, it would have appreciated the history of Mr Sibanyoni and his family’s occupation on the farm. [27] The failure by the Trust to provide Mr Sibanyoni with an opportunity, let alone an effective opportunity, to make representations before terminating his right of residence is not reconcilable with the principles of procedural fairness as envisaged in s 8 of ESTA and confirmed in numerous judgments of this Court14 and the Constitutional Court15. [28] As a result, the termination of Mr Sibanyoni’s right of residence was not just and equitable. In light of this finding, there is no need to deal with ss 9 and 10 of ESTA. [29] In the result the appeal falls to be dismissed and the following order is made: The appeal is dismissed. No order as to costs. 14 See fn 5. 15 See fn 9. ________________________ Z CARELSE JUDGE OF APPEAL Appearances For appellant: Mr G F Porteous Instructed by: Cliffe Dekker Hofmeyr, Sandton McIntyre van der Post Attorneys, Bloemfontein For first respondent: Mr L Sefudi Instructed by: Marivate Attorneys, Pretoria Moroka Attorneys, Bloemfontein. For third respondent: Mr K Toma Instructed by: Office of the State Attorney, Pretoria Office of 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: 04 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 Timothy Maluleke N.O. vs Daniel Phellimon Sibanyoni & Others (Case Name: 1012/2020) [2022] ZASCA 40 (04 April 2022) Today the Supreme Court of Appeal (SCA) dismissed an appeal from the Land Claims Court, Randburg. The appeal dealt with the question whether the termination of the first respondent’s right to reside on the farm was just and equitable both in substance and procedure as prescribed by the Extension of Security of Tenure Act 62 of 1997 (ESTA). The first respondent had resided on the farm before 4 February 1997 and had cropping and grazing rights, in exchange for his labour on the farm. The appellant sought the respondent’s eviction and alleged that the first respondent moved to the farm without the necessary consent and, as a result, exerted considerable and intolerable hardship on the farm and its continued development. This Court considered the provisions of ESTA and found that an occupier’s right of residence can only be terminated in the event that it is just and equitable to do so. This prompted the Court to consider all relevant factors ex post facto. To this end, this Court found that not all relevant factors had been considered. It was clear that the appellant was only prepared to deal with the owners of the property, not it’s occupiers. In addition, the conduct of the appellant not affording the first respondent an opportunity to make representations prior to the termination of his right to residence, which this Court found to be irreconcilable with the principles of procedural fairness as envisaged by ESTA. This Court found that the termination of the first respondent’s right to residence was not just and equitable. In the result, the appeal was dismissed. --------oOo--------

3239

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 596/05 Reportable In the matter between: NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS FIRST APPELLANT INVESTIGATING DIRECTOR: DIRECTORATE OF SPECIAL OPERATIONS SECOND APPELLANT and JULEKA MAHOMED RESPONDENT CORAM: FARLAM, NUGENT, CLOETE, PONNAN et MLAMBO JJA HEARD: 27 AUGUST 2007 DELIVERED: 8 NOVEMBER 2007 SUMMARY: Search and seizure – materials seized pursuant to warrant invalidly issued in terms of s 29 of National Prosecuting Authority Act 32 of 1998 – whether appropriate for court setting seizure aside to make order for preservation of copies of materials seized pending possible prosecution of person whose materials were seized – purposes for which such order may be granted. ORDER OF COURT SET OUT IN PARA 34 IN JUDGMENT OF NUGENT JA. Neutral citation: This judgment may be referred to as National Director of Public Prosecutions v Mahomed [2007] SCA 138 (RSA). ______________________________________________________________ FARLAM JA [1] This is an appeal from a judgment of Hussain J, who granted an application for the setting aside of two search and seizure warrants issued in terms of s 29 of the National Prosecuting Authority Act 32 of 1998 and ordered the appellants, the National Director of Public Prosecutions and the Investigating Director of the Directorate of Special Operations, to return forthwith all documents, files, records, notes, data and other property of the respondent, who is a practising attorney, seized under the warrants, as well as the mirror image of the hard drive of her laptop computer which was seized, together with all photographs taken of her office and home during the execution of the warrants and certain other items. [2] The judgment of the court a quo has been reported: see Mahomed v National Director of Public Prosecutions 2006 (1) SACR 495 (W). [3] The warrants which were set aside in this matter were issued by Ngoepe JP on 12 August 2005 and authorised searches and seizures at the respondent’s residence and offices in Johannesburg. It appeared from the warrants that the documents sought thereunder related to an investigation being undertaken by the Directorate of Special Operations as to whether Mr Jacob Zuma, who was formerly a client of the respondent, and a group of companies described in the annexure as the ‘Thomson–CSF/Thales/THINT group’ were guilty of certain offences. [4] Annexed to the warrants were two annexures, the first of which in the case of both warrants contained 24 paragraphs listing the objects which could be seized. [5] By agreement between the parties all items seized were sealed and deposited with the Registrar of the Johannesburg High Court. By the time they were deposited with the registrar the respondent had claimed privilege in respect of all but three items. [6] In the heads of argument filed on their behalf the appellants conceded that the warrants were invalid to the extent that no case had been made out for the search for and seizure of the objects listed in paragraphs 2 to 24 of the annexures to which I have referred. It was contended, however, that these paragraphs could be severed from the warrants and that the remainder of the warrants could and should be held to be valid. [7] Some days before the appeal was due to be heard the appellants indicated that they were prepared to concede the appeal with costs, including the costs of two counsel, subject to the parties reaching agreement on a satisfactory arrangement to achieve the following two purposes: ‘[a] to preserve for the ongoing investigation into Mr Zuma and the Thint companies and any possible future proceedings against them, the things seized which are covered by paragraph 1 of Annexure A to the warrants or by Annexure B thereto [this was an annexure which set out the manner in which certain computer-related objects could be dealt with]; and [b] to preserve a reliable record of everything seized because such a record may be necessary if ever it should be contended in the future in any such proceedings that the searches entailed or resulted in an unlawful invasion of legal privilege.’ [8] The respondent indicated that she was not prepared to agree to the variation of the order of the court a quo by the addition of a preservation order. [9] When the matter was argued the only submissions addressed to the court related to whether a preservation order should be inserted in the order granted by the court a quo. [10] On the two days after the appeal in this matter was argued the court heard appeals from a judgment given in the Durban High Court in an application brought by Mr Zuma and his attorney, Mr Hulley, and a judgment given in the Pretoria High Court in an application brought by Thint (Pty) Ltd. Both cases concerned other warrants issued by Ngoepe JP on 12 August 2005, authorising other searches and searches relating to the investigation to which I have referred. The same question as to whether a preservation order should be issued in the event of its being held that the warrants or the actions taken pursuant thereto were invalid was argued. The judgments of this court in those two appeals are being delivered simultaneously with the judgment in this matter. [11] For the reasons set out in the judgment in the appeal relating to the application brought by Mr Zuma and Mr Hulley I am of the opinion that a preservation order should also be made in this case. [12] Mr Tuchten, who appeared on behalf of the respondent in this case, submitted that a preservation order should not be made. He argued in the alternative that if a preservation order were to be made it should take the form of a draft which he included in his supplementary heads. The main respect in which his draft differed from the order suggested in the appellants’ letter related to the inclusion of a paragraph providing for the parties’ attorneys to meet with the registrar of the Johannesburg High Court in an endeavour to identify what were described as ‘irrelevant items’, which did not have to be retained and could be returned immediately to the respondent. [13] Mr Trengove, who appeared for the appellants, contended that such a meeting would be a waste of time as his clients were of the view that all the documents currently lodged with the registrar are relevant. [14] In the circumstances there would be no point in providing in the order for the parties’ attorneys to meet with the registrar. In my view an order in the following terms would be appropriate in the circumstances: (A). Subject to what is set out below, the appeal is dismissed with costs including those occasioned by the employment of two counsel. (B). The order of the High Court is varied by the substitution of the following paragraph for the existing paragraph 2: ‘2(a) The registrar is ordered to make copies (either in person or through a delegate) in the presence of the attorneys for the applicant and the respondents of all the documents seized pursuant to the warrants referred to in paragraph 1 and to cause images of all computer materials seized pursuant to such warrants to be made by an expert appointed by the registrar and must hand the originals of the documents and the computer materials seized and all copies of such items which the respondents or their agents may have made while the items have been in their possession (irrespective of the means by which such copies have been made or taken) after the copying process is complete. (b) The registrar is directed to retain the copies and computer images made in terms of subparagraph (a) and to keep them safe, intact and accessible under seal until: (i) notified by the respondents that the retained items or any of them may be returned to the applicant; or (ii) if proceedings are instituted pursuant to the investigation referred to in the founding affidavit placed before Ngoepe JP when the said warrants were authorised, the conclusion of such proceedings; or (iii) the date upon which the first respondent decides not to institute or to abandon such proceedings; whereupon the items so retained must be returned to the applicant. (c) The provisions of subparagraphs (a) and (b) are subject to: (i) any order of any competent court (whether obtained at the instance of the applicant or the respondents); (ii) the lawful execution of any search warrant obtained in the future; or (iii) the duty of the applicant or the registrar to comply with any lawful subpoena issued in the future; (e) the respondents must not take any step to obtain access to any of the retained or returned items unless they give the applicant reasonable prior notice before any such step is taken: in particular, but without derogating from the generality of this provision, the respondents may not take any such step without giving the applicant: (i) reasonable prior notice of any application for a search warrant or an order directing the applicant or the registrar to deliver or release any retained or returned item; and (ii) a reasonable opportunity to challenge in court any subpoena before the applicant or the registrar is obliged to comply with it. (f) The respondents must pay all costs of implementing the provisions of this paragraph.’ [15] I have read the judgments prepared in this matter by my colleagues Nugent and Ponnan JJA. Inasmuch as the order I propose does not carry the support of the majority of the court and as the order set forth in paragraph 16 of Nugent JA’s judgment covers to some extent the ground covered by the order I think should be made I am prepared, in the circumstances of this case, to concur in that order. _______________ IG FARLAM JUDGE OF APPEAL CONCURRING CLOETE JA NUGENT JA: [16] I agree with my colleague Farlam that the registrar of the court below should be authorised to retain, under seal, copies of the documents and material that were seized under the apparent authority of the warrants (I will refer to the documents and material collectively as the material) but not for the reasons that he gives and on more limited terms than those that he proposes. [17] The appellants articulated their request for a preservation order in a letter that was written by the State Attorney and placed before us shortly before this appeal was heard. The request was motivated on two grounds. The first related only to material that falls within the terms of para 1 of the warrants. (That paragraph encompasses a narrow category of material connected with a specific written loan agreement.) The appellants said that they want that material to be preserved ‘for the ongoing investigation into Mr Zuma and the Thint companies and any possible future proceedings against them’. (Mr Zuma, who was formerly a client of the respondent, and the Thint companies, are the appellants under case number 232/07). That means, as I understand it, that the appellants want the material to be available to them, if they are able to obtain lawful access to it (whether by a fresh warrant authorising its seizure, or by the authority of a court order) for the purpose of establishing whether Mr Zuma or the Thint companies have committed offences, or for proving to a court in due course that they have committed offences. [18] I am not at all persuaded that this court (or any court) has the power in law to make a preservation order for that purpose. The retention by the registrar of the material, or copies of the material, even if that material is not viewed, will in my view be a continuing violation of the respondent’s privacy, which is protected against violation by s 14 of the Bill of Rights. I do not think that privacy is violated only when private communications are viewed by or exposed to viewing by another. I think it is violated just as much merely by dispossessing a person of control over material that he or she is entitled to hold in private. As Harms JA said in National Media Ltd v Jooste,1 drawing upon the views expressed by J Neethling and JM Potgieter:2 [‘T]he right to privacy encompasses the competence of a person to determine the destiny of his or her private facts.’ Van der Westhuizen J expressed a similar view in Prinsloo v RCP Media Ltd t/a Rapport,3 in relation to photographic images of matter that was private, when he said that ‘possession of such images by someone who is not authorised by the original author or those depicted on them could in principle amount to an ongoing violation or at least a continuing threat of violation of one’s privacy’ though I do not share his ambivalence as to whether that amounts to an ongoing violation of privacy or whether it merely threatens that a future violation might occur. In my view a violation occurs when, and for so long as, a person is dispossessed of control over private material. 1 1996 (3) SA 262 (A) 271G. 2 J Neethling and JM Potgieter: ‘Aspekte van die Reg op Privaatheid’ 1994 (57) THRHR 703 at 706. See, too, Neethling’s Law of Personality 2 ed by J Neethling, JM Potgieter and PJ Visser p. 237; J Neethling ‘The Protection of the Right to Privacy Against Fixation of Private Facts’ (2004) 121 SALJ 519. Wille’s Principles of South African Law 9 ed 1200 fn 228; The Bill of Rights Handbook 5 ed by Iain Currie and Johan de Waal 14.3. 3 2003 (4) SA 456 (T) 468G-H. [19] The power of a court to authorise a continuing violation of protected rights must be found within the four corners of the Constitution if it is to be found at all, for a court has no reservoir of power outside the Constitution. The Constitution allows for the limitation of protected rights (which will be the effect of granting a preservation order) only if that is permitted by law of general application (and then only to the extent that the limitation is reasonable and justifiable in an open and democratic society that is based on human dignity, equality and freedom, taking into account the factors listed in s 36). There are numerous statutory instruments that authorise an intrusion upon rights of privacy and property for the purpose of investigating and prosecuting crime (none of which are material to this case) but I know of no law – whether it be the common law or a statute or a provision of the Constitution itself – that confers a general discretion upon a court to do the same. [20] My colleague finds the source of this court’s authority to make a preservation order for the purpose of investigating and prosecuting crime in the power that is given to it by ss 38 and 172(1) of the Constitution to fashion remedies for constitutional violations. His view, as I understand it, is that those powers authorise a court to deny full redress to the respondent for the violation of her constitutional rights if that will serve the broader public purpose of prosecuting crime. (The views of my colleague are expressed in his judgment in National Director of Public Prosecutions & Others v Zuma & Another which is delivered simultaneously with this judgment.) [21] It seems to me that the power to fashion remedies for constitutional infringements is given to courts to enable them to vindicate rights rather than to deny them. As Ackerman J said in Fose v Minister of Safety and Security:4 ‘Appropriate relief will in essence be relief that is required to protect and enforce the Constitution. Depending on the circumstances of each particular case the relief may be a declaration of rights, an interdict, a mandamus or such other relief as may be required to ensure that the rights enshrined in the Constitution are protected and enforced. If it is necessary to do so, the courts may even have to fashion new remedies to secure the protection and enforcement of these all-important rights.’ And later:5 4 1997 (3) SA 786 (CC) para 19. 5 Para 69. ‘[I]t is essential that on those occasions when the legal process does establish that an infringement of an entrenched right has occurred, it be effectively vindicated. The courts have a particular responsibility in this regard and are obliged to ‘forge new tools’ and shape innovative remedies, if needs be, to achieve this goal.’ [22] I am not persuaded that the power to fashion remedies to redress constitutional violations are capable of being used to deny such redress so as to serve some other purpose. That is particularly so if the purpose that is to be served by denying redress is one that would not have been capable of being achieved by a court had the violation not occurred. For while it is true, as observed by my colleague, that the effective prosecution of crime is an important constitutional objective, that by itself does not confer a general discretion upon a court to augment the panoply of tools that are available to the state to achieve that objective. And if a court has no general authority to make an order that impinges upon a person’s privacy only because it is useful to do so in the interests of prosecuting crime then I would find it remarkable that the violation by the state of that privacy somehow creates an authority that would not otherwise exist. [23] He finds support for his view in two decisions from Canada that have indeed permitted the preservation of unlawfully seized material on similar grounds, but I do not think that we need uncritically adopt those decisions. Neither of those cases do more than assert that a court may make a preservation order but without pertinently considering the question that concerns me and they do not seem to me to take the matter further. [24] In Dobney Foundry Ltd v Attorney General of Canada6 Esson JA of the British Columbia Court of Appeal (in chambers on an application for an order returning documents seized under a quashed search warrant) relied heavily on pre-Charter cases in support of his decision. With regard to post-Charter decisions to the contrary7 the learned judge said, as pointed out by my colleague, that those decisions ‘rest upon the premise that the purpose and effect of the Charter is to elevate individual rights and freedoms to an absolute which excludes any consideration of competing values such as the desirability that the criminal law be enforced’ 6 Reported under the name Dobney Foundry Ltd v The Queen (2) in (1985) 19 CCC (3d) 465. Because those reports are not available to me I have used the judgment issued by Westlaw. 7 Cited at para 16 of the judgment. and that that approach ‘ignores the reality of the matter [namely that] the interests of the community as a whole require that a reasonable balance be struck between individual rights and community interest’. The learned judge of appeal seems simply to have assumed that protected rights are capable of being encroached upon if only that meets a desire to enforce the criminal law or because it is considered that community interests are served by doing so. Encroachments of that kind, for those and similar reasons, were once common in this country. It seems to me that the very purpose of the Bill of Rights is to ensure that they do not recur by insisting that they are not permissible unless they meet the criteria of s 36. [25] In Re Chapman and the Queen,8 referred to by Esson JA in Dobney, the question whether the Charter had eclipsed the discretion of a court, in the exercise of its inherent jurisdiction, to order the retention of documents unlawfully seized, was not pertinently considered by the Ontario Court of Appeal. In Re Commodore Business Machines Ltd and Director of Investigation and Research9 the same court found, by a majority, that the judge in the court below had ‘properly exercised his discretion derived from s 24(1) of the [Canadian Charter]’10 by permitting the respondents to retain copies of those documents that had been unlawfully seized that were ‘necessary for the prosecution of the offences with which the appellant was charged’, but again without pertinently considering whether the judge had such a discretion at all, basing itself rather on the decision of Esson JA in Dobney. I derive no assistance from the mere assertion of the proposition in those cases. [26] But I do not think it is necessary to reach any firm conclusion on that issue. Even if we had a discretion to make a preservation order for the purpose of preserving evidence for a prosecution I would not do so in this case. I have already indicated that the preservation order was sought for that purpose by the appellants only in relation to the limited class of material encompassed by para 1 of each of the warrants, and we have been given no reason why it might now have become necessary to extend the order to the remaining material (which is what the order proposed by my colleague does) that was seized without justification. It is 8 (1984) 12 CCC (3d) 1. 9 (1988) 50 DLR (4 th) 559. 10 ‘24(1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances’. not clear that the material that was seized includes anything that falls within the terms of para 1 of the warrants but if there is such material amongst the mass that was seized under the apparent authority of the remaining paragraphs of the warrants I do not think it would be practically possible to now separate the former from the latter with any degree of certainty and without exposing the rights of the respondent to the risk of further violation. On that ground alone I would refuse to order the preservation of that material in isolation. [27] But there is also another purpose for which the appellants want the material preserved, which applies to all the material, including the material that is covered by para 1 of the warrants, and that purpose seems to me to place them on firmer ground. [28] The material that was seized under the apparent authority of the warrants related to the affairs of Mr Zuma. The respondent contends that much of the material was protected against disclosure by legal privilege. The present representatives of Mr Zuma have already put the appellants on notice that if their client is ever brought to trial he intends to contest the ability of the state to afford him a fair trial because (so it is alleged) the prosecution has had access to that privileged material. [29] If that objection is indeed taken at any trial that might yet occur then clearly the correct identification of what was amongst the documents that were seized will be crucial to the just adjudication of the objection. It is in that context that the State Attorney’s letter records that a further purpose for which the material should be preserved is ‘to preserve a reliable record of everything seized because such a record may be necessary if ever it should be contended in the future in any such proceedings that the searches entailed and resulted in an unlawful invasion of legal professional privilege.’ What is thus sought in that regard is not to preserve the material so that its content may be used as evidence in any future prosecution (a purpose for which I have not been persuaded that a court has authority to grant such an order) but rather to preserve the material (or copies of the material) so that a court may in due course be in a position to identify with certainty what material was seized if the identity of the material becomes contentious in any future trial. [30] In Shoba v Officer Commanding, Temporary Police Camp, Wagendrift Dam,11 which was decided before the present Constitution took effect, this court drew upon what was then inherent power vesting in the superior courts to hold that a court was entitled to order the preservation of evidence that is vital to substantiate a legal claim.12 That case was decided in the context of what has become known as an ‘Anton Piller order’ but the principle upon which it was decided does not seem to me to be confined to an order of that kind. I think the decision in that case reflected no more than an application of a broader principle that allowed a court, in the exercise of its inherent powers, and in furtherance of the proper administration of justice, to preserve evidence that was vital for the just resolution by a court of a potential legal dispute. For earlier, in Universal City Studios,13 the court had said the following (in that case it found it unnecessary to pronounce finally on the matter but it was effectively endorsed by the later decision in Shoba): ‘There is no doubt that the Supreme court possesses an inherent reservoir of power to regulate its procedures in the interests of the proper administration of justice…It is probably true that, as remarked in the Cerebos Food case,14 that the Court does not have an inherent power to create substantive law, but the dividing line between substantive and adjectival law is not always an easy one to draw…In a case where the applicant can establish prima facie that he has a cause of action against the respondent which he intends to pursue, that the respondent has in his possession specific documents or things which constitute vital evidence in substantiation of the applicant’s cause of action (but in respect of which the applicant can claim no real or personal right), that there is a real and well-founded apprehension that this evidence may be hidden or destroyed or in some manner spirited away by the time the case comes to trial, or at any rate to the stage of discovery, and the applicant asks the Court to make an order designed to preserve the evidence in some way, is the Court obliged to adopt a non possumus attitude? Especially if there is no feasible alternative? I am inclined to think not. It would certainly expose a grave defect in our system of justice if it were to be found that in circumstances such as these the Court were powerless to act. Fortunately I am not persuaded that it would be. An order whereby the evidence was in some way recorded, eg by copying documents or photographing things or even by placing them temporarily, ie pendente lite, in the custody of a third party would not, in my view, be beyond the inherent powers of the Court.15 Although expressed in relation to a civil claim I can see no reason why that 11Shoba v Officer Commanding, Temporary Police Camp, Wagendrift Dam; Maphanga v Officer Commanding, South African Police Murder and Robbery Unit, Pietermaritzburg 1995 (4) SA 1 (A). 12 The requirements for such an order were set out at p. 15H-I. 13 Universal City Studios Inc v Network Video (Pty) Ltd 1986 (2) SA 734 (A) at 754 G-755E. 14 Cerebos Food Corporation Ltd v Diverse Foods SA (Pty) Ltd 1984 (4) SA 149 (T) at 173E. 15 In Shoba at p. 16D the court expressly overruled decisions to the contrary in Economic Data Processing (Pty) v Pentreath 1984 (2) SA 605 (W), Cerebos Food (above) and Trade Fairs and Promotions (Pty) Ltd v Thomson 1984 (4) SA 177 (W) (to the extent that they were in conflict with its decision in Shoba). inherent power would not similarly have been available to ensure the proper administration of justice in relation to a potential dispute between parties to litigation of the kind that is now in issue. [31] Those powers of a court that existed before the Constitution took effect seem to me to be preserved by s 34 of the Constitution. That section accords to everyone (which includes the state) the right, amongst others, to have any dispute that can be resolved by the application of law decided in a fair hearing.16 I have little doubt that the right to a fair hearing before a court of law includes the right to have factual disputes resolved expeditiously and justly. That seems to me to provide ample authority to a court in appropriate circumstances to order the preservation of evidence so as to achieve that end. Indeed, it seems to me that a court, which is under a constitutional duty to ensure that legal disputes are resolved fairly and justly, may order the preservation of evidence on its own initiative if that will serve the proper administration of justice. [32] It is not necessary for present purposes to delineate the boundaries within which those powers may be exercised by a court. It is sufficient to say that where the exercise of those powers intrudes upon other protected rights, as the making of a preservation order will do in this case, a court is bound to exercise those powers only within the constraints of s 36. That requires the benefit that will flow from allowing the intrusion upon protected rights to be weighed against the loss that the intrusion will entail, and only if the loss is outweighed by the benefit to an extent that meets the standard that is set by s 36 will it be permitted to order the intrusion.17 [33] It goes without saying that the application of those principles in this case amply justifies the grant of a preservation order. The limitation that such an order will place upon the respondent’s right to privacy is negligible and ought not to be detrimental in practical terms to the full enjoyment of her right to privacy, bearing in mind that the material is to be held by the registrar under lock and key unless a court orders otherwise. On the other hand the benefit to the expeditious and just 16 Section 34: ‘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.’ 17 See O’Regan J and Cameron AJ in a passage from their dissenting judgment in S v Manamela (Director-General of Justice Intervening) 2000 (3) SA 1 (CC) para 66 that received the approval of the majority; Midi Television (Pty) Ltd v Director of Public Prosecutions [2007] SCA 56 (RSA); [2007] 3 All SA 318 (SCA) paras 10 and 11. resolution of any dispute that a court might be called upon to resolve concerning the identity of the material that was seized is self-evident and enormous. That benefit to the fair and just resolution of the possible dispute clearly outweighs the loss to the respondent to an extent that meets the standard that is set by s 36. [34] In my view an order should be made for the preservation of the material that was seized under the warrants (or copies of the material) but only for that narrow purpose. Accordingly the following orders are made: A. Save as set out in B below the appeal is dismissed with costs that include the costs occasioned by two counsel. B. The order of the court below is varied by the deletion of paragraphs 3, 4, 5 and 6 and the substitution of the following: ‘3. Subject to paragraph 4 below the material that was seized from the applicant pursuant to the warrants is to be retained under seal in the custody of the Registrar of the High Court at Johannesburg on the terms set out in the remainder of this order until such time as the registrar is notified in writing by the National Director of Public Prosecutions that the material may be returned to the respondent or until a court authorises its return. 4. At the election of the respondent and at the cost of the National Director of Public Prosecutions (a) the registrar or an independent person acting under the supervision of the registrar may, in the presence of a representative of the National Director of Public Prosecutions and of the respondent, make one copy of all or any of the documents that are in the custody of the registrar pursuant to this order (b) an independent expert appointed by the registrar may, under the supervision of the registrar, and in the presence of a representative of the National Director of Public Prosecutions and of the respondent, make one image of all or any computer material that is in the custody of the registrar pursuant to this order whereupon the documents or material that have been copied shall be returned by the registrar to the respondent, provided that the copies or images are substituted therefor and are retained in the custody of the registrar on the terms contained in this order. 5. Other than for the purpose of enabling copies to be made as set out in paragraph 4 above nobody may have access to the material that is in the custody of the registrar except in the circumstances set out in paragraph 6 below. 6. Any court may in its discretion order that the material in the custody of the registrar pursuant to this order be produced to it but only if the identity of the material that was seized under the warrants is placed in issue in proceedings before it and for the purpose of resolving that issue. 7. Except under an order made pursuant to paragraph 6 the material in the custody of the registrar shall not be liable to be seized from the registrar under any law. 8. The respondent is to pay the costs of the application.’ ____________________ R.W. NUGENT JUDGE OF APPEAL MLAMBO JA concurs FARLAM JA and CLOETE JA concur in the order. PONNAN JA: [35] I have had the opportunity of reading the judgments of my colleagues Farlam and Nugent and whilst I agree that the appeal must be dismissed with costs including those consequent upon the employment of two counsel, I regretfully cannot agree that the seized items should be retained in the hands of the Registrar. Ordinarily, once the seizure of goods is unlawful, so no doubt is their consequent retention.18 And the person to whom the articles must be returned is the person from whom they were seized, provided that she may lawfully possess them.19 We are called upon to decide whether that rule should in this case be modified so as to preserve, in the hands of the Registrar, the articles so seized. [36] ‘The task of combating crime and convicting the guilty’, according to Brennan J, ‘will in every era seem of such a critical and pressing concern that we may be lured by the temptations of expediency into forsaking our commitment to protecting individual liberty and privacy.’20 The right of search, without which all searches are illegal, is a right created by statute.21 The right to enter premises, search those premises and remove goods therefrom is a significant invasion of the rights of an individual and must therefore be exercised within certain clearly defined limits so as to interfere as little as possible with the rights and liberties of the person concerned.22 The essence of the constitutional right in question in this case is the right not to be subjected to unreasonable intrusions into the privacy of one’s home, papers or effects. The wrong condemned is the unjustified invasion of those areas of an individual’s life. And that was accomplished in this case by the original search and seizure, which it is now conceded was unlawful. Seizures are executed principally to secure evidence. The evidence-gathering role of the police is thus directly linked to the evidence-admitting function of the courts. An individual’s rights may thus be undermined as drastically by the one as by the other. [37] The State, whilst now repudiating the search and seizure as illegal, seeks to maintain some right to avail itself of the knowledge obtained by that means which knowledge it otherwise would not have had. It thus derives for itself an advantage from acting unlawfully that it would not have secured had it not acted at all. The right to be free from the initial invasion of privacy and the right to return of articles 18 Ndabeni v Minister of Law and Order 1984 (3) SA 500 (D) at 503G; Pullen NO, Bartman NO & Orr NO v Waja 1929 TPD 838 at 852; Hertzfelder v Attorney General 1907 TS 403 at 406. 19 Minister van Wet en Orde v Datnis Motors (Midlands) (Edms) Bpk 1989 (1) SA 926 (A); Minister van Wet en Orde v Erasmus 1992 (3) SA 819 (A); Pullen NO, Bartman NO & Orr NO v Waja at 852. 20 Dissenting in United States v Leon 468 US 897 (1984) at 929. 21 Pullen at 859 and 862; Hertzfelder at 404. 22 Pullen at 861; De Wet v Willers NO 1953 (4) SA 124 (T) at 127B-C. so seized are, to my mind, interlinked components of the central embracing right to be free from unlawful searches and seizures. The effect of recognising the right is to put both seizing authorities as well as courts under limitations and restraints on the exercise of their power and authority. Whence, it must be asked, does a court derive its power to make the order sought by the State in this case? If documents unlawfully seized can be held in the manner postulated by the State, the protection afforded by the right to be secure from unlawful searches and seizures is of little, if any, value. To hold otherwise is to recognise the right in theory, but in reality to withhold its protection and enjoyment. Recognition of the right plainly operates to deter the State from gathering information and securing evidence in certain ways. [38] It is the duty of a court to attempt to restore the status quo that would have prevailed if the constitutional requirement had been obeyed. The conduct of the State in this case amounted to nothing less than a naked invasion of the privacy of the respondent’s home and office without the requisite justification demanded by the Constitution. She thus has a right grounded in the Constitution to the return of the articles unlawfully seized from her. The State now admits that the substance as well as the letter of the Constitution was violated. The rule that the parties be restored to the status ante quo is designed to prevent violations of the Constitution. Its purpose is to compel respect for the guarantees enshrined in it in the only effectively available way, namely, by removing the incentive to disregard it. For, as stated by Justice Jackson, ‘uncontrolled search and seizure is one of the first and most effective weapons in the arsenal of every arbitrary government’.23 [39] If the courts were to simply escape their responsibility for redressing constitutional violations, people will be secure only in the discretion of the police and the protections of the right would evaporate. After all, the entire point of the police conduct in this case that violated constitutional guarantees was to obtain evidence for use at a possible subsequent criminal trial. The Bill of Rights must not be reduced to a code that the State may abide in its discretion. The Constitution requires more; it demands a remedy for a violation. That remedy, one would have thought, is well-settled. But, says the State in this case, there now 23 Dissenting in Brinegar v United States 338 US 160 (1949) at 180. exists a constitutional injunction to reconsider existing remedies and to re-fashion them in accordance with the spirit of our new constitutional order. To my mind, there is a fallacy in that approach. It is this: Out of a remedy available to someone wronged by a rights violation, the wrongdoer seeks to fashion for itself a right that it otherwise would not have had.24 That can hardly be authorised by our Constitution. Moreover, the preservation order is being sought in this case in anticipation of possible criminal proceedings, not against the respondent, but against her erstwhile client, Mr Zuma. How, it must be asked, can the State resist a claim for restoration where the items were illegally seized and where, even at the date of the hearing of this appeal, there has been no firm commitment by it that fresh charges will as a fact be preferred against Mr Zuma in regard to which the seized items might be used by it as evidence? [40] If the search and seizure in this case are unlawful as invading personal rights secured by the Constitution, those rights would be infringed yet further if the evidence were allowed to be used even to the limited extent postulated by the State. Excluding evidence is more often than not a necessary corollary of the right and affords a means of extending protection to a citizen, particularly - as in this matter - where the State is itself the invader. Moreover, there is usually no way in which a citizen can invoke advance protection because a search and seizure by its very nature is usually perpetrated without prior warning and conducted in haste. The protection afforded by the right would be greatly impaired unless all of the evidence unlawfully obtained from Ms Mahomed were to be returned to her. [41] In contemplating the novelty of the step urged upon us in this case, I sought, but was unable to derive any assistance from Shoba.25 Shoba considered whether an Anton Piller order directed at the preservation of evidence should be accepted as part of our practice. That question it answered in the affirmative. One of the basic purposes of that interlocutory measure, the essence of which is the element of surprise, is to preserve for a contemplated trial, evidence in the hands of the prospective defendant. Such an order is applied for ex parte, usually in camera and without notice to the respondent. The requirements for its grant are 24 See para 7 of Nugent JA’s judgment. 25 Cited in para 12 of Nugent JA’s judgment. fairly stringent.26 Given its draconian nature it can and often does produce for a litigant, without his/her being heard, damaging and irreversible consequences.27 In my respectful view, for the reasons that follow, the analogy with Shoba is less than perfect. First, in Shoba, it was the wronged - not the wrongdoer (as here) - who invoked the assistance of the court. Second, in Shoba, a private individual, who asserted a cause of action, sought to preserve by means of an order of court, vital evidence required by him in substantiation of that cause of action. Third, the purpose for which the order was sought in Shoba was to redress an asserted civil wrong. To my mind, it is doubtful whether such an order can issue to the police in criminal proceedings.28 After all, that, it seems to me, is the very purpose for which search warrants issue. Fourth, an Anton Piller order operates pendente lite and the contemplated action must commence by the issue of summons within a specified time fixed by the order itself, failing which it shall lapse, spawning perhaps an action for damages. In this matter as I have already stated, we are forced to engage in speculation and conjecture as to when and whether criminal charges will in fact be preferred against Mr Zuma. [42] Legitimate limitations on a constitutional right must occur through and be justified under the prescribed criteria in s 36 of the Constitution and not by giving a restricted definition to the right. Constitutional rights, as far as is possible, must be given a broad and generous interpretation. That is not to suggest that they are unlimited. The limitation of a constitutional right for a purpose that is reasonable and justifiable in an open and democratic society involves the weighing up of competing values and ultimately an assessment based on proportionality.29 The right here under consideration operates as a powerful bulwark against State excesses. Well what then of the sufficiency of the evidence in this case to justify the limitation? The short answer, I am afraid, is that it falls woefully short of what would ordinarily be required. The thrust of the State case before the court below as encapsulated in paragraph 2 of its answering affidavit, was: ‘At the outset I respectfully submit that the [State] was entirely justified in obtaining the warrants in the manner in which they did. Having regard to the supporting affidavits filed herewith I further respectfully submit that the warrants were executed in a 26 Shoba at 15H-I; Chappell v United Kingdom (1990) 12 EHRR 1 para 16. 27 Chappell para 24. 28 Chappell para 18. 29 S v Makwanyane 1995 (3) SA 391 (CC) at para104. professional and lawful manner in accordance with the requirements of the Act’. The postulated relief thus arose very much as an afterthought and has not in truth therefore been fully and properly ventilated on the papers. At that preliminary hurdle as well, the State must therefore also fail, for absent a full factual matrix, the envisaged proportionality exercise can hardly be undertaken, much less resolved in its favour. [43] In order to restore both parties to the position they would have occupied had the unconstitutional search not have occurred, it is necessary that the seized items be restored to the possession of the respondent. This finding is of course no bar to the State proceeding duly and regularly when and if so advised. _________________ V M PONNAN JUDGE OF APPEAL

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM: The Registrar, Supreme Court of Appeal DATE: 8 NOVEMBER 2007 STATUS: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. The Supreme Court of Appeal today dismissed an appeal brought by the National Director of Public Prosecutions against an order granted in the Johannesburg High Court by Mr Justice Hussain in favour of Mr Jacob Zuma’s former attorney, Ms Juleka Mahomed, setting aside two search warrants issued by the Judge President of the Transvaal Provincial Division, Mr Justice Ngoepe. It, however, varied the order granted by Mr Justice Hussain by ordering that copies of material seized under the warrants which were set aside should be preserved by the registrar of the Johannesburg High Court for the purpose of establishing the identity of the material seized if in subsequent criminal proceedings before the court the identity of that material was in issue. The preservation order made by the court was contained in a judgment prepared by Appeal Judge Nugent, with whom Appeal Judge Mlambo concurred. Appeal Judge Ponnan dissented, holding that in order to restore the parties to the position they would have occupied if the unconstitutional search had not occurred it was necessary that the seized items be restored to the possession of Ms Mahomed. Appeal Judges Farlam and Cloete agreed with the order proposed by Appeal Judge Nugent but said they would not have limited the purpose of preservation to establishing the identity of the material seized.

3914

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 516/2021 In the matter between: THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE APPELLANT and THE THISTLE TRUST RESPONDENT Neutral citation: CSARS v The Thistle Trust (516/2021) [2022] ZASCA 153 (7 November 2022) Coram: DAMBUZA ADP and VAN DER MERWE and HUGHES JJA and GOOSEN and DAFFUE AJJA Heard: 2 September 2022 Delivered: 7 November 2022 Summary: Revenue – capital gains tax – Income Tax Act 58 of 1962 – capital gains determined in respect of trusts’ disposal of assets vested in a resident trust beneficiary, who in turn made a distribution to its beneficiaries in the same year of assessment – whether s 25B or para 80(2) of Schedule 8 is applicable – whether the appellant was correct in imposing an understatement penalty of 50% and interest. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: The Tax Court, Gauteng (Wright J sitting as a court of appeal): 1 The appeal succeeds with costs. 2 The order of the Tax Court, Gauteng, is set aside and replaced with the following order: (a) The appeal is upheld only to the extent that the understatement penalty is set aside. (b) There is no order as to costs.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Dambuza ADP and Van der Merwe JA and Goosen and Daffue AJJA concurring): [1] This is an appeal against the decision of the Gauteng Tax Court (the tax court) upholding an appeal against an additional assessment raised by the appellant (SARS) against the respondent (the Thistle Trust). The appeal is with the leave of the tax court. [2] The circumstances giving rise to the additional assessments are as follows. The Thistle Trust is a beneficiary of various trusts that comprised the Zenprop Group. The trusts, referred to as Tier 1 Trusts comprised a group of ten vesting trusts that conduct the business of the Zenprop Group, a group of property owners and developers. In the 2014, 2015 and 2016 tax periods, the Tier 1 Trusts disposed of certain capital assets. The capital gains so realised were distributed, inter alia, to the Thistle Trust in the same tax period. The Thistle Trust, in turn, in the same tax periods, distributed the amounts it received to its beneficiaries. It treated the proceeds received as taxable in the hands of its beneficiaries. [3] SARS raised an additional assessment dated 21 September 2018 for the period 2014, 2015 and 2016, taxing the amounts received by the Thistle Trust as taxable in its hands. SARS also imposed an understatement penalty against the Thistle Trust and required it to pay interest on the assessed liability. [4] The Thistle Trust filed an objection to the additional assessment. The main thrust of the objection was that: ‘having regard to the provisions of section 25B of the ITA and paragraph 80(2) of the Eighth Schedule to the ITA (“the Eighth Schedule”), the capital gains . . . ought not to have been taxed as our client derived no taxable income in this regard, and such gains were properly taxable in the hands of our client’s beneficiaries under those provisions of the ITA.’ [5] SARS disallowed the objection. In March 2021, the Thistle Trust appealed to the tax court. The tax court found that the vesting trusts (ie, the Tier 1 Trusts) had disposed of capital assets and made capital gains. It held that the capital gains distributed to the Thistle Trust and subsequently passed on to its beneficiaries, constituted ‘amounts’ that fell within the purview of ss 25B(1), 25B(2), and paragraph 80(2) of the Eighth Schedule of the Income Tax Act 58 of 1962 (the ITA). Accordingly, the distribution to the beneficiaries of the Thistle Trust was a distribution of capital gains taxable in the hands of its beneficiaries. The tax court, therefore, set aside the additional assessments. The issues [6] Two crisp issues arise. The first is whether the capital gains accrued as a result of the disposal of capital assets by the Tier 1 Trusts are taxable in the hands of the Thistle Trust or in the hands of the beneficiaries of the Thistle Trust to whom those gains were distributed. The second concerns the imposition of an understatement penalty. It arises conditionally in the event that it is found that the gains are taxable in the hands of the Thistle Trust. In that event, the question is whether the circumstances giving rise to the tax treatment by the Thistle Trust of the further distribution to its beneficiaries, warrants the imposition of an understatement penalty. The statutory framework [7] The taxation of trusts came about as a result of the decision of CIR v Friedman (Friedman).1 In Friedman, the court held that a trust was not a legal persona nor a taxable entity. The practice had been that the trustees, as representative taxpayers, were subject to the tax imposed on trust income that accrued to the trust. The court found that since a trust was not a legal person and not a taxpayer, the trustee could 1 CIR v Friedman and Others NNO 1993 (1) SA 353 (A) at 371D-F. not be a representative taxpayer of the trust. Following this judgment, the ITA was amended to include a trust in the definition of a ‘person’ in s 1 of the ITA. [8] Subsequently, s 25B was included in the ITA. The introduction of the section was to provide for the taxation of income accrued to trusts and their beneficiaries. The qualifier was that the trust or beneficiary concerned would only be taxed if it had a vested right in the ‘amount’ received or accrued. Put differently, in terms of s 25B, the trust or beneficiary had to have a vested right in the ‘amount’ received or acquired, otherwise the amount would be taxable in the hands of the trust. [9] Section 25B of the ITA reads: ‘(1) Any amount (other than an amount of a capital nature which is not included in gross income or an amount contemplated in paragraph 3B of the Second Schedule) received by or accrued to or in favour of any person during any year of assessment in his or her capacity as the trustee of a trust, shall, subject to the provisions of section 7, to the extent to which that amount has been derived for the immediate or future benefit of any ascertained beneficiary who has a vested right to that amount during that year, be deemed to be an amount which has accrued to that beneficiary, and to the extent to which that amount is not so derived, be deemed to be an amount which has accrued to that trust. (2) Where a beneficiary has acquired a vested right to any amount referred to in subsection (1) in consequence of the exercise by the trustee of a discretion vested in him or her in terms of the relevant deed of trust, agreement or will of a deceased person, that amount shall for the purposes of that subsection be deemed to have been derived for the benefit of that beneficiary.’ [10] Capital gains tax was first introduced by s 26A of the ITA.2 The section provided that taxable capital gains were to be determined in terms of the Eighth Schedule.3 A capital gain is determined when the proceeds derived from the disposal of an asset exceed that of its base cost.4 [11] Paragraph 80 of the Eighth Schedule provides for capital gain attributed to a beneficiary as follows: ‘80(1) Subject to paragraphs 68, 69 and 71, where a trust vests an asset in a beneficiary of that trust . . . who is a resident, and determines a capital gain in respect of that disposal or, if 2 S 26A was inserted by s 14 of the Taxation Laws Amendment Act 5 of 2001. 3 Section 26A provides that: ‘There shall be included in the taxable income of a person for a year of assessment the taxable capital gain of that person for that year of assessment, as determined in terms of the Eighth Schedule.’ 4 Paragraph 3(a) of the Eighth Schedule. that trust is not a resident, would have determined a capital gain in respect of that disposal had it been a resident— (a) that capital gain must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and (b) that capital gain or the amount that would have been determined as a capital gain must be taken into account as a capital gain for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary to whom that asset was so disposed of. (2) Subject to paragraphs 64E, 68, 69 and 71, where a trust determines a capital gain in respect of the disposal of an asset in a year of assessment during which a beneficiary of that trust (other than any person contemplated in paragraph 62 (a) to (e)) who is a resident has a vested right or acquires a vested right (including a right created by the exercise of a discretion) to an amount derived from that capital gain but not to the asset disposed of, an amount that is equal to so much of the amount to which that beneficiary of that trust is entitled in terms of that right— (a) must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and (b) must be taken into account as a capital gain for the purpose of calculating the aggregate capital gain or aggregate capital loss of that beneficiary.’ (Emphasis added.) Submissions [12] SARS argued that paragraph 80(2) of the Eighth Schedule applies exclusively and that s 25B of the ITA does not apply. SARS argued that capital gains tax is expressly dealt with in the Eighth Schedule. These provisions were introduced subsequent to the amendments providing for the taxation of income accrued by trusts or their beneficiaries. Section 26A, read with the Eighth Schedule, provides for a specific form of tax and for the effect of the vesting of such capital gains as are realised in the hands of successive trusts. [13] SARS further argued that the proceeds of the disposal of capital assets by the Tier 1 Trusts constituted capital gains in the hands of the Tier 1 Trusts. Those trusts, however, distributed the capital gains to the Thistle Trust. Paragraph 80(2), therefore, applies. The Thistle Trust acquired a vested right to the capital gains distributed to it but acquired no vested right to the disposed capital assets. The Thistle Trust distributed the amount it received to its beneficiaries. In doing so, it did not determine a capital gain in respect of the disposal of a capital asset as is required by paragraph 80(2) of the Schedule. Thus, insofar as the beneficiaries of the Thistle Trust are concerned, the provisions of 80(2) do not apply. Section 80(2) determines the tax position of the Thistle Trust. The capital gains accrued upon the disposal of capital assets by the Tier 1 Trusts are, therefore, taxable in the hands of the Thistle Trust. [14] In so far as s 25B of the ITA is concerned, SARS argued that the section does not apply as its provisions concern the taxation of income that accrues to trusts and their beneficiaries. It was argued that the reference to ‘amounts’ which accrues to trusts does not include amounts or proceeds of a capital nature. Those are dealt with in the Eighth Schedule. [15] It was argued that the Tax Court had erred in finding that s 25B, when read in conjunction with paragraph 80(2) of the Schedule, had the effect that the distributions to the beneficiaries of the Thistle Trust were taxable in their hands. [16] The Thistle Trust contended that both paragraphs 80(1) and 80(2) are applicable. Both support a ‘see-through’ approach when dealing with the taxation of capital gains which arises from the disposal of assets by a trust to or for the benefit of the resident beneficiaries. The gains attained are taxable in the hands of the resident beneficiaries. In making the argument, counsel for the Thistle Trust submitted that this is evident on a reading of paragraph 11(1)(d), which provides that a disposal for capital gains tax purposes includes the vesting of an interest in an asset of a trust in a beneficiary. [17] The Thistle Trust argued that paragraph 80(2) ought to be read with s 25B. It submitted that ‘an amount’ in the said section is inclusive of capital gains. Discussion [18] The first question involves the interpretation and application of the relevant provisions of the ITA and the Eighth Schedule to the ITA. Insofar as the interpretation exercise is concerned, it is apposite to call to mind what this Court said in Commissioner, South African Revenue Service v United Manganese of Kalahari (Pty) Ltd:5 5 See C:SARS v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16; 2020 (4) SA 428 (SCA) para 8. See also Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA); [2012] 2 All SA 262 para 18; Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC 33; 2019 (5) SA 1 (CC) para 29; Commissioner, South African Revenue Service v Bosch and Another [2014] ZASCA 171; 2015 (2) SA 174 (SCA) para 9. ‘It is unnecessary to rehearse the established approach to the interpretation of statutes set out in Endumeni and approved by the Constitutional Court in Big Five Duty Free. It is an objective unitary process where consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. The approach is as applicable to taxing statutes as to any other statute. The inevitable point of departure is the language used in the provision under consideration.’(Footnotes Omitted.) [19] When examining ss 25B(1) and 25B(2) to determine what ‘any amount’ constitutes, the sections must be read as a whole. Section 25B(3) provides insight into the amount that the legislator was concerned with in the application of this section. That amount was the ‘taxable income derived by way of any amount’. Section 25B, read in its entirety, demonstrates that the amount is of a taxable income nature and not of a capital gains nature – ‘any amount’ will thus not include capital gains. [20] It bears mentioning that s 25B was introduced by the legislature in 1991, while capital gains tax came into existence in 2001. Logically, if capital gains did not exist, s 25B could not have been intended to apply to capital gains. Further, the insertion of ‘other than an amount of a capital nature which is not included in gross income’ in the section after any amount, which came about after capital gains was introduced, is yet another indicator that this section does not apply to an amount of the nature of a capital gains. [21] Recently this Court in Milnerton Estate Ltd v CSARS stated that:6 ‘. . . capital gains, the determination of the amount of any capital gain falling to be included in the taxpayer’s taxable income is a matter dealt with in the Eighth Schedule to the Act . . . and on its face the Schedule seems to provide a self-contained method for determining whether a capital gain or loss has arisen.’ [22] When the provisions are read as a whole and in context, it is apparent that the legislature intended that s 25B be applied to the taxation of income that accrues to a trust or its beneficiaries. In contrast, the Eighth Schedule is to be applied to the taxation of capital gains that accrue to trusts or their beneficiaries. The tax court accordingly erred in finding that s 25B applied in this instance. 6 Milnerton Estates Ltd v CSARS [2018] ZASCA 155; 2019 (2) SA 386 (SCA) para 22. [23] Counsel for the Thistle Trust argued that the ‘conduit-pipe principle’ was applicable in this case. He argued from the premise that the capital gains that the Tier 1 Trusts distributed to the Thistle Trust amounted to an asset which, in fact, vested in its beneficiaries. Therefore, so it was contended, the Thistle Trust was no more than a conduit for the gain that flowed through it and is accordingly not subject to be taxed on the gain. [24] In Armstrong v the Commissioner of Inland Revenue,7 the conduit-pipe principle was discussed for the first time. The principle became entrenched in our law in Secretary for Inland Revenue v Rosen (Rosen).8 Rosen established that an amount or dividend received by a trust and immediately passed on to a beneficiary in the same year in which it was received would be regarded as having accrued to such beneficiary as opposed to the trust that received it. The conduit-pipe would thus be open, and the trust would be no more than a conduit for the amount or dividend to flow through. Trollip JA cautioned in Rosen that while the principle was applicable for general application in our tax system, it ought only to be applied in appropriate circumstances to be determined on a case-by-case basis. [25] The facts of this case do not support the application of the ‘conduit pipe principle’. The Tier 1 Trusts vested the capital gains in the Thistle Trust which accordingly held a vested right therein. The distribution to it of the accrued gains resulted in it receiving those gains as of right. The Thistle Trust did not dispose of any capital asset nor determine a capital gain that was distributed to its beneficiaries. Instead, it distributed monies that vested in it as of right. In these circumstances, the ‘conduit principle’ does not apply. [26] Paragraph 80 (2) of the Schedule, properly interpreted and applied, requires that the capital gains accrued upon the disposal of assets by the Tier 1 Trusts are to be taxed in the hands of the Thistle Trust and not its beneficiaries to whom it distributed those gains. In the circumstances, SARS was correct to raise the additional assessment for the relevant tax periods. 7 Armstrong v Commissioner of Inland Revenue 1938 AD 343 at 348-349. 8 Secretary for Inland Revenue v Rosen 1971 (1) SA 172 (A) at 190H-191A. Understatement of penalties [27] As indicated earlier in this judgment, the second question arises in the event that it is found that the assessment was correctly raised. The imposition of an understatement penalty arises when a taxpayer submits a tax return that understates its taxable or deemed taxable income. In such circumstances, SARS is entitled to levy a penalty based upon the circumstances giving rise to the understatement. The Tax Administration Act 28 of 2011 (the TAA) provides that the penalty, as determined by the TAA, is payable unless the understatement arises from a bona fide inadvertent error.9 Section 223 of the TAA sets the relevant percentages, in a table format, to be allocated for the different behavioural concerns of a taxpayer. These cover instances ranging from a taxpayer failing to take reasonable care to instances where the taxpayer is grossly negligent. [28] In this matter, SARS imposed an understatement penalty of R1 460 092, which translated to a penalty of 50% levied against the Thistle Trust. As set out in the table, a penalty of 50% for a standard case relates to a taxpayer having ‘no reasonable grounds for the “tax position” taken by the taxpayer’. It is common cause that the Thistle Trust had obtained a legal opinion which another entity within the Zenprop Group had sought. [29] SARS initially adopted the position that, in the light of the legal opinion, it should be concluded that the Thistle Trust had consciously and deliberately adopted the position it took when it elected to distribute the amounts of the capital gains as it did. However, during the argument before us, counsel for SARS conceded, correctly, that the understatement by the Thistle Trust was a bona fide and inadvertent error as it had believed that s 25B was applicable to its case. Though the Thistle Trust erred, it did so in good faith and acted unintentionally. In the circumstances, it was conceded that SARS was not entitled to levy the understatement penalty. Interest [30] Lastly, turning to the matter of interest, as the capital gains tax assessment favours SARS, the Thistle Trust would be liable for interest accrued, in terms of 9 Section 222 (1) of the TAA provides: ‘In the event of an “understatement” by the taxpayer, the taxpayer must pay, in addition to the “tax” payable for the relevant tax period, the understatement penalty determined under subsection (2) unless the “understatement” results from a bona fide inadvertent error.’ s 89quat(2) of the ITA. If the taxable income exceeded, at the most, R50 000, and the normal tax payable exceeds the credit amount in that year, interest would be payable by the taxpayer at the prescribed rate on the amount by which normal tax exceeds the credit amount.10 In argument before us, counsel for the Thistle Trust correctly conceded that SARS, if successful, would be entitled to the interest claimed. [31] As a result, I make the following order: 1 The appeal succeeds with costs. 2 The order of the Tax Court, Gauteng, is set aside and replaced with the following order: (a) The appeal is upheld only to the extent that the understatement penalty raised is set aside. (b) There is no order as to costs.’ ___________________ W HUGHES JUDGE OF APPEAL 10 Section 89quat(2): ‘(2) If the taxable income of any provisional taxpayer as finally determined for any year of assessment exceeds – (a) R20 000 in the case of a company; or (b) R50 000 in the case of any person other than a company, and the normal tax payable by him in respect of such taxable income exceeds the credit amount in relation to such year, interest shall, subject to the provisions of subsection (3), be payable by the taxpayer at the prescribed rate on the amount by which such normal tax exceeds the credit amount, such interest being calculated from the effective date in relation to the said year until the date of assessment of such normal tax.’ APPEARANCES For appellant: M A Chohan SC Instructed by: Madiba Motsai Masitenyane & Githiri Inc., Johannesburg Phatshoane Henney Attorneys, Bloemfontein. For respondent: T S Emslie SC Instructed by: Werksmans Attorneys, Johannesburg Symington & De Kok, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 7 NOVEMBER 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal CSARS v The Thistle Trust (516/2021) [2022] ZASCA 153 (07 November 2022) Today, the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against a decision of the Gauteng Tax Court (the tax court). The issues before the SCA were whether the capital gains accrued as a result of the disposal of capital assets by the Tier 1 Trusts were taxable in the hands of the Thistle Trust or in the hands of its beneficiaries and whether the circumstances that gave rise to the tax treatment by the Thistle Trust of the further distribution to its beneficiaries, warranted the imposition of an understatement penalty. The Thistle Trust is a beneficiary of various trusts that comprised the Zenprop Group. The trusts, referred to as Tier 1 Trusts, comprised a group of ten vesting trusts that conduct the business of the Zenprop Group, a group of property owners and developers. In the 2014, 2015 and 2016 tax periods, the Tier 1 Trusts disposed of certain capital assets. The capital gains so realised were distributed, inter alia, to the Thistle Trust in the same tax period. The Thistle Trust, in turn, in the same tax periods, distributed the amounts it received to its beneficiaries. It treated the proceeds received as taxable in the hands of its beneficiaries. The appellant (SARS) raised an additional assessment dated 21 September 2018 for the period 2014, 2015 and 2016, taxing the amounts received by the Thistle Trust as taxable in its hands. SARS also imposed an understatement penalty against the Thistle Trust and required it to pay interest on the assessed liability. The Thistle Trust filed an objection to the additional assessment. SARS disallowed the objection. In March 2021, the Thistle Trust appealed to the tax court. The tax court held that the capital gains distributed to the Thistle Trust and subsequently passed on to its beneficiaries, constituted ‘amounts’ that fell within the purview of ss 25B(1), 25B(2), and paragraph 80(2) of the Eighth Schedule of the Income Tax Act 58 of 1962 (the ITA). Accordingly, it held that the distribution to the beneficiaries of the Thistle Trust was a distribution of capital gains taxable in the hands of its beneficiaries. The tax court, therefore, set aside the additional assessments. As to the first issue, the SCA held that when the provisions are read as a whole and in context, it is apparent that the legislature intended that s 25B of the ITA be applied to the taxation of income that accrues to a trust or its beneficiaries. In contrast, the Eighth Schedule is to be applied to the taxation of capital gains that accrue to trusts or their beneficiaries. The tax court therefore erred in finding that s 25B applied in this instance. The SCA found that the Tier 1 Trusts vested the capital gains in the Thistle Trust, which accordingly held a vested right therein. Therefore paragraph 80(2) of the Schedule, properly interpreted and applied, required that the capital gains accrued upon the disposal of assets by the Tier 1 Trusts were to be taxed in the hands of the Thistle Trust and not its beneficiaries to whom it distributed those gains. In the circumstances, SARS was correct to raise the additional assessment for the relevant tax periods. As to the second issue, the SCA held that counsel for SARS conceded, correctly, that the understatement by the Thistle Trust was a bona fide and inadvertent error as it had believed that s 25B was applicable to its case. Though the Thistle Trust erred, it did so in good faith and acted unintentionally. ~~~~ends~~~~

479

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 164/2015 In the matter between: LUCKY STAR LIMITED (Formerly Oceana Brands Limited) APPELLANT and LUCKY BRANDS (PTY) LTD FIRST RESPONDENT MICHAEL RUSSELL TOWNSEND NO (In his capacity as a trustee for the time being of the MRT TRUST – IT 2004/2006) SECOND RESPONDENT MARIE HOCKLY NO (In her capacity as a trustee for the time being of the MRT TRUST – IT 2004/2006) THIRD RESPONDENT MERINDA MEINTJIES NO (In her capacity as a trustee for the time being of the MRT TRUST – IT 2004/2006) FOURTH RESPONDENT MICHAEL RUSSELL TOWNSEND FIFTH RESPONDENT HARBOUR HOUSE HOLDINGS (PTY) LTD SIXTH RESPONDENT HARBOUR HOUSE RESTAURANT (PTY) LTD SEVENTH RESPONDENT LUCKY FISH AND CHIPS – MUIZENBERG EIGHTH RESPONDENT LUCKY FISH MUIZENBERG CC NINTH RESPONDENT LUCKY FISH AND CHIPS – BREE STREET TENTH RESPONDENT LUCKY FISH BREE STREET (PTY) LTD ELEVENTH RESPONDENT LUCKY FISH AND CHIPS – SEA POINT TWELFTH RESPONDENT LUCKY FISH REGENT STREET (PTY) LTD THIRTEENTH RESPONDENT LUCKY FISH AND CHIPS – LONG STREET FOURTEENTH RESPONDENT LUCKY FISH LONG STREET (PTY) LTD FIFTEENTH RESPONDENT LUCKY FISH 5 (PTY) LTD SIXTEENTH RESPONDENT THE COMMISSIONER OF THE COMPANIES AND INTELLECTUAL PROPERTY COMMISSION SEVENTEENTH RESPONDENT Neutral citation: Lucky Star Ltd v Lucky Brands (Pty) Ltd (164/2015) [2016] ZASCA 77 (27 May 2016) Coram: Ponnan, Petse, Swain and Dambuza JJA and Kathree-Setiloane AJA Heard: 10 May 2016 Delivered: 27 May 2016 Summary: Trade Marks Act 194 of 1993 – ss 34(1)(a)(b) and (c) – infringement – trade mark sufficiently dissimilar to registered trade mark – likelihood of deception or confusion not established – Companies Act 71 of 2008 – s 11(2) – company name not confusingly similar to appellants company names and registered trade marks. ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Rogers J sitting as court of first instance). The appeal is dismissed with costs. JUDGMENT Swain JA (Ponnan, Petse and Dambuza JJA and Kathree-Setiloane AJA concurring): [1] This appeal concerns the sale and marketing of fish. In the case of the appellant, Lucky Star (Ltd), this is in the form of canned fish sold under the registered trade mark Lucky Star. In the case of the respondents, this is in the form of cooked fish and chips sold from several restaurants operated in Cape Town, under the trade marks Lucky Fish, Lucky Fish and Chips and Lucky Fish & Chips.1 The issues appear to me to be considerably narrower than those raised in the court a quo and by counsel before us. [2] Relying upon the provisions of s 34(1)(a)(b) and (c) of the Trade Marks Act 194 of 1993 (the Act), the appellant unsuccessfully brought an application before the 1 The 1st to the 16th respondents comprise corporations, a close corporation, a natural person, a trust as well as firms or partnerships. It appears that the 8th and 9th respondents, the 10th and 11th respondents, the 12th and 13th respondents and the 14th and 15th respondents, are in each case the same entities. The correct entities are cited as the 9th, 11th, 13th and 15th respondents, whereas the 8th, 10th, 12th and 14th respondents are neither juristic nor natural persons. Nothing however turns upon the incorrect citation of these entities and it is not necessary for the purposes of this appeal to set out the individual details of each of the respondents. The citation of the parties before the court a quo will be retained to avoid confusion save that the 7th respondent is now correctly cited as Harbour House Restaurant (Pty) Ltd. The 17th respondent is the Commissioner of the Companies and Intellectual Property Commission against whom no relief is sought. Western Cape Division of the High Court, Cape Town (Rogers J). An interdict, together with ancillary relief, was sought against the respondents restraining them from infringing the Lucky Star trade mark. The appellant also sought relief in terms of s 11(2)(b)(i) and (iii) and 11(2)(c)(i) of the Companies Act 71 of 2008 (the Companies Act) declaring that the company name of the first respondent, Lucky Brands (Pty) Ltd, was confusingly similar to the appellant‟s registered trade marks, Lucky Star and Oceana Brands and company names, Lucky Star Ltd and Lucky Star Foods. An order was accordingly sought directing the first respondent to change its name and trading name. Similar relief was also sought on the same grounds against the 9th, 11th, 13th, 15th and 16th respondents. [3] Section 34 of the Act provides as follows: „(1) The rights acquired by registration of a trade mark shall be infringed by – (a) the unauthorized use in the course of trade in relation to goods or services in respect of which the trade mark is registered, of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause confusion; (b) the unauthorized use of a trade mark which is identical or similar to the trade mark registered, in the course of trade in relation to goods or services which are so similar to the goods or services in respect of which the trade mark is registered, that in such use there exists the likelihood of deception or confusion; (c) the unauthorized use in the course of trade in relation to any goods or services of a mark which is identical or similar to a trade mark registered, if such a trade mark is well known in the Republic and the use of the said mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of confusion or deception: Provided that the provisions of this paragraph shall not apply to a trade mark referred to in section 70(2).‟ [4] I shall commence with s 34(a) of the Act. For the purposes of s 34(1)(a) the appellant had to establish (i) its trade mark registrations; (ii) unauthorised use in the course of trade by the respondent of an identical mark or a mark so nearly resembling its registered trade mark as to be likely to deceive or cause confusion; and (iii) in relation to the goods in respect of which the mark is registered.2 [5] The appellant relies upon the following registered trade marks: (a) Trade mark registration 1959/01636 Lucky Star in class 29 for „fish and fish products‟ (b) Trade mark registration 1993/00074 Lucky Star in class 42 for „retail . . . services . . . concerned with or relating to the provision and supply of foodstuffs‟; and (c) Trade mark registration 1993/00071 Lucky Star in class 29 for „all goods included in this class excluding fish and fish products‟ (d) Trade mark registration 1989/07326 Lucky Star label in class 29 for „fish and fish products‟ depicted as follows: [6] It was not contended on the appellant‟s behalf that the infringement in terms of s 34(1)(a) consisted in the respondents‟ use of an identical mark. The contention was that the respondents make use of a mark so nearly resembling its trade marks as to be likely to deceive or cause confusion. For purposes of the alleged infringements under s 2 Commercial Auto Glass (Pty) Ltd v BMW AG 2007 (6) SA 637 SCA para 3. 34(1)(a), I shall restrict myself to a consideration of whether the appellant has established that a substantial number of persons will probably be deceived into believing or confused as to whether there is a material connection in the course of trade between the respondents‟ goods and services and the appellant‟s trade mark (see Plascon-Evans at 640G-I). In considering this issue it is appropriate to apply the principles summarized by Corbett JA in Plascon-Evans at 641A-E to the facts of the case. These principles are well known and need not be repeated in detail. It suffices to say that not only should the marks be compared side by side but consideration must be given to whether the average customer in the market place would probably be deceived or confused by their similarity. Corbett JA made it clear that the main or dominant features of the marks in question as well as the general impression and any striking features were all factors to be considered in deciding whether there was a likelihood of confusion or deception. [7] It is clear that in a trade mark infringement case what is required is „an objective comparison between the registration and the [respondents‟] actual use‟.3 The „enquiry is confined to the marks themselves and that no regard should be had to other features of the get-up or other indications of origin of the goods as actually marketed by the [appellant] and the [respondents] respectively‟.4 The alleged infringer cannot „rely upon matter extraneous to the mark itself, which he may have used in conjunction with the mark, in order to negate the likelihood of deception or confusion‟.5 Consequently, to the extent that the court a quo may have considered, or been influenced by a comparison of the get-up of the appellant‟s canned pilchards product with the respondents‟ trade mark, it erred. What is required is a comparison of the appellant‟s registered trade mark „Lucky Star‟ with the trade mark of the respondents „Lucky Fish‟ or „Lucky Fish and Chips‟. 3 Puma AG Rudolf Dassler Sport v Global Warming (Pty) Ltd [2010] ZASCA 140; 2010 (2) SA 600 (SCA) para 10. 4 Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530 (C) at 535H in fine. 5 A C Webster, N S Page, C E Webster and G E Morley South African Law of Trade Marks (Service 19, 2015) para 12.8.5. [8] It is clear that this comparison should not take place in isolation. It must take into account the inter-relationship between the similarity of the marks and the similarity of the goods and services as registered for the appellant, including the „notional use‟ to which the mark may be put by the appellant, and the use to which the marks have actually been put by the respondents. A court in infringement proceedings „has regard to the natural use to which the appellant may put its mark, that is to “all possible fair and normal applications of the mark within the ambit of the monopoly created by the terms of the registration. . . .”‟6 [9] Notional use of the registered mark requires that notice must be taken „of the full range of permissible fair use‟ of the registered mark,7 „in relation to any of the goods in respect of which it is registered‟ and „must embrace all ways in which the marks are likely to be employed in fair and normal use, eg use of the marks in conjunction with a generic description of the goods‟.8 In Adidas9 the following comments were made concerning the case of Lever Bros, Port Sunlight Ltd v Sunniwite Products Ltd, (1949) 66 R.P.C. 84: „. . . what was required to be postulated for the purposes of the comparison was a notional use of each of the marks “in a normal way as a trade mark”. That this was indeed the approach of the Court in the Sunniwite case, in relation to the use of the registered mark of the plaintiff there, appears from an analysis of the facts of the case and the basis upon which the infringement issue was actually decided. The plaintiff had used its mark, “Sunlight”, in respect of soap in tablet form and in respect of soap flakes. The defendant used its mark, “Sunniwite”, in respect of a soapless detergent powder, which fell within the class of goods in respect of which the plaintiff‟s mark had been registered. In deciding that there had been an infringement, the Court found it unnecessary to pronounce finally on the question of confusion on the basis of the plaintiff‟s actual use of its mark being restricted to soap; the decision was based on the finding that there would have been confusion if the plaintiff, as it was entitled to do, had applied its mark 6 Bata Ltd v Face Fashions CC & another 2001 (1) SA 844 (SCA) para 7, quoting Plascon-Evans Paints Ltd v Van Riebeeck Paints supra at 641H-I. 7 Decro Paint and Hardware (Pty) Ltd v Plascon-Evans Paints (Tvl) Ltd 1982 (4) SA 213 (O) at 217B. 8 Hudson & Knight (Pty) Ltd v D H Brothers Industries (Pty) Ltd t/a Willowtown Oil and Cake Mills & another 1979 (4) SA 221 (N) at 224F-G and 225A-B. 9 Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530 (C). to a soapless detergent as marketed by the defendant. . . . Thus, for the purposes of the comparison the actual use of the plaintiff‟s mark in respect of a specific category of goods was disregarded and a notional use, which would have been legitimate and reasonable, was postulated in respect of goods on which the plaintiff had never used the mark. . . The principle underlying the aforementioned approach seems to me to be clear: the Act confers upon the registered proprietor of a trade mark the absolute right, subject to the provisions of the Act, to prevent the use of the trade mark or a mark so nearly resembling it as to be likely to deceive or cause confusion. . .[T]he fact that the owner of the registered mark has not used it in respect of the goods in question is irrelevant in infringement proceedings, and if the circumstances are such that non-use would be irrelevant, as is the position here, it must follow, in my view, that use in any particular manner is equally irrelevant. As far as protection against infringement is concerned, the owner of a mark who has used it in a particular fashion cannot be in a worse position, I consider, than the owner of a mark who has not used it at all‟. (References omitted).10 The court a quo accordingly erred in considering the appellant‟s historical and current business operations in order to determine whether the proposed use of the registered mark by the appellant, would constitute fair and normal notional use. What has to be assumed is such notional use by the appellant of the registered mark, within the ambit of the monopoly created by the terms of the registration.11 [10] The common element of the appellant‟s and the respondents‟ marks is the word „Lucky‟. As stated in Bata: „It is an ordinary word in everyday use, as distinct from an invented or made-up word, and it cannot follow that confusion would probably arise if it is used in combination with another word.‟12 10 Adidas above at 534G – 535E. 11 In Century City Apartments Property Services CC & another v Century City Property Owner’s Association [2009] ZASCA 157; 2010 (3) SA 1 (SCA) para 14 the postulated notional use was described as „reasonable‟. 12 Bata above para 10. In my view, the common elements of the appellant‟s and the respondents‟ marks being the word „Lucky‟ is of minor significance when the marks are looked at as a whole. The word „Fish‟ as opposed to the word „Star‟ is distinctive and cannot be ignored. When the marks are compared side by side, and the main or dominant features of the marks are considered, namely the words „Star‟ and „Fish‟, there is no likelihood of deception or confusion. In this regard the appellant submits that the distinctiveness of the word „Fish‟ is diminished because it is used in the context of the sale of fish. As I understood the argument, the word „Fish‟ was descriptive of the product sold and not distinctive, because the product sold by both parties was fish, in whatever form. I disagree, the distinctiveness of this word is not diminished simply because it also serves to describe the product sold. As in Bata,13 I have considerable difficulty in imagining that the notional purchaser of the respondents‟ fish and chips, would focus attention only on the word „Lucky‟ as the words „Star‟ and „Fish‟ are at least equally significant as the word „Lucky‟. The overall impression which is created is that the marks do not resemble each other closely and the average customer would not be confused or deceived into believing that respondents‟ restaurants bearing the Lucky Fish mark is in any way associated with the appellant. Accordingly it has not been established that the marks resemble each other so closely that deception or confusion is likely to arise. The appellant‟s contentions based on s 34(1)(a) must therefore fail. [11] Turning to s 34(1)(b). Unlike s 34(1)(a), the provisions of s 34(1)(b) do not require that the offending mark be used in relation to goods in the class for which the trademark has been registered.14 It contemplates two elements: „(a) a mark identical or similar to the trade mark used in relation (b) to goods which are so similar to those for which it had been registered that it gives rise to a likelihood of deception or confusion.‟ 15 The relationship between these two elements has been described in the following terms: 13 Bata above para 11. 14 Mettenheimer & another v Zonquasdrif Vineyards CC & others [2013] ZASCA 152; 2014 (2) SA 204 (SCA) para 11. 15 Mettenheimer above para 11. „There is, it seems to me, an interdependence between the two legs of the inquiry: the less the similarity between the respective goods or services of the parties, the greater will be the degree of resemblance required between their respective marks before it can be said that there is a likelihood of deception or confusion in the use of the allegedly offending mark, and vice versa. Of course, if the respective goods or services of the parties are so dissimilar to each other that there is no likelihood of deception or confusion, the use by the respondent even of a mark which is identical to the applicant‟s registered mark will not constitute an infringement; also, if the two marks are sufficiently dissimilar to each other no amount of similarity between the respective goods or services of the parties will suffice to bring about an infringement.‟16 [12] As „the two marks are sufficiently dissimilar to each other‟ that „no amount of similarity between the respective goods or services of the parties will suffice to bring about an infringement,‟17 it follows that the claim based on s 34(1)(b) must also fail. [13] That leaves s 34(1)(c) of the Act. Section 34(1)(c), which requires that the marks be „similar‟ to each other, is intended „to provide protection against the dilution of a registered trade mark by the unauthorized use of an identical or similar mark in relation to any goods or services, notwithstanding the absence of confusion or deception‟.18 In Bata,19 it was held that the word „similar‟ must not be given too wide or extensive an interpretation for the purposes of the section. To do so might have the effect of creating an unacceptable monopoly, and would thus stultify freedom of trade. The appropriate meaning to be given to the word was „having a marked resemblance or likeness‟, which is not satisfied in this case. Because of the distinct lack of similarity between the registered trade mark of the appellant and the trade mark of the respondents, the issue of whether the goods and/or services of the respondent are, or will be the same as, or similar to those proposed by the appellant, does not have to be considered. 16 New Media Publishing (Pty) Ltd v Eating Out Web Services CC 2005 (5) SA 388 (C) at 394C-F. 17 New Media above at 394E-F. 18 Bata Ltd v Face Fashions CC & another 2001 (1) SA 844 (SCA) para 13. 19 Bata above para 14. [14] I turn to the relief sought by the appellant in terms of s 11(2) of the Companies Act. The relevant portions of the section read as follows: „(2) The name of a company must – (a) not be the same as - . . . (iii) a registered trade mark belonging to a person other than the company. . . , unless the registered owner of that mark has consented in writing to the use of the mark as the name of the company; or . . . (b) not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) . . . ; (c) not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company – (i) is part of, or associated with, any other person or entity; . . .‟ [15] The appellant has to show in terms of s 11(2)(b) of the Companies Act that the company name of the first respondent, Lucky Brands (Pty) Ltd, is confusingly similar to the appellant‟s registered trade marks Lucky Star and Oceana Brands, or company names Lucky Star Ltd and Lucky Star Foods, or that in terms of s 11(2)(c), the first respondent‟s name falsely implies or suggests, or is such as would reasonably mislead a person to believe incorrectly that the first respondent is part of, or associated with, the appellant. The same test is applicable to the use of the trade mark Lucky Fish in the names of the 9th, 11th, 13th, 15th and 16th respondents with regard to the appellant‟s registered Lucky Star and Lucky Star label trade marks and company names, Lucky Star Ltd and Lucky Star Foods. [16] For the reasons already given there is no basis to conclude that any person would be led to believe that the 9th, 11th, 13th, 15th and 16th respondents are part of, or associated with the appellant, or that their names which include the words Lucky Fish are confusingly similar to the name Lucky Star. In addition, the name Lucky Brands when compared to the appellant‟s registered trade mark Oceana Brands and company names Lucky Star Ltd and Lucky Star Foods, does not contravene the provisions of s 11(2) of the Companies Act. [17] The appellant accordingly failed to satisfy the requirements of s 34(1)(a)(b) and (c) of the Act as well as s 11(2) of the Companies Act. The appeal must therefore fail. [18] It is ordered that: The appeal is dismissed with costs. K G B Swain Judge of Appeal Appearances: For the Appellant: A R Sholto-Douglas SC (with G D Marriott) Instructed by: Adams & Adams, Cape Town Honey Attorneys, Bloemfontein For the Respondents: M Seale Instructed by: Brian Bacon Inc, 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 27 May 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Lucky Star Ltd v Lucky Brands (Pty) Ltd (164/2015) [2016] ZASCA 77 (27 May 2016) Media Statement The SCA dismissed an appeal in which the appellant had unsuccessfully sought to prevent the respondents from using the trade name Lucky Fish, on the ground that there was no likelihood of deception or confusion with the registered trade name of the appellant, Lucky Star. --- Ends ---

2353

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 261/09 In the matter between: PRICEWATERHOUSE COOPERS INC First Appellant HOEK & WIEHAHN Second Appellant WIEHAHN MEYERNEL Third Appellant PRICEWATERHOUSE MEYERNEL Fourth Appellant PRICE WATERHOUSE Fifth Appellant and G M VAN VOLLENHOVEN N.O. First Respondent NATIONAL POTATO CO-OPERATIVE LTD Second Respondent Neutral citation: Pricewaterhouse v Van Vollenhoven NO (261/2009) [2009] ZASCA 166 (1 December 2009) Coram: Streicher, Brand, Bosielo JJA and Leach and Griesel AJJA Heard: 24 November 2009 Delivered: 1 December 2009 Summary: Administrative law – Promotion of Administrative Justice Act 3 of 2000, s 9(2) – whether high court correctly concluded that not in interests of justice that time within which review application to have been brought be extended. ORDER On appeal from: North Gauteng High Court, Pretoria (Botha J). Order: The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT GRIESEL AJA (STREICHER, BRAND, BOSIELO JJA AND LEACH AJA concurring): [1] This is not the first time that these parties have come to this court in the course of the present litigation.1 As observed by Hurt AJA in the opening sentence of one of the previous judgments,2 ‘(t)he parties are locked in litigation of marathon proportions’. The present appeal arises from an unsuccessful application for review of the taxing master’s decision in respect of security for costs. The taxing master was cited as the first respondent herein, but played no role in the proceedings. For the sake of convenience, I refer to the parties by their description in the main action, namely as plaintiff (for the second respondent) and defendants (for the appellants) respectively. [2] The factual background appears fully from the two previous judgments of this court. It is accordingly not necessary for me to repeat it for present purposes save to set out the following brief chronology: 1 See Price Waterhouse Coopers Inc v National Potato Co-operative Ltd 2004 (6) SA 66 (SCA); Aartappel Koöperasie Bpk v Pricewaterhousecoopers [2007] SCA 166 (‘the 2007 judgment’). 2 The 2007 judgment, para 1.  On 5 December 2006 the trial judge (Botha J in the North Gauteng High Court in Pretoria) granted an order directing the plaintiff to provide security in an amount to be determined by the taxing master. The appeal against that order was subsequently dismissed by this court on 29 November 2007. This formed the subject matter of the 2007 judgment.  Meanwhile, the defendants had presented a pro forma bill of costs to the taxing master to determine the amount of security to be furnished by the plaintiff. After argument, on 15 December 2006, the taxing master determined security in an amount of R7,56 million. In so doing, he disallowed an item in respect of forensic auditors’ fees amounting to some R5,46 million. It is this latter decision that forms the subject matter of the instant appeal.  On 3 June 2008 the trial court ruled that the trial was to recommence on 2 February 2009.  On 6 June 2008 – ie almost 18 months after the decision of the taxing master not to provide for forensic auditors’ fees as part of the security to be furnished by the plaintiff – the defendants launched an application to review and set aside that decision.  On 1 December 2008 the court below dismissed the defendants’ appli- cation with costs. Hence this appeal, which comes before us with leave of this court. [3] Uniform rule 47(2) provides that ‘(i)f the amount of security only is contested the registrar shall determine the amount to be given and his decision shall be final’. Notwithstanding this provision, however, it is settled law that the registrar’s decision, ‘being in the nature of an administrative act, was always susceptible of review provided the necessary grounds for review existed’.3 [4] In the court below it was common cause that the decision of the registrar constituted ‘administrative action’ for purposes of the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’). The principal issue between the parties was whether the court should entertain the application at all in view of the lapse of time. The court declined to do so and dismissed the application on the basis that it had been brought outside the period of 180 days prescribed by s 7(1) of PAJA.4 In coming to its conclusion, the court also refused the defendants’ application to extend the 180-day-period in terms of s 9(2) of PAJA.5 [5] On appeal, it was argued on behalf of the defendants that the court below had erred, inter alia, in that it had not properly considered the require- ment of the ‘interests of justice’ referred to in s 9(2) of PAJA. [6] The concept ‘interests of justice’ has been considered by the Constitutional Court on a number of occasions in the context of applications for condonation. Most recently, in Van Wyk v Unitas Hospital & another,6 the court expressed itself as follows: ‘This court has held that the standard for considering an application for condonation is the interests of justice. Whether it is in the interests of justice to grant condonation depends on the facts and circumstances of each case. Factors that are relevant to this enquiry include but are not limited to the nature of the relief sought, the extent and 3 Trakman NO v Livshitz & others 1995 (1) SA 282 (A) at 289G and the cases referred to therein. 4 The relevant part of s 7(1) provides: ‘(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 – . . . (b) . . . 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.’ 5 Section 9(2) provides that the court may extend the period of 180 days ‘where the interests of justice so require’. 6 2008 (2) SA 472 (CC). cause of the delay, the effect of the delay on the administration of justice and other litigants, the reasonableness of the explanation for the delay, the importance of the issue to be raised in the intended appeal and the prospects of success.’7 [7] With regard to the explanation for the delay, the court further held:8 ‘An applicant for condonation must give a full explanation for the delay. In addition, the explanation must cover the entire period of delay. And, what is more, the explanation given must be reasonable.’ [8] The explanation proffered on behalf of the defendants in this case, as contained in an affidavit by its attorney, was that the decision not to launch review proceedings at an earlier stage was a deliberate one. The attorney explained that until December 2007 he and his clients had believed that, in the event that the appeal to this court should fail, the plaintiff would not be able to furnish security and that would be the end of the case. In these circumstances, so he claimed, ‘there was little point in my client incurring the cost of launching the present application to require additional security’. He stated further: ‘A substantive application, such as the present, is a time consuming and expensive process. I considered it reasonable and appropriate not to mulct the applicants in such costs unless and until security was furnished.’ [9] This explanation clearly does not hold water. First, preparing the founding affidavit, the body of which comprises a mere 15 pages of the record, was the work of not more than a few hours at the most. Second, the cost involved in preparing an application for review would have been trivial in the context of the present litigation and the scale of costs involved. Third, the defendants obviously deemed it useful and expedient to obtain the taxing master’s determination while the appeal was pending. I fail to see why it would not have been equally useful and expedient to have the determination reviewed pending the appeal. Fourth, even if the defendants did not want to launch a 7 Para 20 (footnotes omitted). 8 Para 22. substantive application for review while the appeal was pending, a simple letter or telephone call asking for an extension of the 180-day-period or at least informing the plaintiff of the defendants’ intention to launch an application for review could have been directed to the plaintiff. Instead, nothing at all was done to take the registrar’s decision on review while the appeal was pending. Finally, even after the plaintiff’s appeal was dismissed by this court, a further 180 days elapsed before the review application was eventually launched. There is simply no explanation for this further inexplicable delay. [10] Counsel for the defendants referred to a letter written on behalf of the defendants to the plaintiff on 7 January 2008 in which, so it was claimed, the plaintiff was informed of the intention on the part of the defendants to bring an application for review of the taxing master’s earlier decision. There are two answers to this submission: the first is that the letter is, at best for the defendants, ambiguous and does not pertinently alert the plaintiff to the possibility of a review. Secondly, and in any event, the letter was written more than a year after the taxing master’s decision which it is sought to review and long after the 180-day-period contemplated by s 7 of PAJA had elapsed. [11] The court below also made reference to the fact that, while the appeal was pending, the plaintiff – after much effort – had finally managed to obtain outside finance and that it had concluded an agreement with an Australian company to put up the security originally ordered by the court. In the circumstances, so the court held, the plaintiff would be prejudiced if the original security were now to be substantially increased. Much was made by counsel for the defendants of this finding in an attempt to persuade us that the court below had misinterpreted the terms of the funding agreement. Suffice it to say that, in my view, there is no merit in the point, nor can it be found that the court below erred in finding that the respondent would be prejudiced if the registrar’s decision were now to be overturned. [12] In my view, the explanation furnished by the defendants for its delay does not comply with any of the three requirements laid down in Van Wyk v Unitas Hospital.9 In the result, the defendants have failed to prove that it would be in the interests of justice to extend the period of 180 days contemplated by s 7 of PAJA. It follows that there are no grounds for interfering with the order of the court below. [13] In the circumstances, the appeal is dismissed with costs, including the costs of two counsel. B M GRIESEL Acting Judge of Appeal 9 Para 7 above. APPEARANCES: FOR APPELLANT: W H G van der Linde SC H C Bothma Instructed by: Deneys Reitz Sandton Matsepes Inc Bloemfontein FOR RESPONDENTS: M C Maritz SC N C Maritz Instructed by: G M Van Vollenhoven, Palace of Justice Pretoria Messrs Kirkcaldy Pereira Pretoria 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: 1 December 2009 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. * * * PRICEWATERHOUSE COOPERS v VAN VOLLENHOVEN NO and ANOTHER The Supreme Court of Appeal today dismissed an appeal against a judgment in the North Gauteng High Court, Pretoria. The appellant, Pricewaterhousecoopers (PWC), is engaged in litigation against the second respondent, the National Potato Cooperative. In the course of the litigation, the first respondent, the taxing master of the Pretoria High Court, fixed security to be furnished by the National Potato Cooperative in an amount of some R7,5 million. In the process, the taxing master failed to allow a further amount of R5,5 million in respect of forensic auditors’ fees. PWC took the taxing master’s decision on review to the high court, but the application was dismissed on the grounds that PWC had failed to bring the application within a period of 180 days, as required in terms of the Promotion of Administrative Justice Act (PAJA) of 2000. On appeal, the SCA confirmed the decision of the high court, finding that PWC had failed to prove that the interests of justice required the court to extend the period of 180 days.

1433

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 98/10 DESERT STAR TRADING 145 (PTY) LTD First Appellant BRIDGING ADVANCES (PTY) LTD Second Appellant and NO 11 FLAMBOYANT EDLEEN CC First Respondent CHRISTIAAN SCHOEMAN Second Respondent ____________________________________________________________ Neutral citation: Desert Star Trading v No 11 Flamboyant Edleen (98/10) [2010] ZASCA 148 (29 November 2010) BENCH: NAVSA, CLOETE AND PONNAN JJA, EBRAHIM AND K PILLAY AJJA HEARD: 10 NOVEMBER 2010 DELIVERED: 29 NOVEMBER 2010 SUMMARY: Winding-up – locus standi of applicant as creditor – indebtedness disputed on bona fide and reasonable grounds – winding-up order correctly refused. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: North Gauteng High Court (Pretoria)(B van den Heever AJ sitting as court of first instance) The appeal against paragraphs 3 and 4 of the order of the court below is allowed and the order is amended by the deletion of those paragraphs. Subject thereto and paragraphs 5 and 6 being renumbered 3 and 4 respectively, the order of the court below is confirmed. Save as is set out in paragraph 1 hereof the appeal is dismissed. The appellants are ordered to pay the respondents’ costs jointly and severally, the one paying the other to be absolved. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ PONNAN JA (NAVSA and CLOETE JJA and EBRAHIM and K PILLAY AJJA concurring): [1] ‘Neither a borrower nor a lender be’ is Polonius’ counsel to his son Laertes in Shakespeare’s Hamlet (Act 1 Scene 3). ‘For loan’ as Polonius explains ‘oft loses both itself and friend, [a]nd borrowing dulls the edge of husbandry’. Increased consumption, a desire-based need for credit, attractive borrowing options and alluring methods of repayment have all contributed to many of us not living our lives by that aphorism. Our modern consumer driven society does however come at a cost. As recently as 2005 it was reported that South Africa’s consumer debt crisis was costing the country around R12 billion annually and that 40 per cent of households nationally were experiencing financial difficulty as they were unable to meet loan repayments to micro lenders and other service providers.1 The protection of the consumer has become a common feature in many legal systems. Many countries have adopted consumer protection legislation to regulate credit grantor–credit consumer relationships because they can and do give rise to abuse and exploitation.2 Given the borrower’s weaker economic position3 (that is usually why a loan is being sought), he or she is often helpless in the face of contracts - particularly standard form contracts presented by the lender. To borrow from Voet:4 ‘A needy debtor, pressed by tightness of ready cash, will readily allow any hard and inhuman terms to be written down against him. He promises himself smoother times and better fortune before the day put into the commissary term, and thus hopes to avert the harshness of the agreement by payment; though such a hope, quite slippery and deceptive as it is, not seldom finds nothing at all to encourage it in the aftermath.’ [2] Consumer credit legislation is usually the means by which credit grantor–credit consumer relationships are regulated. The main purpose of consumer legislation is said to be the protection of the consumer from exploitation.5 But as Monica L Vessio points out: ‘What is equally, if not more important, is an actual balancing of the interests of both credit consumers and credit grantors. The reason for the emphasis on this balance is that over-protecting the consumer may result in the investor (credit grantor) withdrawing his funding from the consumer credit market, due to the fact that the general administrative expenses of making credit available, no longer proves a lucrative venture due to stringent consumer laws. Another feature of the over-protection of the consumer may be the passing-on of administrative costs to the consumer. A subtle balance needs to be obtained. The risk of over-protecting the consumer could prove detrimental.'6 That balance has been sought to be achieved in this country by the enactment of the relatively recent National Credit Act 34 of 2005 (the NCA), which seeks, according to its Preamble, inter alia to: ‘provide for the general regulation of consumer credit and improved standards of consumer information; . . . prohibit certain unfair credit and 1 S Renke & M Roestoff ‘The Consumer Credit Bill – A Solution to Over-Indebtedness?’ 2005 (68) THRHR 115. 2 Monica L Vessio ‘The Preponderance of the Reckless Consumer – The National Credit Bill 2005’ 2006 (69) THRHR 649. 3 R Zimmerman The Law of Obligations: Roman Foundations of Civilian Tradition (1990) 166. 4 Cited in Graf v Buechel 2003 (4) SA 378 (SCA) at 384A. 5 NJ Grové & JM Otto The Basic Principles of Consumer Credit Law 2ed (2002) 4. 6 Monica L Vessio op cit p 650. credit-marketing practices; and to promote responsible credit granting and use and for that purpose to prohibit reckless credit granting’. [3] Against that backdrop I turn to the facts in this case. Unable to raise a loan from any of the established banking institutions, but being desperately in need of financial assistance, Mr George Ehlers (Ehlers) turned to small private lenders although as he put it, he knew he 'was going to pay a heavy price for the loan'. One such private lender to whom Ehlers turned during 2007 was Desert Star Trading 145 (Pty) Ltd (Desert Star), the first appellant. Not being creditworthy he did not qualify for the loan that he sought. The loan application was then revised and re-submitted in the name of his son, Mr Eugene Ehlers (Eugene). The amount lent and advanced together with interest and costs by Desert Star to Eugene was the sum of R859 600. On 8 June 2007 Eugene acknowledged his indebtedness in writing to Desert Star and undertook to effect repayment of that sum within twelve months of that date. The agreement provided that in the event of the loan remaining unpaid after 8 June 2008 then the interest would be recalculated with effect from the date of the agreement at the rate of 1.5% per week compounded. As security for the loan, Ehlers in his capacity as the sole member of the first respondent, No 11 Flamboyant Edleen BK (the CC), bound it as a surety and co- principal debtor in favour of Desert Star in respect of the indebtedness of Eugene. And as further security a security bond was registered in favour of Desert Star over an immovable property, the sole asset of the CC. Eugene failed to repay the loan and as at 30 May 2008 his indebtedness to Desert Star stood at R1 253 000. [4] In the meanwhile on 29 January 2008 Ehlers approached another small private lender, the second appellant, Bridging Advances (Pty) Ltd (Bridging) for a loan. This time the application was made in the name of his wife, Lèone Ehlers. A written agreement was concluded in terms of which Bridging loaned and advanced the sum of R160 053 (being R150 000 plus interest and costs) to Ms Ehlers. Here as well Ehlers bound the CC as a surety and co-principal debtor in favour of Bridging for the indebtedness of Ms Ehlers. And as further security a mortgage bond was registered in favour of Bridging over the Ehlers family home which was registered in the name of Ms Ehlers. Sporadic payments in the total sum of R41 000 were effected by the Ehlers to Bridging, but given the annual interest rate of 42.2% applicable to the loan, the outstanding balance had grown by 6 February 2009 to R205 363.55. [5] On 30 May 2008 Desert Star caused a notice in terms of s 697 of the Close Corporations Act8 to be served on the CC claiming payment of the outstanding amount within 21 days. Bridging took a similar step on 3 February 2009. In each instance the s 69 notice pointed out that a failure to timeously comply with the statutory demand would have the result that the CC would be deemed to be unable to pay its debts. In that event each of the notices threatened as a consequence an application for the winding-up of the CC. The notices went unanswered. [6] On 17 July 2008 Desert Star launched the winding-up application threatened in its s 69 notice. The CC took no steps to oppose the application and on 21 November 2008 the North Gauteng High Court (Pretoria) granted a provisional order of winding-up and a rule nisi calling upon all persons concerned to show why a final order should not issue. Thereafter Christiaan Schoeman (Schoeman), the second respondent, sought leave to intervene in the application with a view to setting aside the provisional order. In his affidavit he stated that Ehlers was a long-standing business associate, who had advanced R 2.5 million to the CC for the purchase of its sole asset, the immovable property and that the loan to the CC constituted Ehlers’ loan account in the CC which had been ceded to him (Schoeman). He said: 'To assist G Ehlers I have taken cession of his loan account for value received and consequently I am a creditor of the respondent in an amount of R 2.5 million. The Deed of Cession [is] annexed hereto marked CS1.’ That was confirmed by Ehlers in his affidavit. I should perhaps add that neither the existence nor the validity of the cession was disputed by either appellant. 7 Section 69 provides: ‘ (a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of not less than two hundred rand then due has served on the corporation, by delivering it at its registered office, a demand requiring the corporation to pay the sum so due, and the corporation has for 21 days thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; . . .’ 8 Act 69 of 1984. [7] On 9 April 2009 Bridging also launched an application for the winding-up of the CC, but given the fact that a provisional winding-up order had already issued at the instance of Desert Star, took no further steps to advance its application. Instead on 3 August 2009 Bridging sought leave to intervene in Desert Star's application. [8] On 25 November 2009 after certain further affidavits had been filed by the parties and after hearing argument, Van den Heever AJ: granted Schoeman leave to intervene in the winding-up application; dismissed Bridging's application to intervene in the winding-up application; declared the deed of suretyship concluded between Desert Star and the CC on 26 September 2007 unlawful and ab initio void; cancelled Desert Star's rights arising from the deed of suretyship; set aside the provisional winding up order; and ordered Desert Star and Bridging to pay the CC’s and Schoeman's costs jointly and severally such costs to include those occasioned by the employment of two counsel. [9] With the leave of the court below the appellants appeal to this Court against the whole of the judgment and order of Van den Heever AJ. [10] It can hardly be in dispute that, if the appellants are to qualify as persons having locus standi to apply for the winding-up of the CC, it can only be on the ground that each was a creditor (including a contingent or prospective creditor) of the CC within the meaning of s 346(1)(b) of the Companies Act.9 Each of the appellants alleges that it is indeed such a creditor. That is disputed. It thus becomes necessary to consider the nature of the debt secured by the CC. [11] The appellants in each instance relied upon a deed of suretyship. It is so that a contract of suretyship is a separate contract from that of the principal debtor and his or 9 Act 61 of 1973 read with s 66(1) of the Close Corporations Act. her creditor. It is however accessory to that main contract.10 Thus for there to be a valid suretyship there has to be a valid principal obligation. Put differently, every suretyship is conditional upon the existence of a principal obligation.11 For, as Nienaber JA put it ‘[g]uaranteeing a non-existent debt is as pointless as multiplying by nought’.12 It follows that a surety is not liable to a person to whom the principal debtor is not liable.13 It is well settled that the general rule is that a surety may avail himself or herself of any defences that the principal debtor has save for those defences that are purely personal to the principal debtor.14 [12] It is common cause that each of the underlying principal agreements is a credit agreement as defined in s 8(4)(f) of the NCA and that the Act applies to them. The thrust of the respondents’ case is that the deed of suretyship is ineffectual inasmuch as the debtor identified therein is not indebted to the creditor by virtue of the fact that the principal debt that it sought to secure is, in terms of the NCA, either ab initio void (solely in the case of Desert Star) and in addition one that is liable to be set aside or suspended. [13] It is undisputed that when Desert Star contracted with Eugene it was not a registered credit provider. The NCA required it to be. The effect of it not being so registered according to Schoeman is that the agreement concluded between it and Eugene is void ab initio. In that regard he states: 'It is clear from the provisions of Section 40(1)(a) and (b) read with Section 42(1) of the Act and Government Gazette 28893 dated the 1st of June 2006 that [Desert Star] was required to register as credit provider before or within 30 days from the date of the transaction between [it] and [Eugene]. I respectfully submit that considering the provisions of Section 4(1) read with Section 8(1)(a) of the Act the credit transaction between [Desert Star] and [Eugene] concluded on the 8th of June 2007 is a credit agreement within the Act and subject thereto. 10 Kilroe-Daley v Barclays National Bank Ltd 1984 (4) 609 (A) at 622I. 11 CF Forsyth & JT Pretorius Caney’s Law of Suretyship in South Africa 6ed (2010) 30. 12 African Life Property Holdings (Pty) Ltd v Score Food Holdings Ltd 1995 (2) SA 230 (A) at 238F. 13 Digest 46.1.16; Voet 46.1.3; Pothier Law of Obligations (Translated by WD Evans) 4.1.393-394. 14 Worthington v Wilson 1918 TPD 104 at 105; Standard Bank of SA Ltd v SA Fire Equipment (Pty) Ltd 1984 (2) SA 693 (C) at 695F-H. The implication of not being registered is simple; the principal agreement of debt concluded between [Desert Star] and [Eugene] is void. In this regard I draw the Honourable Court's attention to Section 40(4)15 and Section 89(1)(d) read with 89(5)(a) of the Act. In terms of the Provisions of Section 89(5)(a)16 of the Act I submit that the Honourable Court is obliged to declare that the credit agreement concluded between [Eugene] and [Desert Star] on the 8th June 2007 is void ab initio. The enforceability of the instrument of suretyship, which forms the basis of this application, is conditional upon the existence of an enforceable debt in favour of [Desert Star] by [Eugene]. On this basis alone I submit that the application must fail and the Provisional Order be discharged.' [14] In support of the additional contention that the agreements are liable to be set aside or suspended, the respondents assert that both Desert Star and Bridging are in common parlance ‘loan sharks’ and that each of the principal agreements constitutes 'reckless credit agreements in terms of the [NCA]'. The prevention of the granting of reckless credit is an important lodestar of the NCA. Section 81(3) of the NCA precludes a credit provider from entering into a reckless credit agreement with a prospective consumer. To determine when exactly a credit agreement is a reckless one it is to s 80 that one must turn, which provides that: ‘(1) A credit agreement is reckless if, at the time that the agreement was made . . . (a) the credit provider failed to conduct an assessment as required by section 81(2), irrespective of what the outcome of such an assessment might have concluded at the time; or 15 Section 40(4) reads: 'A credit agreement entered into by a credit provider who is required to be registered in terms of subsection (1) but who is not so registered is an unlawful agreement and void to the extent provided for in section 89.' 16 Section 89(5) reads:‘If a credit agreement is unlawful in terms of this section, despite any provision of common law, any other legislation or any provision of an agreement to the contrary, a court must order that - (a) the credit agreement is void as from the date the agreement was entered into; (b) the credit provider must refund to the consumer any money paid by the consumer under that agreement to the credit provider, with interest calculated - (i) at the rate set out in that agreement; and (ii) for the period from the date on which the consumer paid the money to the credit provider, until the date the money is refunded to the consumer; and (c) all the purported rights of the credit provider under that credit agreement to recover any money paid or goods delivered to, or on behalf of, the consumer in terms of that agreement are either - (i) cancelled, unless the court concludes that doing so in the circumstances would unjustly enrich the consumer; or (ii) forfeit to the State, if the court concludes that cancelling those rights in the circumstances would unjustly enrich the consumer.' (b) the credit provider, having conducted an assessment as required by section 81(2), entered into the credit agreement with the consumer despite the fact that the preponderance of information available to the credit provider indicated that─ (i) the consumer did not generally understand or appreciate the consumer's risks, costs or obligations under the proposed credit agreement; or (ii) entering into that credit agreement would make the consumer over-indebted.’ Sections 81(2) and (3) in turn provide that: '(2) A credit provider must not enter into a credit agreement without first taking reasonable steps to assess - (a) the proposed consumer's - (i) general understanding and appreciation of the risks and costs of the proposed credit, and of the rights and obligations of a consumer under a credit agreement; (ii) debt re-payment history as a consumer under credit agreements; (iii) existing financial means, prospects and obligations; and (b) whether there is a reasonable basis to conclude that any commercial purpose may prove to be successful, if the consumer has such a purpose for applying for that credit agreement. (3) A credit provider must not enter into a reckless credit agreement with a prospective consumer.' In terms of s 83 (1) of the NCA a court, in any court proceedings in which a credit agreement is being considered, may declare it to be a reckless one. If it does do so it may in terms of s 83(2) set aside all or part of the consumer's rights and obligations under that agreement or suspend the force and effect of it. [15] Eugene is a student, with no employment or fixed earnings, who is not possessed of any assets. Ms Ehlers stands on much the same financial footing. She is a housewife, who also has no fixed employment, earns no salary and aside from the matrimonial home, which is now the subject of a mortgage bond registered in favour of Bridging, is possessed of no assets. It is accordingly submitted by the respondents that both Desert Star and Bridging failed to make any assessment of the financial status of Eugene and Ms Ehlers respectively. Accordingly, so the submission goes, their ability in each instance to service the loan was not investigated. Had such an assessment been made as is required by s 81(2)(a)(i)-(iii) and (b) of the Act, so the submission proceeds, Desert Star and Bridging would ineluctably have concluded that there was no reasonable prospect of either repaying the amount loaned. In those circumstances it is contended that the agreement was a reckless credit agreement which is hit by s 81(3) of the NCA. [16] On the view that I take of the matter it is not necessary that any firm conclusion be reached at this stage on the respondents’ contentions. It suffices that the indebtedness is disputed on bona fide and reasonable grounds for, as Corbett JA made plain in Kalil v Decotex (Pty) Ltd:17 'In regard to locus standi as a creditor, it has been held, following certain English authority, that an application for liquidation should not be resorted to in order to enforce a claim which is bona fide disputed by the company. Consequently, where the respondent shows on a balance of probability that its indebtedness to the applicant is disputed on bona fide and reasonable grounds, the Court will refuse a winding-up order. The onus on the respondent is not to show that it is not indebted to the applicant: it is merely to show that the indebtedness is disputed on bona fide and reasonable grounds.' [17] Desert Star had caused a provisional sentence summons to be issued against Eugene. In those proceedings Eugene challenged the validity and enforceability of the acknowledgment of debt on which Desert Star sues. Bridging has also instituted proceedings against Ms Ehlers. In her plea to Bridging’s summons Ms Ehlers contends that the agreement upon which Bridging relies constitutes a reckless credit agreement. She has also filed a claim in reconvention in which she seeks, inter alia, an order that the agreement be declared a reckless credit agreement and that it be set aside. It goes without saying that the correctness of the respondents’ contentions can be determined in those proceedings. It follows that the appellants will not be remediless, for if those proceedings were to be decided in their favour they could thereafter take steps to enforce their rights flowing from the respective suretyship agreements. [18] One final aspect remains. It has been conceded on behalf of the respondents that the learned Judge erred in declaring the suretyship void ab initio and cancelling Desert Star's rights flowing therefrom. It follows that that part of the order of the court below cannot stand and it accordingly falls to be set aside. It was agreed before us that that did not constitute substantial success on appeal and that the costs should follow 17 1988 (1) SA 943 (A) at 980B-D. the result. For the rest the appeal is devoid of any substance and is accordingly dismissed. [19] In the result: The appeal against paragraphs 3 and 4 of the order of the court below is allowed and the order is amended by the deletion of those paragraphs. Subject thereto and paragraphs 5 and 6 being renumbered 3 and 4 respectively, the order of the court below is confirmed. Save as is set out in paragraph 1 hereof the appeal is dismissed. The appellants are ordered to pay the respondents’ costs jointly and severally, the one paying the other to be absolved. _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES: For First Appellant: F H Terblanche SC J E Smit Instructed by: Strydom & Bredenkamp Inc Pretoria EG Cooper & Majidt Inc Bloemfontein For Second Appellant: M C Erasmus SC Instructed by: Ben McDonald Attorney Pretoria Hill, McHardy & Herbst Inc Bloemfontein For First Respondents: A Bester Instructed by: Wynand Viljoen Attorneys Pretoria Honey Attorneys Bloemfontein For Second Respondent: A Bester Instructed by: Buurman Stemela Lubbe Inc Pretoria Honey Attorneys Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 November 2010 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Desert Star Trading v No 11 Flamboyant Edleen (98/10) [2010] ZASCA 148 (29 November 2010) Media Statement Today the Supreme Court of Appeal (SCA) dismissed appeals by Desert Star Trading 145 (Pty) Ltd (Desert Star) and Bridging Advances (Pty) Ltd (Bridging) against a judgment of the Pretoria High Court refusing to place No 11 Flamboyant Edleen BK (the CC) under winding-up. Unable to raise a loan from any of the established banking institutions, but being desperately in need of financial assistance, George Ehlers turned to small private lenders although, as he put it, he knew he 'was going to pay a heavy price for the loan'. One such private lender to whom Ehlers turned during 2007 was Desert Star, the first appellant. Not being creditworthy he did not qualify for a loan. The loan application was then revised and re-submitted in the name of his son, Eugene. The amount lent and advanced together with interest and costs by Desert Star to Eugene was the sum of R859 600. On 8 June 2007 Eugene acknowledged his indebtedness in writing to Desert Star and undertook to effect repayment of that sum within twelve months. The agreement provided that in the event of the loan remaining unpaid after 8 June 2008 then the interest would be recalculated with effect from the date of the agreement at the rate of 1.5% per week compounded. As security for the loan, Ehlers in his capacity as the sole member of the first respondent, the CC, bound it as a surety and co-principal debtor in favour of Desert Star in respect of the indebtedness of Eugene. And as further security a security bond was registered in favour of Desert Star over an immovable property, the sole asset of the CC. Eugene failed to repay the loan and as at 30 May 2008 his indebtedness to Desert Star stood at R1 253 000. In the meanwhile on 29 January 2008 Ehlers approached another small private lender, the second appellant, Bridging, for a loan. This time the application was made in the name of his wife, Lèone Ehlers. A written agreement was concluded in terms of which Bridging loaned and advanced the sum of R160 053 (being R150 000 plus interest and costs) to Ms Ehlers. Here as well Ehlers bound the CC as a surety and co-principal debtor in favour of Bridging for the indebtedness of Ms Ehlers. And as further security a mortgage bond was registered in favour of Bridging over the Ehlers family home which was registered in the name of Ms Ehlers. Sporadic payments in the total sum of R41 000 were effected by the Ehlers to Bridging, but given the annual interest rate of 42.2% applicable to the loan, the outstanding balance had grown by 6 February 2009 to R205 363.55. The SCA considered the nature of the debt secured by the CC. In each instance the appellants’ relied upon a deed of suretyship. The SCA held for there to be a valid suretyship there had to be a valid principal obligation. It follows that a surety is not liable to a person to whom the principal debtor is not liable. It was common cause that each of the underlying principal agreements was a credit agreement as defined in s 8(4)(f) of the National Credit Act. On behalf of the CC it was contended that when Desert Star contracted with Eugene it was not a registered credit provider as required by the Act and that in consequence the agreement concluded with him was ab initio void. In addition, it was contended that both Desert Star and Bridging are in common parlance ‘loan sharks’ and that each of the principal agreements constitutes reckless credit agreements that are liable to be set aside or suspended in terms of the Act. The SCA held that an application for liquidation should not be resorted to in order to enforce a claim which is bona fide disputed by a company. Consequently, where it is shown on a balance of probability by a company that its indebtedness to the applicant is disputed on bona fide and reasonable grounds, the Court will refuse a winding-up order. --- ends ---

2400

non-electoral

2013

DIE HOOGSTE HOF VAN APPÈL VAN SUID-AFRIKA UITSPRAAK RAPPORTEERBAAR Saaknommer: 861/2011 In die saak tussen: DIE MINISTER VAN POLISIE APPELLANT en FREDERIK BAREND VAN DER VYVER RESPONDENT Neutrale sitering: Die Minister van Polisie v Van der Vyver (861/2011) [2013] ZASCA 39 (28 Maart 2013). Coram: Brand, Leach, Theron, Majiedt en Pillay ARR Aangehoor: 7 March 2013 Gelewer: 28 March 2013 Samevatting: Kwaadwillige vervolging – aksie gebaseer op twee onjuiste verklarings deur lede van die SAPD – ten aansien van eerste verklaring – bevind dat kousale verband tussen verklaring en respondent se vervolging nie bewys is nie – ten aansien van tweede verklaring bevind dat animus iniuriandi nie bewys is nie – grondwetlike eis vir skadevergoeding ook onsuksesvol. ________________________________________________________________ BEVEL ________________________________________________________________ Op appèl van: Wes-Kaapse Hooggeregshof, Kaapstad (Veldhuizen R as hof van eerste instansie): 1. Die appèl slaag met koste insluitende die koste van twee advokate. 2. Die bevel van die hof a quo word ter syde gestel en vervang met die volgende: „Eiser se eis word van die hand gewys met koste, insluitende die koste van twee advokate en die kwalifiserende gelde van Dr L Liebenberg, mnr F Maritz en mnr J A Bierman.‟ ________________________________________________________________ UITSPRAAK ________________________________________________________________ BRAND AR (LEACH, THERON, MAJIEDT en PILLAY ARR stem saam): [1] Hierdie saak het van meet af aan die openbare mening aangegryp, waarskynlik omdat 'n jong lewe wat soveel belofte ingehou het so wreed, tragies en sinneloos beëindig is, en die impak op 'n ander jong lewe, synde dié van die respondent, so ingrypend was. Op 16 Maart 2005 is mej Inge Lotz (die oorledene), 'n jong honneursstudent, op brutale wyse in haar woonstel op Stellenbosch aangeval en gedood. Op 15 Junie 2005 is die respondent, wat in 'n vaste verhouding met die oorledene was, in hegtenis geneem op aanklag dat hy die moordenaar was. Op dieselfde dag is hy op borgtog vrygelaat. Verskeie versoeke van die respondent se regsverteenwoordigers aan die Direkteur van Openbare Vervolging, Wes-Kaap (DOV) om die aanklagte te laat vaar, was vrugteloos. Gevolglik is die respondent op 12 Februarie 2007 voor Van Zyl R en twee assessore van moord aangekla. Die verhoor het met onderbrekings voortgeduur tot 29 November 2007 op welke datum die respondent onskuldig bevind is. [2] Voortspruitend hieruit het die respondent die appellant as Minister verantwoordelik vir die Suid-Afrikaanse Polisiediens (die SAPD), in die Wes- Kaapse Hooggeregshof, Kaapstad aangespreek vir skadevergoeding op grond van kwaadwillige vervolging. By die aanvang van die verhoor het Veldhuizen R op versoek van beide partye gelas dat die geskilpunte rakende die appellant se aanspreeklikheid op die meriete ter aanvang bereg moes word, terwyl die kwantum van respondent se beweerde skade sou oorstaan vir latere beregting. Aan die einde van die aanvanklike verhoor het Veldhuizen R die meriete in die guns van die respondent beslis. Bygevolg het hy gelas dat die appellant aanspreeklik is vir sodanige skade as wat die respondent mag bewys voortgevloei het uit sy vervolging. Die huidige appèl teen hierdie beslissing is met die verlof van hierdie hof. Geriefshalwe verwys ek vervolgens na die verrigtinge voor Van Zyl R as „die strafsaak‟ en na dié voor Veldhuizen R – wat aanleiding gegee het tot die onderhawige appèl – as „die siviele saak‟. [3] As basis vir sy bewering dat die polisie kwaadwillig die vervolging teen hom aangestig het, het die respondent in sy besonderhede van vordering gesteun op beweerde opsetlike wanvoorstellings deur lede van die SAPD teenoor die DOV met verwysing na drie aspekte, synde: (a) Die voorwerp waarvan 'n vingerafdruk van die respondent afkomstig was. (b) Die voorwerp waarmee die noodlottige kopwonde aan die oorledene toegedien is. (c) Die verbintenis tussen „n bloedmerk op die oorledene se badkamervloer en 'n sportskoen van die respondent. [4] Die geskilpunte voortspruitend uit hierdie bewerings is beter verstaanbaar teen die agtergrond van die onderliggende feite waarvan ek vervolgens 'n beknopte uiteensetting gee. In die vroeë oggendure van 17 Maart 2005 is die liggaam van die oorledene in haar woonstel aangetref. Volgens alle aanduidings het sy gesterf in 'n gewelddadige aanval waarin sy verskeie wonde toegedien is, veral aan haar kop en haar bors. In teenstelling met hierdie brutale geweld het sy blykbaar onmiddellik voor die aanval op haar rusbank gesit en na 'n Digitale Videoskyf (algemeen bekend, ook in Afrikaans, as 'n DVD) op haar televisie gekyk. Daar was geen tekens van gedwonge toegang tot die oorledene se woonstel nie. Sy was geklee in 'n bloes en 'n klein slaapbroekie. Hieruit is die afleiding gemaak dat sy haar aanvaller goed geken het, omdat sy die persoon moes binnegelaat het terwyl sy skamel gekleed was en daar rustig voortgegaan het om na „n DVD te kyk. Daar was niks uit die woonstel vermis nie. Artikels van waarde soos 'n skootrekenaar en 'n selfoon is oop en bloot in die woonstel aangetref. Die enigste vermiste items was 'n mes en 'n afstandbeheerder wat die aanvaller nodig gehad het om die woonstelkompleks te verlaat. Dit het die afleiding laat ontstaan dat roof nie die oogmerk van die aanval was nie. Gedurende die vroeë oggendure van 17 Maart 2005, pas nadat die liggaam van die oorledene aangetref is, het 'n span ondersoekers van die Plaaslike Kriminele Rekordsentrum (PKRS) van die Paarlse Polisie die misdaadtoneel ondersoek. In die proses het een van die lede van die span, konstabel Swartz, volgens sy getuienis, met twee folienstrokies, vingerafdrukke gelig van 'n DVD-houer (folien 1) en 'n drinkglas (folien 2) wat in die oorledene se woonstel was. [5] Bykans 'n maand later, op 12 April 2005, is vingerafdrukke van die respondent en sy vriende geneem. Dit was 'n roetine-prosedure wat vir doeleindes van uitskakeling beoog is. Later daardie dag is egter vasgestel dat die respondent se vingerafdrukke ooreenstem met „n vingerafdruk op folien 1 wat, volgens konstabel Swartz, van die DVD-houer afkomstig was. Indien Swartz se weergawe waar was, sou dit beteken dat die respondent in die oorledene se woonstel was na 3 nm van 16 Maart 2005 omdat dit die tyd was toe sy die DVD by „n videowinkel op Stellenbosch gehuur het. Dit sou fataal wees vir die respondent se alibi. Hiervolgens het hy gedurende die oggend van 16 Maart 2005 van die oorledene afskeid geneem en toe, nadat hy 'n klas bygewoon het by die universiteit, na sy werkplek by Ou Mutual in Pinelands, Kaapstad, vertrek waar hy die res van die dag deurgebring het. Gevolglik het hy, volgens hom, die oorledene nooit weer lewend gesien nie. Op 14 April 2005 het konstabel Swartz onder eed bevestig dat hy die betrokke vingerafdruk van die DVD-houer gelig het. Van toe af het hierdie vingerafdruk 'n sentrale rol in die polisieondersoek teen die respondent gespeel. Onder meer is hierdie getuienis aangevoer ter ondersteuning van 'n aansoek vir 'n lasbrief ter deursoeking van die respondent se woonplek, sy kantoor en sy voertuig, waaraan uitvoering gegee is op 15 April 2005. Klaarblyklik het die vingerafdruk ook 'n belangrike rol gespeel in die daaropvolgende verkryging van 'n lasbrief vir die respondent se arrestasie op 15 Junie 2005. [6] Na die respondent se arrestasie het sy regsverteenwoordigers egter die kwessie van hierdie vingerafdruk opgeneem met die twee advokate in diens van die DOV, Theunissen en Van der Vijver, aan wie die respondent se vervolging opgedra is. In besonder is dit onder die aandag van die twee staatsadvokate gebring dat die respondent die opinie ingewin het van vingerafdrukdeskundiges waarvolgens die betrokke vingerafdruk nie van „n DVD nie, maar inderwaarheid van 'n drinkglas afkomstig was. Dit het die twee staatsadvokate genoop om senior forensiese deskundiges in die polisie te raadpleeg. Twee van hulle was van oordeel dat die respondent se vingerafdruk tog moontlik van „n DVD-houer gelig is. Op 12 Desember 2006 het senior superintendent R D Dixon van die SAPD egter onder eed verklaar dat die respondent se vingerafdruk op folien 1, na sy mening, afkomstig was van „n drinkglas en nie van „n DVD-houer nie. Sy mening was voorts dat die vingerafdruk moontlik gelig is van „n drinkglas wat in die oorledene se woonstel aangetref is. Hieruit voortspruitende het die DOV op Desember 2006 die volgende brief aan die respondent se regsverteenwoordigers gerig: „Ek bevestig hiermee dat die Staat nie meer van voorneme is om voort te gaan met die getuienis rondom u kliënt se beweerde vingerafdruk op die DVD-omslag nie. Aangeheg die verslag van Senior Superintendent Dixon vir u aandag . . .. ‟ [7] Volgens alle redelike verwagting sou dit die einde wees van die hele sage rondom die vingerafdruk. Die respondent se regsverteenwoordigers het egter in die strafsaak die houding ingeneem dat hierdie toegewing deur die Staat hulle nie daarvan weerhou het om getuienis oor die fabrisering van die vingerafdruk aan te bied nie omdat dit „die Staat se saak teen hom besmet‟ het. As teenvoeter was die Staat toe verplig om volledige getuienis oor die onderwerp in die strafsaak aan te bied ten einde bewerings van mala fides aan die kant van die polisiebeamptes te weerlê. Aan die einde van die strafsaak het die hof by monde van Van Zyl R bevind dat die folien 1 onmoontlik van 'n DVD-houer afkomstig kon wees. Terselfdertyd het die hof egter ook bevind dat daar „nie genoeg getuienis voor hierdie hof [geplaas is] om met enige sekerheid te bevind dat dit aan opsetlike optrede deur die polisie te wyte was nie. Dit mag trouens die gevolg gewees het van nalatigheid of [blote] onbevoegdheid‟. [8] In die siviele saak het die respondent weereens die verhoorhof probeer oortuig dat die verkeerde stellings rondom die oorsprong van die gewraakte vingerafdruk nie aan blote nalate of onbevoegdheid te wyte was nie, maar aan 'n bedrieglike poging deur die polisie om te mislei, welke poging sy vervolging aangestig het. Die verhoorhof het egter hierdie geskilpunt ten gunste van die appellant beslis. Die ratio decidendi skyn in die volgende aanhaling uit die hof se uitspraak opgesluit te wees: „Konstabel Swartz het gedurende Oktober 2000 by die SAPD aangesluit. In 2003 het hy 'n basiese opleidingskursus, wat onder andere ingesluit het die lig van vingerafdrukke, voltooi. Hy het die kursus geslaag en het toe werk gedoen as 'n vingerafdrukondersoeker maar was nie 'n vingerafdrukdeskundige nie. Hy was nie gemoeid met die vergelyking van vingerafdrukke nie, dit was die taak van die vingerafdrukdeskundiges. Voor hierdie hof het konstabel Swartz (tans 'n sersant) getuig dat hy steeds oortuig is dat hy folien 1 van die DVD-houer gelig het. Hy het egter toegegee dat „n fout kon ingesluip het en dat hy hom mag vergis het. Hy was 'n onindrukwekkende getuie. Hy was ontwykend en vaag. Hy het ook teenstrydige getuienis gelewer oor onder andere hoe en waar hy die vingerafdrukke gelig het en wie teenwoordig was tydens die ondersoek in die woonstel. Dit is tog van belang dat, op die stadium toe hy verklaar het dat folien 1 van die DVD-houer gelig is, hy nie geweet het of kon geweet het dat dit van belang is of die vingerafdruk van die drinkglas of van die DVD-houer afkomstig is nie. Dat hy nalatig of selfs roekeloos was staan vas. Maar na my mening, selfs inaggenome sy swak getuienis, is die afleiding dat hy in dié opsig leuenagtig was en met animus injuriandi opgetree het nie geregverdig nie.‟ [9] Desnieteenstaande het die respondent op appèl volgehou met sy argument gebaseer op die vingerafdruk. Ek kom hierby terug. Vir die huidige gaan ek egter voort met die kroniek van die agtergrondfeite. Soos ek ter inleiding gesê het, het die tweede been van die respondent se saak berus op polisieverklarings aangaande die voorwerp waarmee die noodlottige kopwonde aan die oorledene toegedien is. In die verband het ek vroeër verwys na die lasbrief vir die deursoeking van die respondent se woonstel, sy kantoor en sy voertuig wat uitgevoer is op 15 April 2005. Tydens die deursoeking van die respondent se voertuig is onder meer 'n ornamentele hamer onder die sitplek gevind. Die vermoede het by die polisie ontstaan dat dit moontlik die moordwapen was. By die ondersoek van hierdie moontlikheid het kaptein Maritz, sekere proefnemings gedoen. As deel van sy saak het die respondent aangevoer dat kaptein Maritz in sy verslag oor hierdie proefnemings opsetlike onwaarhede verkondig het wat tot aanstigting van die vervolging gedien het. Die slotsom waartoe kaptein Maritz egter aan die einde van sy verslag gekom het, was slegs dat hy nie die ornamentele hamer as moordwapen kon uitsluit nie. In hierdie lig was die verhoorhof se beslissing, in wese, dat hierdie neutrale slotsom nie bydraend kon wees tot die respondent se vervolging nie. Hierdie bevinding deur die verhoorhof, ten gunste van die appellant, is nie deur die respondent op appèl aageveg nie. Gevolglik kan ek die hele kwessie van die hamer met vrymoedigheid daar laat. [10] Dit bring my dan by die derde been van die respondent se saak wat gebaseer is op die verbintenis tussen 'n bloedmerk op die oorledene se badkamervloer en die respondent se skoen. Die verloop van gebeure wat hiertoe gelei het, was in die breë soos volg: tydens die polisieondersoek in die woonstel van die oorledene gedurende die vroeë ure van 17 Maart 2005, is 'n bloedmerk op die badkamervloer deur die polisie waargeneem en gefotografeer. Op 15 April 2005 is by die deursoeking van die respondent se woonstel – waarna ek vroeër verwys het – beslag gelê op 'n paar manssportskoene. Die skoene is in die forensiese laboratorium van die polisie vir bloed getoets, maar die uitslag van die toets was negatief. Superintendent B S Bartholomew van die PKRS in Kaapstad het egter die skoene verder ondersoek en onder meer die sole onder 'n mikroskoop bekyk. Aan die hand van hierdie ondersoek het Bartholomew tot die slotsom gekom dat sandkorreltjies onder die regterskoen ooreengestem het met wit kolletjies op die foto‟s van die bloedmerk in die oorledene se badkamer en dat die respondent se skoen gevolglik met die bloedspoor verbind kon word. Hieroor was die ondersoekspan van die polisie uiteraard baie opgewonde. Dit het immers die respondent tydens die aanval op die oorledene in haar woonstel geplaas. Ander polisiedeskundiges in Kaapstad het egter koue water op die entoesiasme gegooi deur die mening uit te spreek dat Bartholomew se gevolgtrekkings geen steek hou nie. [11] In 'n poging om stawing vir sy gevolgtrekking te kry, is Bartholomew toe na die hoofkantoor van die polisie se forensiese afdeling in Pretoria. Daar het hy die aangeleentheid bespreek met die nasionale bevelvoerder van die forensiese afdeling, kommissaris Du Toit, sy tweede in bevel, direkteur Vorster en nog 'n lid van die nasionale ondersoekspan. Hy het aan hulle sy waarnemings en sy gevolgtrekking, dat die bloedmerk deur die respondent se skoen veroorsaak is, in besonderhede verduidelik. Nie een van hierdie deskundiges het egter met hom saamgestem nie; inteendeel, aldrie van hulle was onomwonde die mening toegedaan dat die bloedmerk nie met die skoen verbind kon word nie. By sy terugkoms in Kaapstad het Bartholomew hierdie verwikkelinge aan sy seniors in die polisie sowel as die betrokke advokate in die kantoor van die DOV oorgedra. Bartholomew het egter nie so maklik bes gegee nie. As deel van sy verdere soeke na stawing vir sy mening, het hy 'n gesaghebbende werk oor skoenafdrukke deur 'n internasionaal erkende Amerikaanse deskundige, mnr W J Bodziak, geraadpleeg. Toe hy niemand hier te lande kon vind wat met sy mening saamstem nie, het Bartholomew vervolgens verlof verkry om Bodziak in die Verenigde State te besoek in 'n verdere poging om steun vir sy standpunt te werf. Tydens hul ontmoeting, wat plaasgevind het op 30 Junie 2006, het Bartholomew sy waarnemings en sy gevolgtrekking breedvoerig aan Bodziak verduidelik. [12] Bodziak is later in sowel die strafsaak as die siviele saak namens die respondent as getuie geroep. Volgens sy getuienis, wat deur beide howe aanvaar is, het hy dit aan Bartholomew in geen onsekere terme oorgedra dat hy nie enige verbintenis tussen die skoen en die bloedmerk kon sien nie. Ter motivering van hierdie standpunt het Bodziak verduidelik dat wanneer 'n merk met 'n voorwerp, soos 'n skoen, vergelyk word, daar in die eerste plek bepaal moet word of die voorwerp ooreenstemmende klaseienskappe, soos skoengrootte, soolpatroon ensovoorts met die merk toon. Indien nie, is dit die einde van die ondersoek. Waar die klas eienskappe wel ooreenstem, word gesoek vir unieke eienskappe wat die besondere skoen van ander skoene in dieselfde klas onderskei. Volgens Bodziak het hy dit aan Bartholomew gestel dat hy nóg enige klaskenmerke, nóg enige unieke ooreenkomste tussen die bloedmerk en die skoen kon vind. Nietemin het Bodziak in sy mening volhard dat daar wel ooreenstemmende klaseienskappe was. Vir die unieke kenmerke het hy gesteun op die sandkorreltjies in die skoen wat hy verbind het met wit kolletjies op die foto‟s van die bloedsmeer. Volgens Bodziak het hy dit egter aan Bartholomew duidelik gemaak dat die sandkoreltjies na sy mening te diep in die groef van die skoen se sool vasgesit het om die wit kolletjies in die bloedsmeer te veroorsaak. Tydens Bartholomew se besoek aan Bodziak het die twee van hulle by wyse van proefneming vasgestel dat, hoe hard ook al op die skoen getrap word, die sandkorreltjies eenvoudig te diep was om met die vloer kontak te maak en enige merke agter te laat. [13] Heel onverwags, in die lig van hierdie gebeure, het Bartholomew egter by sy terugkeer na Kaapstad teenoor sy seniors te kenne gegee dat Bodziak sy mening in wesenlike opsigte steun, welke wanvoorstelling aan die advokate in die kantoor van die DOV oorgedra is. Op 21 Julie 2006 het Bartholomew uit die diens van die polisie getree. In Desember 2006 was die respondent se regsverteenwoordigers, wat vooraf verneem het van die bewering dat Bodziak die mening van Bartholomew steun, in direkte verbinding met Bodziak. Hy het met verbasing op dié bewering reageer en hulle oor die ware toedrag van sake ingelig. Op hulle beurt het die respondent se regsverteenwoordigers dit aan advokate Theunissen en Van der Vijver oorgedra dat Bodziak se mening direk in stryd was met dié van Bartholomew en dat hulle deur hom onder 'n wanindruk gebring is. Na aanleiding hiervan het die twee staatsadvokate op 15 Januarie 2007 'n telefoonkonferensie met Bodziak gevoer. In die loop hiervan het Bodziak dit aan die advokate duidelik gemaak dat hy hoegenaamd nie met Bartholomew saamgestem het nie. Eerstens, omdat daar na sy mening geen klaskenmerke in die bloedmerk was wat die gevolgtrekking kon regverdig dat dit hoegenaamd deur enige skoen gemaak is nie. Tweedens, omdat die wit kolletjies in die bloedmerk, wat deur Bartholomew as unieke eienskap aangemerk is, nie deur die sandkorreltjies in die skoen veroorsaak kon word nie, weens die diepte daarvan in die sool van die skoen. [14] Op 17 Januarie 2007 het die respondent se regsverteenwoordigers tydens samesprekings met Theunissen en Van der Vijver gepoog om die terugtrekking van die aanklag teen die respondent te bewerkstellig. In die loop van hierdie samesprekings is 'n verslag van nog 'n deskundige uit die Verenigde State, mnr M R Grimm, aan die staatsadvokate beskikbaar gestel wat onomwonde die gevolgtrekking van Bodziak steun en die teenoorstaande mening van Bartholomew oortuigend as onjuis verwerp. Vervolgens het Theunnissen en Van der Vijver vir Bartholomew gekonfronteer met die inhoud van Grimm se verslag asook met wat hulle van Bodziak verneem het. Op daardie stadium het Bartholomew vir die eerste keer toegegee dat Bodziak destyds teenoor hom aangedui het dat die sandkorrels te diep in die skoensool was om die wit kolletjies in die bloedmerk te veroorsaak. Hy het ook toegegee dat hy dit nie tydens proefnemings kon regkry om die sandkorreltjies met die vloer in kontak te bring nie. Nietemin het hy voet by stuk gehou dat sy mening die enigste korrekte een was en dat die teenoorstaande standpunt van al die ander deskundiges, nasionaal en internasionaal, almal uit pas. [15] Na die konsultasie met Bartholomew het die staatsadvokate besluit om tog met die aanklag teen die respondent voort te gaan en het hulle die respondent se regsverteenwoordigers dienooreenkomstig verwittig, Soos ons weet het die strafsaak toe op 12 Februarie 2007 'n aanvang geneem. Gedurende die verhoor het Bartholomew as staatsgetuie gepoog om sy teorie aangaande 'n verbintenis tussen die bloedmerk en die respondent se skoen te verdedig. In antwoord het die respondent onder meer die getuienis van Bodziak en 'n Britse deskundige, mnr P F Ryder, aangebied. In kort is Bartholomew se teorie in vlamme afgeskiet. Kwalik onverwags het die strafhof dan ook hierdie teorie verwerp op die basis dat dit geen sin maak nie. Onder meer het Van Zyl R die volgende in die verband gesê: „Superintendent Bartholomew, wat nie 'n goeie indruk as getuie gemaak het nie, se getuienis was onbetroubaar en veral gekleur deur die ernstig misleidende bewerings wat hy oor sy besoek aan mnr Bodziak kwytgeraak het. . . . Daar was . . . geen verduideliking van hoe die sandkorrels bloed-kontaminasie kon vrygespring het of hoe hulle, ten spyte van die diepte waartoe hulle in die betrokke groef vasgesit het, steeds daarin kon slaag om hulle afdruk op die bloedmerk te maak . . .. Les bes was daar geen betroubare bewys van enige klaseienskappe van die skoen in die merk waarneembaar nie.‟ [16] In die siviele saak het Veldhuizen R bevind dat Bartholomew se mening, in die lig van Bodziak se getuienis, nie die „papier werd [was] waarop dit geskryf is nie‟. Verder het hy hom ook soos volg in onderhawige verband uitgelaat: „Ek is tevrede dat mnr Bartholomew nie 'n eerlike getuie is nie. Ek bevind dat hy nie eerlik kon geglo het en inderdaad nie geglo het dat sy opinie reg is nie. Daar het 'n plig op hom gerus om enige twyfel wat hy gehad het en wat hy, na my mening, inderdaad gekoester het aan die vervolgingsgesag oor te dra. Dit het hy nie gedoen nie. In stede daarvan het hy volhard met sy mening. Hy het in dié opsig, met die nodige opset, hom skuldig gemaak aan die aanstigting van die vervolging.‟ [17] Soos Veldhuizen R ook tereg opgemerk het, was die staatsadvokate se besluit om steeds op Bartholomew se getuienis te steun, ten spyte van al hierdie feite tot hulle beskikking, op die oog af moeilik verstaanbaar. Voor Veldhuizen R is Van der Vijver deur die appellant as getuie geroep om hierdie besluit te verduidelik. In breë trekke het dit op die volgende neergekom. Volgens Van der Vijver het hy en sy kollega Theunnissen besef dat Bartholomew waarskynlik nie die probleme wat deur Bodziak geopper is, dat die sandkorrels te diep was om die wit kolletjies in die bloedmerk te veroorsaak, kon antwoord nie. Gevolglik was die unieke kenmerk waarop Bartholomew gesteun het daarmee heen. Nietemin het Bartholomew ten spyte van dit alles in sy eie opinie bly glo. Hoewel die staatsadvokate ernstige bedenkinge gehad het oor hierdie opinie, het hulle besluit om dit tog in die skaal te plaas. Na alles, so het Van der Vijver getuig, was dit nie vir hulle nie, maar vir die hof om oor die aanvaarbaarheid van Bartholomew se mening te beslis. [18] Indien Bartholomew twyfel oor sy eie mening uitgespreek het, so het Van der Vijver voortgegaan, sou hulle nie sy getuienis aangebied het nie. Maar selfs al sou Bartholomew glad nie getuig het nie, het Van der Vijver onomwonde op vrae deur Veldhuizen R self geantwoord, sou hulle beslis nie die vervolging gestaak het nie. Vir hul standpunt dat die vervolging met of sonder Bartholomew se getuienis sou voortgaan, het die staatsadvokate, volgens Van der Vijver, gesteun op omstandigheidsgetuienis wat in die breë, onder andere, die volgende behels het: (a) Die ornamentele hamer wat in die respondent se voertuig gevind is deur die staatsadvokate as die waarskynlike moordwapen beskou. Onder meer weens die uniekheid daarvan en omdat beide kante – dit is, sowel die hamerkant as die botteloopmakerkant – sommige of al die oorledene se kopwonde kon veroorsaak het. Daarbenewens is 'n handdoek in die oorledene se badkamer gevind met 'n bloedmerk wat ooreengestem het met die vorm van die hamer. (b) Daar was geen gedwonge toegang tot die oorledene se woonstel nie en daar was niks uit die woonstel gesteel nie. Hierdie aspekte en die wyse waarop die oorledene geklee was, dui daarop at sy die aanvaller geken het, meer bepaald, omdat sy die persoon binnegelaat het en nie skaam was om in 'n klein slaapbroekie voor die persoon te verskyn nie. Dit het uiteraard die vinger na die respondent gewys met wie sy in 'n vaste verhouding betrokke was. (c) Die enigste item, behalwe 'n mes, wat uit die woonstel vermis was, is 'n afstandbeheertoestel om die woonstelkompleks te verlaat. Die oorledene was ten tye van die moord slegs sowat twee tot drie weke daar woonagtig terwyl die respondent nie oor so 'n afstandbeheerder beskik het om die kompleks te verlaat nie. Die oorledene moes hom altyd met behulp van die afstandbeheerder uit die woonstelkompleks laat. Die respondent het dus geweet dat daardie afstandbeheer nodig was om uit die kompleks te kom. (d) Gedurende die aand van 15 Maart 2005 het die oorledene en die respondent met mekaar getwis, welke twis die oggend van 16 Maart 2005, synde die dag van die moord, nog voortgeduur het. Dit het tot gevolg gehad dat die respondent die oggend na sy vertrek teruggekeer het na die oorledene, wat gehuil het, om haar te troos. (e) Die oorledene het later, op die dag van die moord, teenoor 'n vriend van haar genoem dat sy en die respondent vroeër 'n hewige stryery („'n helse fight‟) gehad het en dat alles tussen hulle verby is. Die respondent het hierdie stryery teenoor die polisie verswyg. (f) 'n Brief wat die oorledene die ogend van 16 Maart 2005 aan die respondent oorhandig het en waarin sy hom verskeie kere om verskoning vra vir wat sy teenoor hom kwytgeraak het, is deur die respondent van die polisie weerhou. Die polisie het dit eers op 15 April 2005 by die uitvoering van 'n deursoekingslasbrief gevind en daarop beslag gelê. (g) 'n Getuie, mnr J N Swart, het beweer dat hy die respondent op 16 Maart 2005 in Stellenbosch gesien het op 'n stadium toe die respondent, volgens sy alibi, by sy werkplek in Pinelands was. (h) Die sekuriteitstelsel by die respondent se werkplek was nie onfeilbaar nie en sou, na die staatsadvokate se mening, nie verhoed dat die respondent daar kon wegkom sonder om opgemerk te word nie. [19] Aangaande Van der Vijver se getuienis dat die Staat selfs sonder Bartholomew se getuienis met die vervolging teen die respondent sou voortgaan, het Veldhuizen R kom onder meer soos volg uitgelaat: „Ek moet dadelik sê dat ek sy getuienis verstommend vind. Die feit is egter dat mnr Bartholomew nie eerlik met die DOV was nie en adv van der Vijver se getuienis is dus hoogstens „n opinie van wat sou gebeur het indien Bartholomew eerlik was. Dit is my plig om te bepaal of daar op „n oorwig van waarskynlikhede, sy opinie inaggenome, bewys is dat die vervolging sou voortgegaan het.‟ [20] Vervolgens het Veldhuizen R die ander feite en omstandighede oorweeg waarop die Staat, volgens Van der Vijver, besluit het om met die vervolging voort te gaan, waarna hy tot die volgende slotsom gekom het: „Na my mening was daar, indien mnr Bartholomew se opinie buite rekening gelaat word, op die stadium toe daar besluit is om met die vervolging voort te gaan, nie „n prima facie saak teen die eiser nie. Die waarskynlikheid is oorweldigend dat 'n redelike lid of lede van die DOV, in die afwesigheid van mnr Bartholomew se opinie, nie met die vervolging sou voortgegaan het nie.‟ [21] Dit bring my by die toepaslike regsbeginsels. In dié verband het hierdie hof reeds by verskeie geleenthede 'n uiteensetting gegee van wat die vereistes vir „n suksesvolle beroep op kwaadwillige vervolging behels. (Sien bv Lederman v Moharal Investments (Pty) Ltd 1969 (1) SA 190 (A) te 196G-H; Prinsloo v Newman 1975 (1) SA 481 (A) te 491H; Rudolph v Minister of Safety and Security 2009 (5) SA 94 (HHA) para 16.) Twee van hierdie vereistes meld sigself in die onderhawige saak vir oorweging aan. Die eerste hiervan is, soos dit in Engels geformuleer word, dat „the defendant must have instigated the criminal procedings by setting the law in motion‟ oftewel, dat die verweerder deur sy of haar gewraakte optrede die strafregtelike vervolging aangestig het. Die tweede is dat hierdie optrede met 'n kwaadwillige gesindheid moes geskied. Soos Jansen AR egter in Lederman (te 197A) verduidelik het, omvat die eerste vereiste eintlik niks meer nie as dat daar 'n oorsaaklike verband moet wees tussen die verweerder se optrede aan die een kant en die strafregtelike vervolging, aan die ander. Wat betref die tweede vereiste is die terminologie van kwaadwilligheid (of malice) ietwat verwarrend, asof dit „n vereiste sou wees dat die verweerder met nyd of bose opset teenoor die eiser moes gehandel het. Dit is egter nie so nie. Inteendeel kan dit op hierdie stadium van ons regsontwikkeling met vertroue aanvaar word dat die aksie vir kwaadwillige vervolging, net soos ander aksies wat hulle oorsprong in die action injuriarum het, slegs animus injuriandi oftewel opset vereis. Voorts staan dit vas dat hierdie opset nie alleen direkte opset nie, maar ook opset in die regstegniese sin van dolus eventualis insluit (sien bv Prinsloo te 492A-B; Rudolph para 16. Vergelyk ook Le Roux v Dey 2011 (3) SA 274 (KH) para 129). Indien „n verweerder dus subjektief voorsien het dat sy of haar optrede die ongeregverdigde vervolging van die eiser sou meebring en hom of haar met daardie moontlikheid sou versoen, is daar aan die vereiste van kwaadwilligheid voldoen. [22] By toepassing van hierdie regsbeginsels oorweeg ek eers die basis van die respondent se saak waarop hy in die hof benede geslaag het, synde Bartholomew se onegte verbinding van die bloedmerk in die oorledene se badkamer met die respondent se skoen. Met verwysing hierna het die hof a quo bevind dat daar aan die vereiste van kwaadwilligheid voldoen is. Na my mening was hierdie bevinding korrek. In die lig van die oorweldigende koor van deskundige getuienis tot die teendeel, is die afleiding geregverdig dat Bartholomew na alle waarskynlikheid subjektief voorsien het dat sy mening ongegrond mag wees. Nietemin het hy halstarrig geweier om dit toe te gee en hom sodoende versoen met die moontlikheid dat die voortsetting van die respondent se vervolging op ongeregverdigde basis mag geskied. Soos ek dit sien word Bartholomew se kwaadwilligheid – selfs in die letterlike sin – onderstreep deur die blatante onwaarheid wat hy aan sy seniors en die staatsadvokate verkondig het, naamlik, dat Bodziak sy mening steun. [23] Met verwysing na die vereiste van oorsaaklikheid is namens die appellant aangevoer dat Bartholomew sy gewraakte mening eers op 22 Augustus 2005 vir die eerste maal uitgespreek het. Gevolglik, so is betoog, kon hierdie optrede nie ter aanstigting dien van die respondent se vervolging wat reeds op 15 Junie 2005 „n aanvang geneem het nie. Ek vind hierdie betoog onoortuigend. Indien argumentshalwe aanvaar word dat die DOV by afwesigheid van Bartholomew se getuienis, die vervolging sou staak, is daar myns insiens aan die vereiste van oorsaaklikheid voldoen. Die tweede punt van betoog namens die appellant het berus op die feit dat Bartholomew reeds op 21 Julie 2006 uit die SAPD bedank het. Ook hierdie betoog oortuig nie. Weereens; indien die oorsaaklike verband tussen Bartholomew se mening en die respondent se vervolging argumentshalwe aanvaar word, moet eweneens aanvaar word dat hy hierdie kousale ketting van gebeure aan die gang gesit het toe hy nog in die Polisiediens was en dat hierdie kousale ketting toe nooit daarna verbreek is nie. [24] Dit bring my by die appellant se betoog wat steun op die getuienis van Van der Vijver dat hy selfs sonder Bartholomew met die vervolging sou voortgaan. Hierdie betoog moet uiteraard verstaan word in die lig van die sogenaamde „but- for test‟ wat in ons reg as maatstaf vir die vasstelling van feitelike kousaliteit aanvaar word. In International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (A) te 700E-G het Corbett HR die aanwending van hierdie maatstaf soos volg verduidelik: „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.‟ [25] Met verwysing na hierdie toets het die appellant betoog dat, in die lig van Van der Vijver se getuienis – dat die vervolging van die respondent selfs sonder Bartholomew se mening sou voortgaan – kousaliteit nie bewys is nie. Die hof a quo het hierdie betoog verwerp. Soos ek dit verstaan kom die hof se redes vir hierdie bevinding, in kort, op die volgende neer: Van der Vijver se getuienis is hoogstens „n opinie wat tesame met ander faktore in ag geneem moet word by die vraag of „n redelike lid van die DOV waarskynlik met die vervolging sou voortgaan; aangesien die Staat, sonder Bartholomew se getuienis, objektief gesproke geen prima facie saak teen die respondent gehad het nie, is die waarskynlikheid oorweldigend dat 'n redelike lid van die DOV nie sonder hierdie getuienis met die vervolging sou voortgaan nie. [26] Hiervolgens het die hof dus die objektiewe toets van die redelike advokaat as maatstaf aangelê. Ter ondersteuning van hierdie objektiewe benadering het die respondent hom beroep op die beslissing van hierdie hof in Minister of Safety and Security v Carmichelle 2004 (3) SA 305 (HHA). Wat in Carmichelle die polisie ten laste gelê is, was dat hulle nie by die borgaansoek van ene Coetzee sekere feite voor die landdros geplaas het nie, as gevolg waarvan Coetzee toe op borg vrygelaat is wat weer tot die aanval op me Carmichelle gelei het. Die betrokke landdros se getuienis was egter dat, selfs al sou die polisie hierdie feite voor hom geplaas het, hy steeds Coetzee se borgaansoek sou toegestaan het. Hierop het Harms AR homself soos volg uitgelaat oor die vraag of die toepaslike toets objektief of subjektief moet wees (in paras 60 en 61): „The inquiry is subjective in the sense that a court has to determine what the relevant magistrate on the probabilities would have done had the application for bail been opposed. In this regard the ex post facto evidence of the magistrate would generally amount to an inadmissible opinion as to what his or her state of mind would have been at some time in the past. To the extent that the evidence is admissible it would generally be unhelpful because it would be speculative. Courts of appeal are often called upon to decide what a reasonable judicial officer should have done and this they do by establishing what a reasonable judicial officer would have done. It may be presumed factually that judicial officers conform to that norm and it is fair to deduce that any particular judicial officer (even if his or her identity cannot be established), on the probabilities and as a matter of fact, would have so acted. The proper inquiry is, thus, what the relevant judicial officer, who is factually assumed to make decisions reasonably, would, on the probabilities, have done.‟ [27] Die respondent se betoog was in wese dat Harms AR in die aangehaalde gedeelte 'n objektiewe toets voorstaan waarvolgens die optrede van die betrokke landdros vervang word met die van die fiktiewe redelike landdros. Dit is nie korrek nie. Inteendeel is die toets wat Harms AR onderskryf subjektief. Die vraag bly steeds – wat sou die betrokke landdros waarskynlik doen indien die polisie hulle plig nagekom het. Die betrokke landdros was egter nooit in die situasie waar die polisie inderdaad hulle plig nagekom het nie. Sy getuienis oor wat hy waarskynlik sou doen kom dus neer op blote spekulasie. Meer betroubaar in die omstandighede, sê Harms AR, is om by wyse van logiese afleiding te bepaal wat waarskynlik sou gebeur het. As vertrekpunt vir hierdie proses van logiese afleiding gebruik hy dan die fiktiewe redelike landdros. Wat sou die redelike landdros waarskynlik gedoen het? Die volgende stap in die proses is dan die aanvaarding dat die betrokke landdros waarskynlik dieselfde sou doen. [28] Wat Bartholomew in hierdie saak ten laste gelê word, is positiewe optrede of 'n commissio. Ons weet dus, aan die een kant, presies wat die aard van Bartholomew se getuienis was en, aan die ander kant, wat van die Staat se saak sou oorbly indien ons hierdie getuienis sou elimineer. Ons weet ook dat die betrokke staatsadvokaat, volgens sy uitdruklike getuienis, geglo het dat daar selfs sonder Bartholomew voldoende getuienis was om met die vervolging voort te gaan. Die hof a quo bevind dat hierdie standpunt geignoreer kan word omdat dit nie sou strook met die optrede van 'n redelike staatsadvokaat nie. Wat die hof se redenasie egter buite rekening laat is die ander kant van die munt, synde of die redelike advokaat na 17 Januarie 2007 met die vervolging sou voortgaan op sterkte van Bartholomew se getuienis. By die beoordeling van hierdie vraag moet in gedagte gehou word dat op 17 Januarie 2007, na Van der Vijver se wete, daar letterlik niks van Bartholomew se mening oorgebly het nie. Van der Vijver het immers geweet van die koor van deskundige menings, internasionaal en hier te lande, dat Bartholomew se teorie geen steek hou nie. Hy het veral ook geweet van Bodziak se mening wat gebaseer was op die totale afwesigheid van unieke kenmerke en waarop Bartholomew eenvoudig geen antwoord gehad het nie. Soos Veldhuizen R tereg bevind het, was Bartholomew se getuienis „in alle opsigte nie die papier werd waarop dit geskryf is nie‟. Selfs 'n leek kon op daardie stadium sien dat dit onsin is en Van der Vijver het dit alles geweet. Die antwoord op die gestelde vraag is dus dat indien die redelike staatsadvokaat nie sonder Bartholomew se getuienis met die vervolging sou voortgaan nie, hy of sy dit vir seker nie op grond van Bartholomew se getuienis sou doen nie. [29] In hierdie omstandighede skep die gebruik van die redelike staatsadvokaat as 'n vertrekpunt in die proses van logiese afleiding 'n netelige probleem. Indien aanvaar word dat Van der Vijver soos 'n redelike staatsadvokaat opgetree het, het ons sy direkte getuienis oor wat die redelike staatsadvokaat waarskynlik sou doen. Indien daarteenoor aanvaar word dat Van der Vijver onredelik was, is die tweede stap van die logiese redenasie – naamlik, dat hy waarskynlik soos die redelike staatsadvokaat sou optree – nie geregverdig nie. Ons weet reeds hy sou nie. Op die ou end, so wil dit my voorkom, is die deurslaggewende vraag dus of Van der Vijver se getuienis oor wat hy in die afwesigheid van Bartholomew se getuienis sou doen, as geloofwaardig aanvaar moet word. Indien wel, het die respondent, na my oordeel, nie die oorsaaklike verband tussen Bartholomew se onregmatige optrede, aan die een kant, en die voortsetting van sy vervolging, aan die ander kant, bewys nie. [30] Soos ek dit sien kom die vraag of Van der Vijver se optrede inderdaad redelik was al dan nie, dus nie werklik ter sprake nie. Die hof a quo het bevind sy houding was onredelik. Ek is nie so seker nie. Vir my kom dit onbillik voor om 'n advokaat se besluit te toets met die voordele van 'n terugkykende oordeel en nadat al die getuienis behoorlik in kruisverhoor getoets is, wel wetende dat hy sy besluit sonder hierdie voordele moes neem. Nadat een maal besluit is om met die verhoor voort te gaan op die res van die getuienis, lyk die volgende redenasie ook nie vir my inherent onredelik nie: hoewel Bartholomew se getuienis opsigself eintlik geen waarde het nie, kan dit nie die Staat se saak benadeel nie. Dit kan dus maar net sowel in die skaal geplaas word vir wat dit werd is. Maar hoe dit ook al sy. Soos reeds gesê gaan dit myns insien op die ou end oor Van der Vijver se geloofwaardigheid wanneer hy sê dat die vervolging in elk geval sou voortgaan sonder Bartholomew se getuienis. [31] Hoewel die hof a quo nie 'n geloofwaardigheidsbevinding teen Van der Vijver gemaak het nie, was die respondent se betoog in hierdie hof inderdaad dat sy getuienis in hierdie opsig as ongeloofwaardig verwerp moet word. Hierdie betoog was in ooreenstemming met wat in kruisverhoor aan Van der Vijver gestel is, synde dat „dit is nie die waarheid as u sê dat u sou definitief aangaan met die vervolging as die skoenspoor weggeval het nie‟. In wese het die argument ter ondersteuning van hierdie betoog weereens berus op die inherente onwaarskynlikheid dat die Staat sonder Bartholomew se getuienis met die vervolging sou voortgaan. Weereens is my probleem met hierdie betoog egter dat dit die onwaarskynlikheid buite rekening laat dat die Staat op sterkte van Bartholomew se getuienis met die vervolging sou voortgaan. Uiteindelik strook die waarskynlikhede dus eerder met Van der Vijver se getuienis, naamlik dat hy sonder die voordeel van 'n terugkykende oordeel, nie die vervolging sou staak as Bartholomew se getuienis sou wegval nie. [32] In hierdie hof het die respondent 'n verdere betoog geopper wat steun op die standpunt dat die Konstitusionele Hof in Lee v Minister of Correctional Services 2013 (2) SA 144 (KH) paras 45-51, 'n meer buigsame (flexible) toepassing van die „but-for‟ toets neergelê het as dié wat tot nog toe deur ons howe aanvaar is. Ek stem nie saam met hierdie uitleg van die uitspraak van Nkabinde R in Lee nie. Wat sy bedoel met „flexible‟ blyk duidelik uit para 47 waarin sy onder meer sê: „The most recent, post-constitutional affirmations of [the flexible application of the but-for test] are to be found in Van Duivenboden [ie Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA)] and Gore [ie Minister of Finance v Gore NO 2007 (1) SA 111 (SCA)]. In Gore the approach adopted in discharging the onus in relation to factual causation was described thus: “. . . . Application of the “but-for” test is not based on mathematics, pure science or philosophy. It is a matter of common sense, based on the practical way in which the ordinary person‟s mind works against the background of everyday-life experiences. Or, as was pointed out in similar vein by Nugent JA in Minister of Safety and Security v Van Duivenboden: “A plaintiff is not required to establish the causal link with certainty, but only to establish that the wrongful conduct was probably a cause of the loss, which calls for a sensible retrospective analysis of what would probably have occurred, based upon the evidence and what can be expected to occur in the ordinary course of human affairs rather than metaphysics.”‟ [33] Soos ek dit sien, doen Nkabinde R hoegenaamd nie 'n wysiging van hierdie hof se benadering tot die toepassing van die „but-for test‟ aan die hand nie. Inteendeel, sy bevestig dit juis. Soos blyk uit die passasies wat sy aanhaal, word met „flexible‟ slegs bedoel dat 'n eiser nie oorsaaklikheid met matematiese presiesheid hoef te bewys nie, maar bloot op oorwig van waarskynlikheid. Soos uit die voorgaande blyk is dit hoe ek gepoog het om die „but-for test‟ in die onderhawige konteks toe te pas. En dit is juis die toepassing van die toets op hierdie „flexible‟ oftewel buigsame wyse wat my tot die slotsom lei dat 'n kousale verband tussen Bartholomew se onregmatige optrede en die voortsetting van die respondent se vervolging nie bewys is nie. [34] Dit bring my by die respondent se argument gebaseer op Swartz se verklaring dat hy die respondent se vingerafdruk van 'n DVD-houer gelig het terwyl dit, soos op hierdie stadium algemeen aanvaar word, van 'n drinkglas afkomstig was. Ons weet ook dat die verhoorhof op hierdie punt teen die respondent beslis het op grond van die bevinding dat opset aan die kant van Swartz nie bewys is nie. Nietemin het die respondent op appèl volgehou met hierdie argument. Die appellant se antwoord hierop was drieledig. Eerstens, dat by ontstentenis aan 'n kruisappèl hierdie argument nie die respondent in die mond lê nie. Tweedens, dat die hof a quo se feitebevinding aangaande afwesigheid van opset aanvaar moet word. Derdens, dat daar in elk geval geen kousale verband tussen die polisie se optrede rondom die vingerafdruk en die uiteindelike vervolging was nie. Ek beoog om hierdie drie antwoorde afsonderlik te oorweeg. [35] As gesag vir sy betoog gebaseer op afwesigheid van 'n kruisappèl, het die appellant hom veral beroep op Van der Plaats v SA Mutual Fire and General Insurance Co Ltd 1980 (3) SA 105 (A) te 117G-H. Soos ek dit sien is die onderhawige saak egter op die feite eerder analoog aan Bay Passenger Transport Ltd v Franzen 1975 (1) SA 269 (A) as aan Van der Plaats. Die beginsel verskil tussen die twee situasies word verduidelik in Bay Passenger Transport (te 278A-D). Ooreenkomstig hierdie verduideliking is 'n appèl en derhalwe ook 'n kruisappèl, gerig teen die bevel van die verhoorhof en nie die hof se beredenering nie. Wanneer 'n respondent dus tevrede is met die verhoorhof se bevel, maar dit op ander gronde wil verdedig as waarop die hof gesteun het, is 'n kruisappèl nie nodig nie. Die feit dat daardie gronde deur die verhoorhof verwerp is maak aan hierdie beginsel geen verskil nie. 'n Kruisappèl word slegs vereis wanneer die respondent die hof se bevel in sy geheel of gedeeltelik wil aanveg. Terwyl Van der Plaats in die laasgenoemde kategorie tuisgebring is, val hierdie saak, soos Bay Passenger Transport, myns insiens in die eerste. Die respondent is tevrede met die bevel van die hof a quo in sy geheel. Gevolglik was dit nie vir hom nodig om 'n kruisappèl te loods ten einde op die feite rondom die vingerafdruk as basis vir sy saak te steun nie. [36] Wat kousaliteit betref weet ons dat die staatsadvokate 13 Desember 2006 die respondent se regsverteenwoordigers formeel verwittig het dat nie langer op die vingerafdrukgetuienis gesteun word as basis vir 'n skuldigbevinding nie. Dit was meer as twee maande voordat die strafsaak 'n aanvang geneem het. Vir soverre die appellant se betoog is dat daar na 13 Desember 2006 nie meer 'n kousale verband tussen die vingerafdrukgetuienis en die vervolging was nie, moet hy, na my oordeel, gelyk gegee word. Daarteenoor staan dit vas dat die vingerafdrukgetuienis direk aanleiding gegee het tot die begin van die respondent se vervolging op 16 Junie 2005 en daarna 'n belangrike rol gespeel het in die voortsetting van die vervolging tot 13 Desember 2006. Tussen die twee datums was daar dus inderdaad 'n kousale verband tussen die vingerafdrukgetuienis en die vervolging. [37] Wat oorbly is die kwessie van animus iniuriandi oftewel opset aan die kant van Swartz. Blykens die uitspraak van die hof is hy veral tot sy bevinding, – dat opset aan die kant van Swartz nie bewys is nie – oorreed deur die oorweging dat Swartz ten tyde van sy onware verklaring hoegenaamd nie geweet het dat dit van belang is dat die vingerafdruk van 'n DVD-houer – instede van 'n drinkglas – afkomstig was nie. Soos ek dit sien is hierdie redenasie onaanvegbaar. Swartz kon op daardie stadium nie weet dat die aanwesigheid van die respondent se vingerafdruk op die betrokke DVD-houer in stryd sou wees met sy alibi nie. Trouens, Swartz het op daardie stadium nog nooit van die respondent gehoor nie en ook nie geweet wie se vingerafdruk ter sprake was nie. Die respondent se antwoord op hierdie oorweging word in sy hoofde van betoog soos volg geformuleer: „Hierdie oorweging is „n non sequitur. Dit was nie nodig vir Swartz voordat hy die vals verklaring gemaak het om te geweet het of die oorsprong van die folien [met die vingerafdruk] van belang is al dan nie. Motief is irrelevant.‟ Ek glo hierdie antwoord mis die punt. Die punt is eenvoudig dat indien daar vir Swartz hoegenaamd geen rede was om 'n valse verklaring te maak nie, dit hoogs onwaarskynlik is dat hy dit opsetlik sou doen. [38] Die respondent se verdere argument is gebaseer op Swartz se getuienis dat hy slegs twee vingerafdrukke met twee stukke folien gelig het in die oorledene se woonstel en die feit dat die twee foliene wat nog beskikbaar is albei van drinkglase afkomstig is. Hieruit volg dit, so het die respondent betoog, dat die folien 1 – met die respondent se vingerafdrukke – op „n later stadium omgeruil moes gewees het met die oorspronklike folien 1 wat inderdaad deur Swartz van 'n DVD-houer gelig is. Indien nie, so het die respondent retories gevra, wat het geword van die folien wat Swartz inderdaad van die DVD gelig het. Hieruit volg dit, so het die respondent betoog, dat die folien 1 met die respondent se vingerafdruk deur 'n lid van die polisie gelig is van 'n drinkglas; dat dit daarna bedrieglik omgeruil is met die folien 1 wat gelig is van die DVD-houer; dat Swartz bedrieglik in sy handskrif aangedui het dat die vervangende folien afkomstig is van die DVD-houer; en toe die vervangende folien 1 voorgehou het as 'n bewysstuk wat van die DVD-houer in die oorledene se woonstel afkomstig was. [39] Soos blyk uit wat volg lei hierdie teorie egter tot verskeie probleme. In die eerste plek is die foliene wat Swartz in die oorledene se woonstel gelig het op 18 Maart 2005 ingeskandeer op die polisie se rekenaarstelsel wat bekend staan as OVIS, synde 'n afkorting vir „outomatiese vingerafdruk identifikasie sisteem‟. Op 22 Maart 2005 het Swartz foto‟s van die foliene wat hy gelig het vanaf die polisie fotograwe ontvang waarvan hy 'n sogenaamde grootboogkaart gemaak het. Op 12 April 2008 het inspekteur Bester die vingerafdrukke wat op daardie datum geneem is van die respondent en sy vriende, vergelyk met die grootboogkaart. Toe eers is vasgestel dat die respondent se vingerafdruk ooreenstem met die vingerafdruk wat blykens die grootboogkaart van die DVD-houer gelig is. Aanvaarding van die respondent se teorie sou dus beteken dat die polisie voor 12 April 2005 op klandestiene wyse 'n vingerafdruk van die respondent bekom het om dit dan kwansuis met sy vingerafdruk wat amptelik op 12 April 2005 geneem is, te vergelyk. Dit sou ook beteken dat die vingerafdruk afkomstig van die DVD-houer nie alleen op folien nie, maar ook in die OVIS-stelsel en op die grootboogkaart vervang moes word. [40] Op die ou end is die enigste basis vir hierdie ingewikkelde teorie dan Swartz se getuienis dat hy slegs twee foliene in die oorledene se woonstel gelig het en sy ontkenning dat hy 'n fout gemaak het toe hy op folien 1 'n aantekening gemaak het dat dit van 'n DVD-houer afkomstig was. Daarteenoor dui Swartz se onprofessionele onbeholpenheid en louter onervarenheid egter juis op die waarskynlikheid dat hy 'n fout gemaak het. Onder meer het hy, in stryd met staande polisie-instruksies, nie sy aantekeninge van waar die vingerafdrukke afkomstig was op die toneel gemaak nie, maar eers later in sy kantoor. In die siviele saak het Swartz ook in kruisverhoor toegegee dat hy op 17 Maart 2005 by ander sake betrokke was waar hy vingerafdrukke gelig het wat hy toe ook na sy kantoor geneem het. Uiteindelik moes hy dan ook in die siviele saak teësinnig toegee dat „dit moontlik is dat êrens hier goed deurmekaar geraak het‟. Teen hierdie agtergrond is die moontlikheid van 'n fout na my mening baie meer waarskynlik as die spekulatiewe teorie van 'n gekompliseerde bedrieglike skema deur die polisie waarop die respondent steun. Hieruit volg dat die bevinding van die hof a quo waarvolgens die respondent geen opset aan die kant van Swartz bewys het nie, myns insiens as korrek aanvaar moet word. [41] Laastens het die respondent aangevoer dat, indien hy nie met sy eis op grond van kwaadwillige vervolging kan slaag nie, hy óf 'n grondwetlike eis óf 'n statutêre eis vir skadevergoeding het. As basis vir sy grondwetlike eis het hy gesteun op aantasting van sy reg op menswaardigheid, sy reg op vryheid en integriteit van sy persoon, insluitende psigologiese integriteit, wat almal deur die Handves van Menseregte in die Grondwet onderskryf word. Vir sy statutêre eis het die respondent hom beroep op art 14 van die Wet op die Suid-Afrikaanse Polisiediens 68 van 1995 ingevolge waarvan die polisie, volgens die respondent se betoog, verplig was om sy grondwetlike regte te beskerm. Aangaande sy statutêre eis is in argument namens die respondent toegegee dat dit eintlik ondervang word deur sy grondwetlike eis en kan ek hierdie eis dus met vrymoedigheid daar laat. Wat betref die feitegrondslag van sy grondwetlike eis steun die respondent op dieselfde feitebewerings as vir sy eis gebaseer op kwaadwillige vervolging. In argument het die respondent se advokaat dan ook uitdruklik toegegee dat die vereistes van opset en 'n kousale verband ook by hierdie eis toepassing vind. [42] Dit staan vas dat hierdie hof in terme van artikel 8(3) en 39(2) van die Grondwet verplig is om die gemenereg te ontwikkel indien dit sou blyk dat die beginsels van ons gemenereg onvoldoende beskerming aan fundamentele regte verleen. Die uitgangspunt wat by oorweging van sodanige ontwikkeling geld word soos volg saamgevat deur Ponnan AR in Dendy v University of Witwatersrand 2007 (5) SA 382 (HHA) para 23: „A court, faced with such a task, is obliged to undertake a two-stage enquiry. First, it should ask itself whether, given the objectives of s 39(2), the existing common law should be developed beyond existing precedent. If the answer to that question is a negative one, that should be the end of the enquiry. If not, the next enquiry should be how the development should occur and which court should embark on that exercise.‟ [43] By toepassing van hierdie benadering is ek nie oortuig dat die gemeenregtelike aksie gebaseer op kwaadwillige vervolging onvoldoende beskerming aan die respondent se fundamentele regte verleen nie. Die rede waarom die respondent se gemeenregtelike eis nie kan slaag nie is omdat hy nie die feitebewerings waarop hy steun kon bewys nie. Vir soverre hy vir sy grondwetlike eis op dieselfde feitebewerings steun, kan hierdie eis logieserwys ook nie slaag nie. Hierdie hof het al by geleentheid die mening uitgespreek dat aksies gebaseer op kwaadwillige vervolging weens oorwegings van openbare beleid ontmoedig word (sien bv Le Roux v Dey 2010 (4) SA 210 (HHA) para 34). Aangesien die respondent egter nie in sy pleitstukke of in argument aangevoer het dat die vereistes van die gemeenregtelike aksie afgewater moet word nie, kom die vraag of sodanige afwatering nodig en wenslik is en indien wel, tot welke mate dit moet geskied, nie ter sprake nie. [44] Gevolglik word gelas: 1. Die appèl slaag met koste insluitende die koste van twee advokate. 2. Die bevel van die hof a quo word ter syde gestel en vervang met die volgende: „Eiser se eis word van die hand gewys met koste, insluitende die koste van twee advokate en die kwalifiserende gelde van Dr L Liebenberg, mnr F Maritz en mnr J A Bierman.‟ _________________ F D J BRAND APPÈLREGTER VERSKYNINGS: Vir Appellant: J W Olivier SC R Liddell In opdrag van: Staatsprokureur KAAPSTAD Korrespondente: Staatsprokureur BLOEMFONTEIN Vir Respondent: P J de Bruyn SC B J Pienaar SC T N Price In opdrag van: Lowe & Petersen KAAPSTAD Korrespondente: Honey Prokureurs BLOEMFONTEIN

DIE HOOGSTE HOF VAN APPÈL REPUBLIEK VAN SUID-AFRIKA PERSVERKLARING – UITSPRAAK GELEWER IN DIE HOOGSTE HOF VAN APPÈL Van: Die Griffier, Hoogste Hof van Appèl Datum: 28 Maart 2013 Status: Die persverklaring is tot voordeel van die media en vorm nie deel van die uitspraak van die Hoogste Hof van Appèl nie. DIE MINISTER VAN POLISIE v F B VAN DER VYVER Op Maart 2013 het die HHA die appèl van die Minister van Polisie gehandhaaf teen 'n uitspraak van die Wes-Kaapse Hooggeregshof ten gunste van mnr F B van der Vyver. Die saak het sy oorsprong gehad in 'n strafsaak waarin Van der Vyver tereggestaan het op aanklag van die moord op mej Inge Lotz op 16 Maart 2005. Nadat Van der Vyver onskuldig bevind is op hierdie aanklag het hy die Minister suksesvol aangespreek in die verhoorhof op grond van kwaadwillige vervolging deur lede van die SAPD, onder meer, vir die regskoste wat hy in die strafsaak aangegaan het. As basis vir sy eis het Van der Vyver veral gesteun op twee verklarings deur lede van die SAPD wat later geblyk het onwaar te wees. Die eerste het betrekking gehad op sy vingerafdruk wat na bewering gelig is van 'n DVD-houer in die oorledene se woonstel maar later geblyk het van 'n drinkglas afkomstig te wees. Die tweede het geslaan op 'n bloedmerk op die oorledene se badkamervloer wat verkeerdelik verbind is met 'n sportskoen van Van der Vyver. Aangaande die vingerafdruk het die verhoorhof beslis dat Van der Vyver nie daarin geslaag het om kwaadwilligheid aan die kant van die polisie te bewys nie. Nietemin is sy eis gehandhaaf op grond van die onware getuienis rondom die bloedmerk. Op appèl het die HHA met die verhoorhof saamgestem oor die vingerafdruk- getuienis, maar beslis dat geen oorsaaklike verband bewys is tussen die onware getuienis rakende die bloedspoor, aan die een kant, en die voortsetting van die vervolging teen Van der Vyver, aan die ander kant, nie. In wese het die HHA sy uitspraak baseer op die getuienis van die staatsadvokaat in die strafsaak dat die vervolging teen Van der Vyver, selfs in die afwesigheid van hierdie onware getuienis rakende die bloedspoor, sou voortgaan.

3860

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 788/2020 In the matter between: P A F APPLICANT and S C F RESPONDENT Neutral citation: P A F v S C F (788/2020) [2022] ZASCA 101 (22 June 2022) Coram: DAMBUZA, MOLEMELA and MAKGOKA JJA, and MAKAULA and WEINER AJJA Heard: 3 March 2022 Delivered: 22 June 2022 Summary: Family law – divorce – accrual – asset donation to trust – whether value thereof should be considered as part of donor spouse’s estate for purpose of calculating accrual. Civil procedure – application for leave to lead further evidence on appeal – condonation – late prosecution of appeal – principles restated. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Kruger, D Pillay and Steyn JJ, sitting as a court of appeal): The application for special leave to appeal is refused with costs, including costs of two counsel, where so employed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Makgoka JA (Dambuza and Molemela JJA, and Makaula and Weiner AJJA concurring): [1] This is an application for special leave to appeal against the order of the full court of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the full court). That court dismissed the applicant’s application for leave to adduce further evidence on appeal, and his application to condone the late prosecution of the appeal. On further application to this Court for special leave to appeal, the application was referred for oral hearing in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013 (the Superior Courts Act). The parties were also notified that they should be prepared, if called upon to do so, to argue the merits of the appeal. [2] The parties were married to each other on 5 September 2001 out of community of property, subject to the accrual system. On 24 June 2013, the applicant issued summons against the respondent in the KwaZulu-Natal Division of the High Court, Durban (the high court) for a decree of divorce and ancillary relief. It was common cause that the value of the applicant’s estate had shown a greater accrual than the estate of the respondent. Accordingly, in her counterclaim, the respondent claimed an amount equal to one half of the difference between the accruals in the parties’ respective estates. [3] The divorce trial commenced in the high court on 18 February 2015. On 29 January 2015, a mere 20 days before the commencement of the trial, the applicant founded a trust under the laws of the British Virgin Islands, pursuant to a settlement agreement between him and his brother, MJF, a solicitor practicing as Queen’s Counsel (QC) in the British Virgin Islands. The parties’ minor daughter is the sole beneficiary of the trust, and the applicant’s brother is its sole trustee. The applicant and the respondent are the residual trustees. [4] On 30 January 2015, a day after the trust was established, the applicant concluded a written deed of donation with the trust. In terms thereof, he donated a sum of £115 000 to the trust. The donation, which was irrevocable and unconditional, was payable a year later on 29 January 2016, or on the date of registration of transfer of an immovable property owned by the applicant in London, whichever occurred earlier. The donation (at the time, equivalent to R2 205 362) was paid to the trust in March 2015. Also, during the same month, the applicant transferred a sum of £125 000 (at the time, equivalent to R3 377 481) into the bank account of his father. This was purportedly repayment of a loan advanced to him by his father approximately 25 years earlier. [5] Upon becoming aware of these transactions, the respondent amended her counterclaim in September 2016 to include a prayer that the calculation of the accrual should take into account the value of the two transactions. On 26 April 2017, the high court granted a decree of divorce, but reserved judgment on the determination of the proprietary consequences of the marriage. The court subsequently gave judgment on this aspect on 13 November 2017. The high court concluded that the two transactions were made with the ‘fraudulent intention’ of depriving the respondent of her rightful accrual claim. Consequently, it ordered, among others, that the value of the two transactions be deemed to be part of the applicant’s assets for the purposes of calculating the accrual. [6] The high court subsequently granted the applicant leave to appeal to the full court. However, the applicant failed to prosecute his appeal timeously, and as a result, the appeal lapsed. Before the full court the applicant abandoned the appeal against the order in respect of the payment to his father, and applied for condonation of the late prosecution of the appeal to the full court and for leave to introduce further evidence on appeal. The full court dismissed both applications. [7] The issue before this Court is therefore whether special leave should be granted against the orders of the full court, and if granted, the merits of the case. A consideration of the condonation application involves the question whether there are reasonable prospects of success on the merits. I consider each of these issues, in turn. Application to lead further evidence [8] The evidence which the applicant sought to introduce on appeal before the full court was the fact that he had obtained a written legal opinion regarding the lawfulness of establishing a trust and making a donation to it, and the written opinion itself. That opinion was provided by Advocate André Stokes SC (Stokes SC), who also represented the applicant during the divorce trial. The applicant asserted that he had established the trust on the basis of that opinion, which was to the effect that the establishment of the trust, and the donation to it, would not be unlawful, and the reasons for the donation were legitimate. The applicant contends that the opinion is relevant, because, according to him, had the high court had such evidence before it, it would not have concluded that the donation be considered for purposes of calculating the accrual. As to why the evidence was not introduced during the trial, the applicant explained that during the trial, he had enquired from Stokes SC as to the need to lead such evidence, but was advised that it was unnecessary to do so. [9] Section 19(b) of the Superior Courts Act, empowers this Court to ‘receive further evidence’. In Colman v Dunbar 1933 AD 141 (A) at 161-163, this Court said that the relevant criteria as to whether evidence should be admitted on appeal are: the need for finality, the undesirability of permitting a litigant who has been remiss in bringing forth evidence, to produce it late in the day, and the need to avoid prejudice. This was approved by the Constitutional Court in Rail Commuters Action Group and Others v Transnet Ltd t/a Metrorail and Others [2004] ZACC 20; 2005 (2) SA 359 (CC) paras 41-43. Referring to s 22 of the repealed Supreme Court Act 59 of 1959, which is similar to s 19(b) of the Superior Courts Act, the court cautioned that the power to receive further evidence on appeal should be exercised ‘sparingly’ and that such evidence should only be admitted in ‘exceptional circumstances’. In addition, the evidence must be ‘weighty, material and presumably to be believed’. In O’Shea NO v Van Zyl NO and Others (Shaw NO and Others Intervening) [2011] ZASCA 156; 2012 (1) SA 90 (SCA); [2012] 1 All SA 303 (SCA) para 9, this Court considered that one of the criteria for the late admission of the new evidence is that such evidence will be practically conclusive and final in its effect on the issue to which it is directed. [10] Measured against the approach set out above, I am of the view that there is no merit in the applicant’s application. First, I discern no ‘exceptional circumstances’ to move this Court to exercise its power, which, it must be borne in mind, should be exercised ‘sparingly’. [11] Second, the evidence sought to be introduced would not be ‘practically conclusive and final in its effect’ on the issue of the lawfulness of the donation. The fact that the applicant acted on the basis of a legal opinion from senior counsel is not dispositive of the question as to whether the value of the donation to the trust should be included in the calculation of the accrual. It is but one of the factors to be considered. [12] Third, and as counsel for the respondent correctly pointed out, the evidence sought to be introduced is not of an incontrovertible nature. It is not decisive of the question for which it is sought to be introduced. On the contrary, it raises more questions than it answers, which can only be explored in cross-examination, which cannot be done on appeal. Those questions include why the applicant sought a second opinion on the same issue, which tends to suggest that the initial opinion was unfavourable to the outcome he sought. For all the above reasons, the application to adduce further evidence on appeal must be dismissed. Condonation [13] The high court granted the applicant leave to appeal to the full court on 23 October 2018. The notice of appeal was delivered timeously on 7 November 2018. In terms of rule 49(6)(a) of the Uniform Rules of Court, the applicant had 60 days within which to apply for allocation of the date of hearing of the appeal, and to lodge the appeal record. If no such application was made, the appeal would be deemed to have lapsed in terms of the rule. Thus, the applicant had up to 6 February 2019 to apply for a date. He only did so on 10 October 2019, when he also furnished the record on appeal. By then, the appeal had lapsed in terms of the deeming provisions of rule 49(6)(a). [14] The explanation for the delay was provided by the applicant’s attorney. She stated that she was under an erroneous impression that the application for the allocation of a date of hearing could only be made once the appeal record was ready to be lodged. As the appeal record was not ready by 6 February 2019, she did not apply for a date of hearing. The attorney further explained that there were difficulties in compiling the appeal record. Certain documents were missing, including a bundle of the respondent’s trial exhibits, which was only furnished to her on 19 February 2019. The task of finalising the appeal record was only completed in September 2019, and the record was delivered to the applicant’s attorney by the transcribers on 18 September 2019. [15] The full court had to consider whether there was sufficient cause to condone the applicant’s non-compliance with the rules. The basic principle is that a court considering condonation has a discretion, to be exercised judicially upon a consideration of all the facts, and in essence, it is a matter of fairness to both sides.1 Among the factors usually relevant are: (a) the degree of lateness; (b) the explanation therefor; (c) the prospects of success; (d) and the importance of the case.2 [16] It seems common cause, or at least not seriously contested, that much of the fault for the delay in finalising the preparation of the record can be attributed to the transcribers. The full court was critical of the applicant’s attorney for not taking steps to compel the transcribers to complete the appeal record timeously, and for her failure to explain this in her affidavit. The full court observed: ‘“Final instructions” were allegedly given to [the transcribers] on 6 June 2019. Notwithstanding this, the record was only delivered to the [applicant’s] attorney on 18 September 2019. No explanation has been provided for the delay from 18 September 2019 until 9 October 2019 when the appeal record was eventually filed with the registrar. There is also no explanation from [the transcribers], in either the form of a substantive affidavit or a confirmatory affidavit, regarding the delay and the causes thereof.’ 1 Melane v Santam Insurance Co Ltd 1962 (4) SA 531 (A) at 532B-E. 2 Ibid. [17] The full court was also not impressed with the attorney’s explanation that she had misconstrued the provisions of rules 49(6) and (7) that the application for a date could not be made without the lodging of the appeal record. It described the explanation as ‘terse’ and found it inadequate. I agree. Even allowing for the fact that the delay in the preparation of the record was occasioned by the transcribers, and that there was not much the applicant’s attorney could do about it, there is still no proper explanation as to what the attorney ‘misconstrued’ about rule 49(7)(a). The rule requires the application for a date to be filed simultaneously with copies of the record. But it has an important proviso, which reads as follows: ‘. . . If the necessary copies of the record are not ready at that stage, the registrar may accept an application for a date of hearing without the necessary copies if – (i) the application is accompanied by a written agreement between the parties that the copies of the record may be handed in late; or (ii) failing such agreement, the appellant delivers an application together with an affidavit in which the reasons for his omission to hand in the copies of the record in time are set out and in which is indicated that an application for condonation of the omission will be made at the hearing of the appeal.’ [18] The proviso is clear. If the record was not available, the applicant’s attorney could have requested the respondent’s attorney to agree to file the record later, failing which, she could have deposed to an affidavit explaining to the registrar the difficulties experienced by the transcribers to finalise the preparation of the record. Even a cursory reading of the proviso would have made it clear that an application for a date could be made without filing the record. The applicant’s attorney does not explain what part of this proviso she ‘misconstrued’. [19] The full court further referred to the trite principle that it is the duty of every legal practitioner to be acquainted with the rules of court. It thus concluded that the attorney’s explanation was no excuse for not complying with the rules. It referred in this regard to Moaki v Reckitt and Colman (Africa) Ltd and Another 1968 (3) SA 98 (A), where this Court held, at 101G that: ‘An attorney who is instructed to prosecute an appeal is . . . duty bound to acquaint himself with the procedure prescribed by the Rules of the Court to which a matter is being taken on appeal.’ The full court also considered the decisions of this Court in Kgobane and Another v Minister of Justice and Another 1969 (3) SA 365 (A) at 369B-370A and Mbutuma v Xhosa Development Corporation Limited 1978 (1) SA 681 (A). [20] The full court further pointed out that the applicant’s attorney was notified in writing by the respondent’s attorney as early as 21 June 2019 that the appeal had lapsed and that an application for condonation would be necessary. The applicant’s attorney did not meaningfully respond to that letter, and failed to address this aspect in her founding affidavit. It is a requirement that an application for condonation must be made as soon as possible after the party becomes aware of its failure to comply with the rules.3 In this case, the application was only made some four months later, on 10 October 2019, when the applicant delivered the appeal record and applied for a date of hearing. This, the full court remarked, suggested that the applicant’s attorney was of the view that condonation was simply there for the asking. On these considerations, the full court dismissed the applicant’s application for condonation of the late prosecution of the appeal and its reinstatement. In this Court, the applicant persisted in his assertion that that the delay in prosecuting the appeal had been fully and satisfactorily explained. [21] A court considering a condonation application exercises a discretion in the true sense, upon consideration of all the circumstances of each case.4 In Aurecon South Africa (Pty) Ltd v City of Cape Town [2015] ZASCA 209; 2016 (2) SA 199 (SCA) para 17, it was held that the relevant factors in that enquiry generally 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 reasonableness of the explanation for the delay, which must cover the whole period of delay; the importance of the issue to be raised; and the prospects of success. The onus is on the applicant to satisfy the court that condonation should be granted.5 3 P E Bosman Transport Works Committee and Others v Piet Bosman Transport (Pty) Limited 1980 (4) SA 794 (A) at 800A-C. 4 Mabaso v Law Society of the Northern Provinces [2004] ZACC 8; 2005 (2) SA 117 (CC) para 20. 5 Glazer v Glazer NO 1963 (4) SA 694 (AD) at 702H. [22] Because the discretion exercised in this regard is one in the true sense, the court’s decision can only be overturned on appeal in narrow circumstances. The approach of an appellate court to the exercise of such a discretion is this: it will not set aside the decision of the lower court merely because it would itself, on the facts of the matter, have come to a different conclusion; it may interfere only when it appears that the lower court had not exercised its discretion judicially, or that it had been influenced by wrong principles or a misdirection on the facts, or that it had reached a decision which in the result could not reasonably have been made by a court properly directing itself to all the relevant facts and principles.6 [23] Having carefully considered the reasoning of the full court as set out above, I cannot fault its approach or the conclusion it reached. There is no discernable misdirection or an indication that the discretion was not exercised properly. There is therefore no basis for this Court to intervene and substitute its discretion for that of the full court. Prospects of success [24] Good prospects on the merits may compensate for poor explanation for the delay.7 However, where special leave is sought, as here, the existence of reasonable prospects of success is insufficient for the granting of special leave. As pointed out in Cook v Morrison and Another [2019] ZASCA 8; 2019 (5) SA 51 (SCA) para 8, ‘something more, by way of special circumstances, is needed’. This may include: ‘that the appeal raises a substantial point of law; or that the prospects of success are so strong that a refusal of leave would result in a manifest denial of justice; or that the matter is of very great importance to the parties or to the public.’8 [25] The issue in this regard is whether the high court was correct in its order that the amount donated to the trust should be deemed to be part of the applicant’s estate 6 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000 (2) SA 1 (CC); 2000 (1) BCLR 39 (CC) para 11. 7 United Plant Hire (Pty) Ltd v Hills and Others 1976 (1) SA 717 (A) at 720E-G; Darries v Sheriff, Magistrate’s Court, Wynberg and Another 1998 (3) SA 34 (SCA) at 40H-41E; Valor IT v Premier, North West Province and Others [2020] ZASCA 62; 2021 (1) SA 42 (SCA) para 38. 8 This is not a closed list, as explained in Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A) at 564H-565E. See also Director of Public Prosecutions, Gauteng Division, Pretoria v Moabi [2017] ZASCA 85; 2017 (2) SACR 384 (SCA) para 21. for the purpose of calculating the accrual. The right to claim accrual is provided for in s 3 of the Matrimonial Property Act 88 of 1984 (the MPA). That section provides that at the dissolution of a marriage subject to the accrual system, the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse, acquires a claim against the other spouse for an amount equal to half of the difference between the accrual of the respective estates of the spouses.9 [26] Where trust property is involved, the default position is that such property does not form part of the personal estate of the trustee, except in so far as he or she, as trust beneficiary, is entitled to the trust property.10 A court can disregard this in two instances: where it finds that a trust is a sham or simulated, or when it finds that there has been abuse of the trust form. In Van Zyl NO and Another v Kaye NO and Others [2014] ZAWCHC 52; 2014 (4) SA 452 (WCC) para 16, it was explained that the notion of a trust being a sham is premised upon the trust not existing. If it is found that a trust is a sham, the result is that no effect will be given to the transaction and the ‘founder’ will remain the owner of the ‘trust assets’ and neither the ‘trustee(s)’, nor the ‘beneficiaries’ will acquire any rights with regard to these assets.11 On the other hand, piercing the trust veneer implicitly recognises the validity of a trust in the legal sense, but finds that there may be a justification to disregard the ordinary consequences of its existence for a particular purpose.12 These two remedies are distinct from each other and should not be conflated. [27] In her amended counterclaim, the respondent accepted the formalities in respect of the trust, namely: its formation in accordance with the laws of the British Virgin Islands; that the applicant’s brother was its sole trustee; that the parties’ minor child was the sole beneficiary, with the applicant and the respondent as the residual 9 This is subject to s 8(1) of the Matrimonial Property Act 88 of 1984, which reads: ‘Power of court to order division of accrual (1) A court may on the application of a spouse whose marriage is subject to the accrual system and who satisfies the court that his right to share in the accrual of the estate of the other spouse at the dissolution of the marriage is being or will probably be seriously prejudiced by the conduct or proposed conduct of the other spouse, and that other persons will not be prejudiced thereby, order the immediate division of the accrual concerned in accordance with the provisions of this Chapter or on such other basis as the court may deem just.’ 10 Section 12 of the Trust Property Control Act 57 of 1988. 11 Van Zyl NO v Kaye NO paras 16-22. 12 Ibid. beneficiaries; and that the donation was made to the trust and was accepted by the applicant’s brother as the trustee. The upshot of these averments was that the trust was legitimately established, and that the applicant could never retrieve the donation made to the trust. Also, that the donation, being unconditional, would yield no quid pro quo for the applicant, and that the parties’ minor daughter would benefit from the donation to the trust. [28] It was submitted on behalf of the applicant that given the above admissions by the respondent in her pleadings, and the evidence led at the trial, the high court was precluded from making the determination that the donation was made for the sole purpose of reducing the respondent’s accrual claim. It was further submitted that during the trial it was never put to either the applicant or the trustee (his brother) that: the donation was simulated or that the trust was a sham; nor was it ever suggested that the applicant still retained ownership of the money which was donated to the trust. [29] In my view, the substance, rather than form, of the respondent’s claim must be considered. Properly construed, the essence of the respondent’s allegations in para 26 of her counterclaim is this: by creating the trust and making the donation to it, the applicant abused the trust form to reduce her accrual claim. Upon such premise, she requested the court to go behind the trust form, or ‘pierce the trust veneer’, and order that the value of the donation be taken into account when the accrual is determined. [30] The high court was alive to this, and it appears from record that this was the basis on which the trial was conducted. This is also consistent with the order it made, ie that the value of the donation to the trust be deemed to be part of the applicant’s assets for the purposes of calculating the accrual. This it could do only after piercing the trust veneer. The result is that even if the respondent’s claim was not properly framed, the question whether the court should go beyond the trust form, or pierce the trust veneer, was fully ventilated during the trial. [31] It must be borne in mind that this Court has inherent jurisdiction to decide a matter even where it has not been pleaded, provided that such matter was ventilated before it.13 Here, it is not a case of an issue not having been pleaded. It was pleaded, if only inelegantly so. As explained in Van Mentz v Provident Assurance Corporation of Africa Ltd 1961 (1) SA 115 (A) at 122, if the real issue emerges during the course of the trial, it would be proper to treat the issues as enlarged where this can be done without prejudice to the party against whom the enlargement is to be used.14 Given the manner in which the trial was conducted, there can be no prejudice to the applicant. [32] On behalf of the applicant, it was submitted that there was no legal basis for the order made by the high court, ie that the value of the donation to the trust be deemed as an asset in the estate of the applicant for the purposes of calculating the accrual. For this proposition, heavy reliance was placed upon the decision in MM and Others v JM 2014 (4) SA 384 (KZP) (MM v JM). There, the parties were married out of community of property subject to the accrual system. In her counterclaim, the defendant claimed that a family trust was the alter ego of the plaintiff, and that its assets should be deemed to form part of his assets for the purpose of determining the accrual of his estate. The plaintiff excepted to the defendant’s counterclaim on grounds, among others, that the claim lacked the averments necessary to sustain a cause of action. [33] The exception found favour with the court, which upheld it on the basis that the defendant did not allege that the assets of the trust were the plaintiff’s property, nor that the trust was a sham. Ploos van Amstel J drew a distinction between a court’s consideration of a claim for a redistribution order in terms of s 7(3) of the Divorce Act 70 of 1979 (the Divorce Act) and when it considers an accrual claim in terms of s 3 of the MPA. The learned judge made three propositions.15 First, that an accrual claim was determined on a ‘factual and mathematical basis’ and was not a matter of discretion. Second, that there was no authority in the MPA to have regard to assets which did not form part of a spouse’s estate on the basis that it would be ‘just’ to do so. Lastly, that there was no legal basis for an order that assets which in fact did not 13 See Shill v Milner 1937 AD 101 (A) at 105. 14 See also Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A) at 433 and Robinson v Randfontein Estates Gold Mining Co Ltd 1925 AD 173 (A) at 198. 15 MM and Others v JM para 19. form part of a spouse’s estate should be deemed to form part of it for purposes of determining the accrual. [34] In RP v DP and Others 2014 (6) SA 243 (ECP) (RP v DP), Alkema J took the opposite view. He embarked on a helpful analysis of the evolution of the court’s common law power to pierce the corporate veil and explained (at para 31): ‘. . . [T]he power of piercing either the corporate or the trust veil is derived from common law and not from any general discretion a court may have. It is a function quite separate from, for instance, the exercise of discretion in making a redistribution order under s 7 of the Divorce Act 70 of 1979 (the Divorce Act), and must not be confused or conflated with such power.’ [35] Unqualified and viewed in isolation, the propositions expounded in MM v JM appear attractive. But contextually, they do not bear scrutiny. Although the accrual claim only arises at the dissolution of the marriage,16 both spouses acquire a protectable contingent right against each other during the subsistence of the marriage, which the law will protect in circumstances of irregularity and a lack of bona fides.17 Thus, upon vesting of such right, there is a legal obligation on both spouses to satisfy the accrual claim (and hence to share in their respective gains) at the dissolution of their marriage.18 Furthermore, s 7 of the MPA obliges both spouses to furnish ‘full particulars of the value’ of their estates. Therefore, an accurate reflection of the parties’ respective accruals is necessary to give effect to the intention behind the legislature’s provision of the accrual system in the first place.19 [36] Accordingly, where there is an allegation that one of the spouses had sought to evade this obligation by abusing the trust form, for example, by transferring assets to a trust in order to reduce the value of their estate, and thus their accrual liability, a court is not precluded from enquiring into that issue. It is empowered to conduct an in- depth examination of the facts to determine whether trust form had been abused. If this is established in that factual enquiry, the court is empowered to pierce the trust 16 Brookstein v Brookstein [2016] ZASCA 40; 2016 (5) SA 210 (SCA) para 19. 17 Reeder v Softline Limited and Another 2001 (2) SA 844 (W) at 850-851; RS v MS and Others 2014 (2) SA 511 (GJ) para 13. 18 B S Smith ‘Statutory discretion or common law power? Some reflections on “veil piercing” and the consideration of (the value of) trust assets in dividing matrimonial property at divorce – Part Two.’ (2017) Journal for Juridical Science 42(1):1-18 UV/UFS. 19 Ibid. veneer, and order that the value of such assets be taken into account in the calculation of the accrual. This power is not based on the authority of the MPA or in the exercise of a statutory discretion, but on the basis that a factual enquiry has revealed trust form abuse, upon which the piercing of the trust veneer follows. [37] Viewed in this light, it is clear that when a court pierces the trust veneer, this has nothing to do with the exercise of a statutory discretion in terms of either the MPA or the Divorce Act. The court does so on the basis of its common law power, which was transplanted from the principles of piercing the corporate veil in the realm of company law. See WT v KT [2015] ZASCA 9; 2015 (3) SA 574 (SCA) (WT v KT) para 31.20 As Professor Smith puts it: ‘In my view, Ploos van Amstel J’s finding in MM v JM to the effect that “the amount of the accrual claim is determined on a factual and mathematical basis and is not a matter of discretion” is an overly convenient explanation for refusing to consider the value of the assets of an alter ego trust in assessing an accrual claim. This is because, in order for the contingent right to share in the assets of the other spouse to vest (and thus to ascertain whether the contingencies that establish the claim have materialised), it is necessary for the divorce court to conduct an in-depth assessment of the facts of the case, based on the reciprocal obligation placed on both spouses “to furnish full particulars of the value” of their estates within a reasonable time of being requested to do so.’21 [38] The learned author further opines that MM v JM would have the effect of frustrating the objective of the accrual system to achieve equal sharing and financial equality between spouses who made financial and other contributions during the subsistence of the marriage. This is so, as it would enable spouses to reduce the true value of their accrual by transferring assets to a trust.22 See also YB v SB and Others NNO 2016 (1) SA 47 (WCC) para 35, where it was remarked that the viewpoint that the determination of an accrual claim ‘involves purely an “arithmetical calculation” is an over-simplification of the issue and can therefore not be correct’, as it fails to 20 See also M de Waal, P Solomon and E Cameron Honoré’s South African Law of Trusts 6 ed (2018) at 313-314. 21 Smith fn 19 above at 10. 22 Smith fn 19 above at 11. consider the in-depth factual enquiry referred to earlier.23 I agree with both observations. [39] In my view, the approach in RP v DP that the power to pierce the trust veneer is founded in the common law and exists independently of the Divorce Act or the MPA, and is thus in principle applicable to marriages subject to the accrual system, is to be preferred to that in MM v JM. The latter’s approach is rigid, by seeking to confine the court’s power to the MPA or the Divorce Act, is unduly constricting. Where the trust form is abused to prejudice an aggrieved spouse’s accrual claim, a court should exercise its wider power in terms of the common law to prevent such prejudice. [40] Lastly, the holding in MM v JM that ‘[there was no] legal basis for an order that [the values of] assets which in fact [did] not form part of a spouse’s estate should be deemed to form part of it for purposes of determining the accrual’,24 must be considered to have been overturned by the decision of this Court in REM v VM [2016] ZASCA 5; 2017 (3) SA 371 (SCA) (REM v VM). Although no reference was made there to MM v JM, this Court, in principle, recognised that trust assets may be used to calculate the accrual of a trustee or founder spouse’s estate on the basis that the trust form had been abused to prejudice the other spouse’s accrual claim.25 In the process, the court disapproved of a finding made in WT v KT that an aggrieved spouse, who was neither a beneficiary of the trust, nor a third party who had transacted with it, had no standing to impugn the management of a trust because no fiduciary duty was owed to such a spouse.26 [41] The test whether trust assets should be taken into account when determining the patrimonial consequences of a marriage was enunciated by this Court in Badenhorst v Badenhorst [2005] ZASCA 116; 2006 (2) SA 255 (SCA) para 9, as follows: ‘. . . 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 23 See also BC v CC and Others 2012 (5) SA 562 (ECP) para 9. 24 MM v JM para 19. 25 REM v VM paras 19 and 20. 26 REM v VM para 20. 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.’ [42] Badenhorst concerned a redistribution order in terms of s 7(3) of the Divorce Act. The question is whether this test is limited to marriages subject to s 7(3) and thus excludes marriages subject to the accrual system. To my mind, there is no reason to confine this broad test in that way. I align myself with the view that the test is applicable to, among others, marriages subject to an accrual system.27 Both the redistribution order in terms of s 7(3) of the Divorce Act and the accrual system in terms of s 3 of the MPA, have as their objective, equitable and fair patrimonial consequences of a marriage. [43] On the unique facts of the present case, the Badenhorst ‘control test’ does not find application. This is because: the applicant does not seem to have either the de jure or the de facto control of the trust; there is no evidence that the applicant’s brother is ‘either supine or do[es] the bidding of’ the applicant; there is no ‘evidence of how the affairs of the trust were conducted during the marriage’, as the trust was established shortly before the trial commenced; and there is nothing in the terms of the trust deed that points to possible gain or control of the trust by the applicant. However, that is not decisive. As explained earlier, where there are allegations that the trust form has been abused to prejudice a spouse’s accrual claim, a court is empowered to enquire into that and make a determination. [44] In other words, the absence of ‘control’ does not necessarily exclude the possibility of trust form abuse. A court must vigilantly examine the facts in each case to determine allegations of trust form abuse. If such abuse is established, a court is 27 See, for example, YB v SB and Others NNO 2016 (1) SA 47 (WCC) para 49. entitled to pierce the trust veneer, despite the absence of ‘control’. As explained in Van Zyl NO v Kaye NO para 22, piercing the trust veneer is: ‘. . . [A]n equitable remedy . . . one that lends itself to a flexible approach to fairly and justly address the consequences of an unconscionable abuse of the trust form in given circumstances. It is a remedy that will generally be given when the trust form is used in a dishonest or unconscionable manner to evade a liability, or avoid an obligation.’ This description received the imprimatur of this Court in WT v KT para 31 and REM v VM para 17. [45] What is more, even in the absence of ‘control’, the piercing of the trust veneer is still a remedy on the basis of the proviso in the Badenhorst ‘control test,’ which was articulated as follows:28 ‘. . . 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 . . . the asset or assets concerned cannot be taken into account.’ (Emphasis added.) [46] In my view, the facts of the present case fall neatly within the proviso. This brings me to the high court’s conclusion that the value of the donation to the trust should be deemed as part of the applicant’s assets for the purposes of calculating the accrual. This conclusion rested on four factors, namely: (a) the timing of the creation of the trust and the donation made to it; (b) the fact that the trust was established in the British Virgin Islands; (c) the applicant did not consult the respondent about the creation of the trust; and (d) that there was no immediate need to provide for the maintenance of the child. I consider each, in turn. The timing [47] As mentioned already, the trust was created, and the deed of donation concluded, only days before the trial commenced. One of the issues in dispute was the value of the applicant’s estate, upon which the accrual payable to the respondent was to be calculated. The applicant offered no credible explanation for why he was 28 Badenhorst para 9. genuinely motivated to create a trust for the parties’ daughter before the trial was due to start, where the issue of maintenance for the child was to be determined. What is more, although the quantum of maintenance was an issue in the divorce, the applicant had repeatedly stated that affordability was not an issue and that he could pay whatever the court decided was reasonable. [48] Closely allied to the timing of the creation of the trust and the donation to it, are two further considerations, namely (a) the motivation why the applicant sought legal advice about the creation of the trust, and (b) the transfer of funds to the applicant’s father. The fact that, prior to the creation of the trust, the applicant had sought legal advice on his liability to the respondent in respect of the respondent’s accrual claim, weighed heavily with the full court. It had regard to an affidavit submitted by Stokes SC, in which he set out the context in which the applicant had sought the opinion from him. In paragraph 4 of the affidavit, he mentioned that during preceding consultations, it emerged that the applicant ‘was very concerned about the amount he was likely to have to pay [the respondent] in terms of her accrual claim’. Stokes SC further mentioned that the applicant had previously consulted with another counsel on the same issue, but that he wanted a second opinion. This is an important consideration. It sets the tone for the creation of the trust and the donation to it, as well as the payment to the applicant’s father. [49] As to the transfer of funds to the applicant’s father, I mentioned earlier that the applicant abandoned the appeal in respect thereof before the full court. Despite this, it remains a relevant consideration in the overall assessment of the applicant’s motive. The payment was made at the same time as the donation to the trust, and from the same funds. This aspect is particularly important for two reasons. First, before he reflected the ‘loan’ on his balance sheet for the first time before the trial commenced in February 2015, the applicant had not made any mention of it. As mentioned already, the parties were, during the subsistence of the marriage, transparent with each other on financial matters. If it was a genuine loan, the applicant would likely have informed the respondent about it. Second, there is no explanation as to why the loan had not been paid since 1990. It seems to be common cause that the applicant would have been able to repay it earlier. But he chose to repay it just before the respondent’s accrual claim was to be determined in court. Therefore, the timing of the applicant’s payment to his father strongly suggests that the ‘loan’, together with the donation to the trust, were both part of the applicant’s stratagem to reduce his accrual liability to the respondent. [50] Although the timing of the creation is not decisive, given what is stated above, it is one of the most important considerations. The applicant has not explained why he could not create the trust after the finalisation of the divorce and payment of the respondent’s accrual. The inference is thus irresistible that the creation of the trust, and the hasty donation to it, were meant to thwart the respondent’s accrual claim. The trust was established in the British Virgin Islands [51] The high court considered this a relevant factor, because any attempt by the respondent to challenge the manner in which the trust was being managed or to seek to recover assets from it was made more difficult and expensive by the simple reason that it is in a foreign jurisdiction. It seems that the applicant’s wish was to place the trust and the donation made to it out of the respondent’s reach. There is no credible explanation why the trust could not be created in South Africa. No consultation with the respondent about the creation of the trust [52] The applicant’s retort is that because the parties were married out of community of property, he was free to do as he pleased with his separate asset. However, this disregards the fact that the parties had historically consulted each other in respect of major financial matters, including the acquisition and disposal of immovable property. Also, the parties had pooled assets and acquired many of them jointly. Furthermore, the trust and donation were purportedly made for the benefit of their daughter. This is a significant financial decision affecting one’s child to which the mother would ordinarily have been privy. Given these considerations, the fact that the respondent was not consulted on the creation of the trust, stands out oddly, and assumes some importance. This is particularly so in the light of the respondent’s contingent right to share in the accrual, as mentioned earlier. No immediate need to provide for the maintenance of the child [53] The applicant suggested that the creation of the trust was reasonable, in case he had more children in the future, or in the event that he might die unexpectedly. This appears to be disingenuous. And it merely needs to be mentioned to be rejected. The fact of the matter is that the applicant was, in any event, obliged to maintain his daughter. Had the donation not been made, the amount of the donation would have been available in the calculation of his accrual, and what the respondent was entitled to as her accrual share. This would similarly apply in respect of the deceased estate in the event of the applicant’s untimely passing. Conclusion [54] In all the circumstances, upon a conspectus of all the relevant facts, the high court was correct to conclude that it was entitled to go behind the trust form and order that the value of the donation to the trust be taken into account as part of the applicant’s assets in calculating the accrual. The appeal was correctly dismissed, and accordingly, there are no prospects of success on the underlying legal issue. Coupled with the fact that there is no basis to interfere with the refusal to condone the applicant’s late prosecution of the appeal, it follows that there are no special circumstances warranting the grant of special leave to appeal. [55] In the result, the following order is made: The application for special leave to appeal is refused with costs, including costs of two counsel, where so employed. __________________ T MAKGOKA JUDGE OF APPEAL APPEARANCES: For applicant: D Phillips SC (with him E S Law) Instructed by: Strauss Daly Attorneys, Umhlanga EG Cooper Majiedt Inc., Bloemfontein. For respondent: A M Annandale SC (with her SI Humphrey) Instructed by: Andrew Inc., Attorneys, Durban 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 22 June 2022 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. P A F v S C F (788/2020) [2022] ZASCA 101 (22 June 2022) Today, the Supreme Court of Appeal, per Makgoka JA (Dambuza and Molemela JJA, and Makaula and Weiner AJJA concurring), handed down a judgment dismissing an application for leave to appeal against an order of the full court of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the full court). That court dismissed the applicant’s application for leave to adduce further evidence on appeal, and his application to condone the late prosecution of the appeal. The applicant and the respondent were married out of community of property subject to the accrual system, and were involved in a divorce. Shortly before the divorce trial commenced in the KwaZulu-Natal Division of the High Court, Durban (the high court), the applicant created a trust, of which his brother was the sole trustee, and the parties’ minor daughter was the sole beneficiary. A day after the trust was established, the applicant concluded a written deed of donation with the trust, and shortly thereafter, he donated R2 205 362 to the trust. Also, during the same month, the applicant transferred R3 377 481 into the bank account of his father. This was purportedly repayment of a loan advanced to him by his father approximately 25 years earlier. Upon becoming aware of these transactions, the respondent amended her counterclaim to include a prayer that the calculation of the accrual should take into account the value of the two transactions. The high court upheld her claim, and concluded that the two transactions were made with the ‘fraudulent intention’ of depriving the respondent of her rightful accrual claim. Consequently, it ordered, among others, that the value of the two transactions be deemed to be part of the applicant’s assets for the purposes of calculating the accrual. The high court subsequently granted the applicant leave to appeal to the full court. However, the applicant failed to prosecute his appeal timeously, and as a result, the appeal lapsed. Before the full court the applicant abandoned the appeal against the order in respect of the payment to his father, and applied for condonation of the late prosecution of the appeal to the full court and for leave to introduce further evidence on appeal. The full court dismissed both applications. The applicant’s further application for special leave to appeal to the Supreme Court of Appeal was referred for oral hearing. The Supreme Court of Appeal (the SCA or the Court) considered, and dismissed, the applicant’s application to introduce further evidence on appeal on the basis that no case had been made in respect thereof. The Court went on to consider whether condonation for the late prosecution of the appeal should be granted, and concluded that the applicant had failed to adequately explain his failure to timeously prosecute the appeal. There was no basis to interfere with the full court’s refusal to condone the applicant’s late prosecution of the appeal, as the full court had properly exercised its discretion. Nevertheless, the SCA went on to consider the prospects of success in the underlying legal issue, namely, the correctness of the high court’s conclusion that the value of the donation to the trust should be deemed as part of the applicant’s assets for the purposes of calculating the accrual. On behalf of the applicant, relying on MM and Others v JM 2014 (4) SA 384 (KZP) (MM v JM), it was submitted that there was no legal basis for the order made by the high court. In that decision, the court had made three propositions. First, that an accrual claim was determined on a ‘factual and mathematical basis’ and was not a matter of discretion. Second, that there was no authority in the Matrimonial Property Act 88 of 1984 (the MPA) to have regard to assets which did not form part of a spouse’s estate on the basis that it would be ‘just’ to do so. Lastly, that there was no legal basis for an order that assets which in fact did not form part of a spouse’s estate should be deemed to form part of it for purposes of determining the accrual. The SCA noted that in RP v DP and Others 2014 (6) SA 243 (ECP) (RP v DP), an opposite view was reached. It analysed the decision in MM v JM and concluded that the views articulated therein could not be supported. The SCA pointed out that, although the accrual claim only arises at the dissolution of the marriage, both spouses acquire a protectable contingent right against each other during the subsistence of the marriage, which the law will protect in circumstances of irregularity and a lack of bona fides. Thus, upon vesting of such right, there is a legal obligation on both spouses to satisfy the accrual claim (and hence to share in their respective gains) at the dissolution of their marriage. Furthermore, s 7 of the MPA obliged both spouses to furnish ‘full particulars of the value’ of their estates. Therefore, an accurate reflection of the parties’ respective accruals is necessary to give effect to the intention behind the legislature’s provision of the accrual system in the first place. Accordingly, where there is an allegation that one of the spouses had sought to evade this obligation by abusing the trust form, for example, by transferring assets to a trust in order to reduce the value of their estate, and thus their accrual liability, a court is not precluded from enquiring into that issue. It is empowered to conduct an in-depth examination of the facts to determine whether the assets ostensibly held in such a trust are in fact beneficially owned by the errant spouse. If this is established in that factual enquiry, the court is empowered to pierce the trust veneer, and order that the value of such assets be taken into account in the calculation of the accrual. This power is not based on the authority of the MPA or in the exercise of a statutory discretion, but on the basis that a factual enquiry has revealed that the trust form had been abused, upon which the piercing of the trust veneer follows. Viewed in that light, when a court pierces the trust veneer, this has nothing to do with the exercise of a statutory discretion in terms of either the MPA or the Divorce Act. The court does so on the basis of its common law power, which was transplanted from the principles of piercing the corporate veil in the realm of company law. The SCA preferred the approach in RP v DP that the power to pierce the trust veneer is founded in the common law and exists independently of the Divorce Act or the MPA, and is thus in principle applicable to marriages subject to the accrual system. It viewed the approach in MM v JM to be inflexible, and unduly constricting. The SCA emphasised that where the trust form is abused to prejudice an aggrieved spouse’s accrual claim, a court should exercise its wider power in terms of the common law to prevent such prejudice. Lastly, the SCA considered the holding in MM v JM that there was no legal basis for an order that [the values of] assets which in fact did not form part of a spouse’s estate, should be deemed to form part of it for purposes of determining the accrual. The SCA concluded that this must be considered to have been overturned in REM v VM [2016] ZASCA 5; 2017 (3) SA 371 (SCA), in which the court in principle, recognised that trust assets may be used to calculate the accrual of a trustee or founder spouse’s estate on the basis that the trust form had been abused to prejudice the other spouse’s accrual claim. In the process, the court disapproved of a finding made in WT v KT [2015] ZASCA 9; 2015 (3) SA 574 (SCA) that an aggrieved spouse, who was neither a beneficiary of the trust, nor a third party who had transacted with it, had no standing to impugn the management of a trust because no fiduciary duty was owed to such a spouse. The SCA also considered the ‘control test’ enunciated in Badenhorst v Badenhorst [2005] ZASCA 116; 2006 (2) SA 255 (SCA) para 9, as to when trust assets should be taken into account when determining the patrimonial consequences of a marriage. The Court determined that although Badenhorst concerned a redistribution order in terms of s 7(3) of the Divorce Act, the test was not limited to marriages subject to s 7(3) but was also applicable to marriages subject to an accrual system. The rationale was that both the redistribution order in terms of s 7(3) of the Divorce Act and the accrual system in terms of s 3 of the MPA, have as their objective, equitable and fair patrimonial consequences of a marriage. Although the ‘control’ was not satisfied in the unique circumstances of the present case, this was not decisive, as reliance could be placed upon the proviso to the ‘control test’ in Badenhorst, where a donation is found to have been made with the intention of frustrating the other spouse’s accrual claim. The SCA found that the facts of the present case fell within the proviso. The Court then turned to the factors which the high court had considered for its conclusion that the value of the donation to the trust should be deemed as part of the applicant’s assets for the purposes of calculating the accrual. These were: (a) the timing of the creation of the trust and the donation made to it; (b) the fact that the trust was established in the British Virgin Islands; (c) the applicant did not consult the respondent about the creation of the trust; and (d) that there was no immediate need to provide for the maintenance of the child. The Court considered each of these factors and concluded that the high court was correct in its decision to go behind the trust form and order that the value of the donation to the trust be taken into account as part of the applicant’s assets in calculating the accrual. It thus concluded that the appeal was correctly dismissed, and accordingly, there were no prospects of success on the underlying legal issue. Coupled with the fact that there was no basis to interfere with the refusal to condone the applicant’s late prosecution of the appeal, the SCA concluded that there were no special circumstances warranting the grant of special leave to appeal. Accordingly, the Court refused the application for special leave to appeal with costs. ***END***

2877

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 241/12 Not Reportable In the matter between: SENWES LIMITED Appellant and MICHAEL FRANCOIS VAN DER MERWE Respondent Neutral citation: Senwes Limited v Michael Francois van der Merwe (241/12) [2012] ZASCA 192 (30 November 2012) Coram: HEHER, SHONGWE, LEACH and THERON JJA and SOUTHWOOD AJA Heard: 15 November 2012 Delivered: 30 November 2012 Summary: Contract: Interpretation - clauses offering alternative remedies to non- defaulting party – whether such party retains claim for damages – whether the provisions of ss 83 and 84 of the Insolvency Act 24 of 1936 invalidated the agreement. ___________________________________________________________________ ORDER ___________________________________________________________________ On Appeal From: North Gauteng High Court Pretoria (Legodi, Thusi and Ismail JJ sitting as court of appeal): 1 The appeal is upheld with costs on the attorney and client scale and no order is made on the cross-appeal. 2 The order of the court a quo is replaced with the following: ‘The appeal is dismissed with costs on the attorney and client scale.’ JUDGMENT ___________________________________________________________________ SHONGWE JA (HEHER, LEACH, THERON JJA and SOUTHWOOD AJA concurring) [1] This appeal concerns the interpretation of a deed of sale. On 6 March 2008, Claassen J in the North Gauteng High Court, Pretoria granted judgment in favour of the appellant (plaintiff) against the respondent (defendant) for payment of the sum of R9 172 394.69 for damages suffered. On 7 May 2009 this court granted the respondent leave to appeal to the full court, Claassen J, having refused leave. On 2 November 2011, the full court, per Legodi, Thusi and Ismail JJ, upheld the appeal and set aside the judgment and substituted it with an order dismissing the action with costs. On 23 March 2012, the appellant was granted special leave to appeal to this court, the full court having refused leave. The respondent also lodged a cross-appeal against that part of the order of the full court confirming the rejection by the trial court of the respondent’s defence of invalidity of the sale agreement, on the basis of the provisions of ss 83 and 84 of the Insolvency Act 24 of 1936 (the Act). For convenience, I shall refer to the appellant as Senwes and to the respondent as the purchaser. [2] The purchaser was the sole member of MJP Boerdery Close Corporation (the CC). On 14 September 2001, the CC applied for an order for provisional voluntary surrender. Subsequent thereto Senwes, as the major creditor of the CC, applied for the final liquidation of the CC which was granted on 27 November 2001. Mr Venter, an attorney from Bloemfontein, was appointed as a further liquidator together with the two others already appointed. [3] At the insistence of Senwes, an insolvency enquiry was arranged for 16 to 18 October 2002, because Senwes suspected that the purchaser was disposing of assets of the CC. Before the enquiry could start, the parties entered into negotiations which resulted in the conclusion of a written sale agreement, the interpretation of which forms the subject of this appeal. The sale agreement was concluded and signed on 17 October 2002. In the deed of sale Senwes is referred to as the ‘eerste party’ (first party) and the purchaser as the ‘tweede party’ (second party). [4] The salient clauses of the deed of sale are the following: ‘1. Ten opsigte van MJP BOERDERY BK (in likwidasie), kom die partye hierbo genoem ooreen dat die tweede party vanaf die eerste party aankoop, die eerste party se eis in gemelde gelikwideerde boedel. 2. Voormelde aankoopprys wat deur tweede party betaalbaar is aan eerste party, beloop die bedrag van R10 500 00-00 (TIEN KOMMA VYF MILJOEN RAND), welke bedrag die tweede party aan eerste party sal oorbetaal op die volgende basis:- 2.1. R2 500 000-00 (TWEE KOMMA VYF MILJOEN RAND) voor of op 31 DESEMBER 2002; 2.2. R3 000 000-00 (DRIE MILJOEN RAND) voor of op 31 JULIE 2003; 2.3. R2 500 000-00 (TWEE KOMMA VYF MILJOEN RAND) voor of op 31 DESEMBER 2003; 2.4. R2 500 000-00 (TWEE KOMMA VYF MILJOEN RAND) voor of op 31 JULIE 2004; 3.1 Die betaling van die eerste paaiement sal geskied deur die herfinansiering en/of aankoop van die bestaande huurkoop bates, wat insluit die volgende: 3.1.1. Een John Deere CTS Stroper met Greenstar; 3.1.2. Een sestoring Senwes spilpunt; 3.1.3. Een sesry John Deere Planter; 3.1.4. Een sesry John Deere Mielietafel 3.1.5. Een ses meter John Deere Koringtafel; 3.1.6. Een 8400 John Deere Trekker. deur die tweede party en/of sy genomineerde. 3.2. Sodra die eerste party in besit is van ’n goedgekeurde bankwaarborg vir die betaling van die som van R2 500 000-00 (TWEE KOMMA VYF MILJOEN RAND) en/of betaling ontvang, sal die eerste party sy regte en belang in die bates in samewerking met die kurator en die boedel van MJP Boerdery BK (in likwidasie) aan die finansierder en/of die koper oordra. 3.3. Teen betaling van die eerste paaiement ten bedrae van R2 500 000-00 (TWEE KOMMA VYF MILJOEN RAND) teen 31 DESEMBER 2002 sal die eerste party afstand doen ten gunste van die tweede party van enige sekuriteit wat hy teen die gelikwideerde boedel het. … 5. By wanbetaling van enige paaiement voor of op die vervaldatum soos hierbo gestipuleer, sal die volle uitstaande balans opeisbaar en betaalbaar wees. 6. Afgesien van die voormelde versnellingsklousule, kom die partye uitdruklik ooreen dat indien die tweede party versuim om die eerste paaiement soos op 31 Desember 2002 aan die eerste party te betaal sal die eerste party geregtig wees om: - 6.1. hierdie ooreenkoms as gekanselleer te beskou asof sy eis teen MJP BOERDERY BK nooit deur die tweede party oorgekoop is nie, waarna die eerste party normaalweg sal voortgaan en optree as ’n skuldeiser in die gelikwideerde boedel; of 6.2. die tweede party gebonde te hou aan hierdie ooreenkoms en afdwinging daarvan te verg ooreenkomstig die voormelde versnellingsklousule en sal ’n sertifikaat van die eerste party se gemagtigde beampte dien as prima facie bewys van die kapitaal en rente uitstaande en verskuldig. … 9. Indien enige van die party versuim om die bepalings van hierdie ooreenkoms na te kom sal die onskuldig party geregtig wees om die skuldige party kennis te gee by sy domicilium om sy kontrakbreuk reg te stel binne ’n tydperk van veertien dae, by gebrek waarvan die onskuldige party geregtig sal wees om die ooreenkoms te kanselleer en sy regte af te dwing in terme van die ooreenkoms of gemeenregtelik.’ [5] It is common cause that the purchaser failed to comply with the provisions of clause 2 of the deed of sale. Not a single instalment was paid to Senwes, therefore the purchaser was in breach of the sale agreement. On 13 February 2004, Senwes sent a letter of demand to the purchaser informing him of his failure to comply with clauses 2.1, 2.2 and 2.3 of the deed of sale and calling on him to make good the breach within 14 days. It is further common cause that the purchaser also failed to comply therewith. Clause 9 unambiguously provides that in the event the guilty party fails to make good the breach, the innocent party shall be entitled to cancel the deed of sale and thereafter to enforce his rights in terms of the agreement or at common law. [6] Indeed in or about August 2005, Senwes issued summons against the purchaser for damages in the sum of R9 172 394.69. This amount was calculated as follows: a sum of R1 327 605.31, being a dividend received by Senwes after proving a claim against the insolvent estate, was deducted from R10 500 000.00 being the purchase price set out in clause 2 of the sale agreement. The undisputed evidence during the trial indicated that at some stage, Senwes, in its capacity as a creditor, proceeded to file and proved a claim against the estate of R14 644 203.39 but only received a dividend of R1 327 605.31. [7] Upon receipt of the particulars of claim, the purchaser raised various defences that are no longer relied upon. [8] On the morning of the trial in the high court the purchaser introduced an amendment to the plea, which was not opposed. The amendment was to the effect that the sale agreement was invalid because it was contrary to the provisions of ss 83 and 84 of the Act. I shall deal in detail with these provisions later in the judgment. [9] At the trial both Senwes and the purchaser led evidence. The trial court made credibility findings, discredited the purchaser and concluded that on the whole there was one version before it, that of Senwes, as supported by the evidence of the purchaser, where such evidence did not contradict that of Senwes. It consequently found for Senwes. [10] The trial court decided the matter on the basis that ss 83 and 84 were not applicable. It did not deal with the provisions of clause 6.1. However, the court a quo added another dimension when it said in para 12 of its judgment that; ‘Whilst not easy to understand the essence of the defendant’s defence as raised in the plea, effectively, two issues were argued before us. Firstly, whether the agreement relied upon was null and void ab initio. In the alternative, whether the plaintiff was entitled to claim anything from the defendant after having cancelled the agreement, and having participated in the liquidation proceedings.’ The court a quo reasoned that the focus should be the provisions of clause 6.1. In para 29 of its judgment, it said: ‘Indeed the plaintiff upon cancellation elected to go and join the queue in the liquidation proceedings and was rewarded with a dividend in the amount of R1 327 605.31.’ The court a quo also reasoned that; ‘… the main purpose of the agreement was to take the CC out of liquidation. Accepting therefore, that, that was the purpose of the agreement, when it did not materialise, the plaintiff would have preferred to go back to the liquidation proceedings to safeguard its interest in the liquidation like any other creditor would do. This was what the plaintiff actually did.’ [11] The nub of this appeal lies in the interpretation of the sale agreement. There are two issues for determination by this court. The first involves an interpretation of clause 6.1 of the sale agreement and the second relates to whether the agreement is in contravention of ss 83 and 84 of the Act and therefore invalid. [12] In interpreting the provisions of the sale agreement I must state from the outset that the purpose, context and the language used, should be the primary consideration for a sensible, rational and objective meaning of the document. (See Jaga v Dönges NO and another; Bhana v Dönges NO and another 1950 (4) SA 653 (A) at 662G – 663A and the cases therein cited.) [13] I now deal with the interpretation of clause 6.1. Senwes contends that its claim against the purchaser is based upon a breach by the purchaser of the written sale agreement. It was and still is common cause that the purchaser breached the sale agreement in that he failed to make even a single payment to Senwes in compliance with clause 2 of the agreement. Therefore, argues Senwes, it has a right, in terms of clauses 5 and 9 of the agreement, to claim damages, notwithstanding the provisions of clause 6.1. I agree. Clause 6.1 creates an escape mechanism for the appellant at an early stage of its implementation. It relates only to a failure by the respondent to pay the first instalment timeously. In that event the appellant acquires the right to treat the agreement as cancelled ‘as if the respondent had never sold his claim against MJP Boerdery to Senwes’ (in my paraphrase). The necessary implication is that no notice to remedy the failure is contemplated or required, presumably because, once Senwes elected to treat the agreement as at an end, the failure by the purchaser to comply with clause 2 of the agreement was not to be regarded as a breach in the context of an enforcible agreement but simply as a reason to end the legal relationship between the parties as if it had never been established. Hence the reason for the exclusion of the automatic acceleration despite the express provisions of clause 5. Clause 6.1 proceeds to state the ‘normal’ consequence of there never having been a sale of the claim, viz that Senwes, as a creditor of the CC would proceed with the proof of that claim in the estate. [14] Clause 9, by contrast, contains a standard breach provision operative in the event of a failure to comply with any of the terms of agreement (not just the payment of the initial instalment). It refers to the guilt and innocence of the defaulting and non- defaulting parties; it requires formal notice to remedy a breach of the contract, and a right in the innocent party to cancel and enforce the terms of the agreement or its common law rights. [15] Senwes pleaded reliance on clause 9 in its particulars of claim; the allegations of breach (in para 4), notice to remedy (para 5), cancellation (para 6) and breach of contract and damages flowing from it (para 8), are consistent only with such reliance. The reference to the proof of a claim in the estate (in para 7) is especially tied to the cancellation referred to in para 6 and clearly has nothing to do with the ‘normal’ consequence to which reference is made in clause 6.1. [16] The purchaser, in his plea, admitted the allegations in paras 4, 5 and 6 of the claim. Exhibits C and D at the trial were formal notices to remedy the breaches. They refer not only to the failure to pay the first instalment but also to the purchaser’s default in relation to the second and third instalments. As such they are reconcilable only with clause 9. [17] The conclusion reached by the court a quo that ‘the issue under discussion did not require to be decided mainly on fact, but by mere looking at 6.1’ (clause 6.1) is, in my view incorrect. The sale agreement should be considered in its entirety and not merely on the basis of isolated clauses (see South African Warehousing Services (Pty) Ltd v South British Insurance Co Ltd 1971 (3) SA 10 (A) at 17H.) A necessary conclusion from the proceedings and the evidence is that Senwes’ case was derived entirely from clause 9 and that clause 6 was irrelevant to the dispute between the parties. [18] Clause 2 provided the terms of payment of the purchase price of the claims. Clause 3 merely set out a means of effecting payment of the first instalment, ie by refinancing or selling the hire-purchase assets of the CC. This provision was however inserted purely for the benefit of the purchaser, who could utilise its mechanism or not as it suited him. The interest of Senwes lay in receiving the purchase price set out in clause 2. It had no interest in how the purchaser financed payment of the price and it could not insist on compliance with clause 3.1. Clause 3.2 in turn depended on the ability of the purchaser to raise the first instalment on the strength of refinancing or selling the assets. Here too, for the same reasons, Senwes had no interest provided it was timeously paid in full or unless the purchaser was able to achieve the sale or refinancing as contemplated in clause 3.1. [19] I now turn to the question whether the provisions of the Insolvency Act prohibited the conclusion of the sale agreement. The purchaser raised the invalidity of the sale agreement due to the alleged conflict with s 83 read with s 84 of the Act. This defence was raised because the purchaser understood the merx to be the assets mentioned in clause 3.1.1 – 3.1.6 of the agreement. In my view his understanding was erroneous. The reference to the assets in clause 3.1.1 – 3.1.6 of the agreement was a reference to the means of payment open to the purchaser and not to the merx in the sale agreement. Clause 1 of the agreement makes it clear that the merx was the claim, as the purchaser admitted in his evidence under cross- examination. [20] Section 83 of the Act deals with a situation where a creditor holds any movable property as security for its claim. In the present case, although the said assets were in the possession of Senwes, they were kept there for storage purposes and not because Senwes held them as security. Senwes was selling its right to claim against the CC (in liquidation) nothing more and nothing less. In the present case both ss 83 and 84 are irrelevant and of no application. Both the trial and the court a quo rejected this defence and I agree with that conclusion. [21] The appeal must succeed. Counsel for the purchaser conceded that the cross-appeal was unnecessary. [22] The sale agreement provided for payment by the purchaser of costs on the attorney and client scale, in the event of Senwes instituting legal proceedings to enforce its rights. [23] In the result the appeal is upheld and the following order is made. 1 The appeal is upheld with costs on the attorney and client scale and no order is made on the cross-appeal. 2 The order of the court a quo is replaced with the following: ‘The appeal is dismissed with costs on the attorney and client scale.’ ___________________ J B Z SHONGWE JUDGE OF APPEAL APPEARANCES FOR APPELLANT M P Van Der Merwe Instructed by: Tim Du Toit & Co Inc, Pretoria; Naudes Attorneys, Bloemfontein. FOR RESPONDENT B C Stoop and J J N Swart Instructed by: Dreyer & Dreyer Attorneys, Pretoria; McIntyre & Van Der Post, Bloemfontein.

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 November 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. * * * SENWES LIMITED V MICHAEL FRANCOIS VAN DER MERWE The SCA today upheld an appeal against the judgment of the full court of the North Gauteng High Court (Pretoria) which upheld an appeal by the respondent. This appeal is with special leave of this court. Senwes Ltd sued the respondent for the payment of R9 172 394.69 being for damages suffered. Senwes had concluded a sale agreement between itself and the respondent whereby Senwes sold and the respondent purchased the right to claim against the insolvent estate of MJP Boerdery Close Corporation of which the respondent was the sole member. The first installment was due and payable on 31 December 2002 in terms of clause 2 of the sale agreement. It is common cause that the respondent failed to pay the first installment which entitled Senwes to claim for damages. The nub of this case is the interpretation of clause 6.1 of the sale agreement and also whether the provisions of sections 83 and 84 of the Insolvency Act 24 of 1936 (the Act) invalidated the agreement. It was the respondent’s main defence that the agreement was invalid as it conflicted with sections 83 and 84 of the Act. Clause 6.1 provides that the agreement will be considered cancelled, as if the claim against the CC was never sold or purchased by the respondent, in the event of the respondent failing to effect payment of the first installment on 31 December 2002. However the agreement also contained clause 5 and 9 of the sale agreement which respectively provide that should the respondent fail to effect payment of any installment before the stipulated date, the full outstanding amount shall be due and payable and clause 9 provides that the innocent party shall give the guilty party 14 days’ notice to make good the default, failing which the innocent party shall be entitled to cancel the agreement and enforce his right in terms of the agreement or under common law. The question is whether clause 6.1 prohibits Senwes from exercising his right in terms of clause 5 and 9 of the sale agreement. This court found that Senwes does not forfeit its right in terms of clause 5 and 9 of the sale agreement. This court also found that section 83 and 84 of the Act were irrelevant and not applicable because the merx of the sale was the claim and not the property mentioned in clause 3 of the sale agreement.

556

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 814/2015 In the matter between: BONITAS MEDICAL FUND APPELLANT and THE COUNCIL FOR MEDICAL SCHEMES FIRST RESPONDENT THE REGISTRAR OF MEDICAL SCHEMES SECOND RESPONDENT Neutral citation: Bonitas Medical Fund v The Council for Medical Schemes (814/2015) [2016] ZASCA 154 (3 October 2016) Coram: Mpati AP, Bosielo, Petse, Swain and Van der Merwe JJA Heard: 5 September 2016 Delivered: 3 October 2016 Summary: Interpretation of statute ─ a decision to order an inspection in terms of s 44(4)(a) of the Medical Schemes Act 131 of 1998 is not appealable under s 49(1) ─ Costs ─ no genuine and substantive constitutional issue raised ─ Cross-appeal in respect of costs allowed. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from Gauteng Division of the High Court, Pretoria (Tuchten J sitting as court of first instance): 1 The appeal is dismissed with costs. 2 The cross-appeal is upheld with costs and paragraph 2 of the order of the court a quo is set aside and replaced with the following: ‘The respondent is directed to pay the costs of the application.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ Van der Merwe JA (Mpati AP, Bosielo, Petse and Swain JJA concurring): [1] The appellant in this appeal, Bonitas Medical Fund (the scheme), is a medical scheme registered under Chapter 4 of the Medical Schemes Act 131 of 1998 (the MSA). The first respondent is the Council for Medical Schemes (the council), a juristic person established in terms of s 3 of the MSA. The second respondent is the Registrar of Medical Schemes (the registrar), appointed in terms of s 18(1) of the MSA. The registrar is the executive officer of the council and manages its affairs. [2] Section 44 of the MSA deals with inspections and reports. Subsection 44(4) provides as follows: ‘(4) The Registrar may order an inspection in terms of this section─ (a) if he or she is of the opinion that such an inspection will provide evidence of any irregularity or of non-compliance with this Act by any person; or (b) for purposes of routine monitoring of compliance with this Act by a medical scheme or any other person.’ Section 49(1) of the MSA states: ‘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.’ The central issue in the appeal is whether a decision of the registrar to order an inspection in terms of s 44(4)(a), is appealable in terms of s 49(1). [3] The issue arose in the following manner. On 10 November 2014 the registrar appointed Mr Cornelius Jacobus Potgieter as an inspector, and ordered him to inspect the affairs of the scheme as well as of specified institutions associated with the scheme. The certificate of appointment stated that the inspector was appointed in terms of s 44(4)(a) of the MSA and s 2 of the Inspection of Financial Institutions Act 80 of 1998 (the FIA). The inspector was principally directed to investigate whether or not irregularities occurred or existed in respect of: (a) the election of the board of trustees of the scheme; (b) the commercial relationship between officers of the scheme and service providers contracted to the scheme; and (c) increases in the non-healthcare expenditure, marketing expenditure and managed care expenditure of the scheme. [4] On 24 December 2014 the scheme delivered a notice of appeal to the registrar. In terms of the notice, the scheme lodged an appeal to the council against the decision to order the inspection. However, on 26 February 2015, the council resolved that the registrar’s decision to order the inspection was not appealable in terms of s 49(1). [5] As the scheme insisted that the decision to order the inspection was appealable, a dispute arose between the parties. The council and the registrar approached the Gauteng Division, Pretoria for declaratory relief aimed at resolving the dispute. They sought an order declaring that the registrar’s decision of 10 November 2014, to order an inspection into the affairs of the scheme in terms of s 44(4)(a) of the MSA, is not a decision that is appealable in terms of the provisions of s 49(1) of the MSA. The scheme opposed the application but did not file answering affidavits. The court a quo (Tuchten J) granted the declarator but made no order as to costs. It granted leave to the scheme to appeal to this court against the declaratory order. The court a quo also granted leave to the council and the registrar to cross-appeal in respect of costs. [6] It is necessary, therefore, to determine the meaning of the word ‘decision’ in s 49(1) of the MSA. As is the case with almost any word, the word ‘decision’ is capable of more than one meaning. In the present matter the word may mean a decision of a dispute or issue in the sense of the determination thereof or simply a decision to do something, ie the making up of one’s mind. It is not necessary to quote authority for the principle that the meaning of the word must be determined in the context in which it is used. The context includes the apparent scope and purpose of the MSA. [7] Medical schemes are of great public importance. They receive and control vast amounts in members’ contributions. The scheme, for instance, has approximately 297 000 members and more than 650 000 beneficiaries. It receives contributions from members in excess of R10,2 billion per year. [8] The MSA provides for the regulation of medical schemes in the public interest. Its long title indicates that its objects include the control of certain activities of medical schemes and the protection of members’ interests. Section 7 of the MSA deals with the functions of the council. Section 7(a) states that it is a function of the council to protect the interests of the beneficiaries of medical schemes ‘at all times’. [9] The power in terms of s 44(4)(a) is intended to promote these objects. The power is no doubt intended to be an effective regulatory mechanism. For it to be effective, the registrar ought to be able to act in terms of s 44(4)(a) with expedition and without notice. A medical scheme or person suspected of irregularities or non-compliance with the Act, should, in the public interest, not be provided with the opportunity to hide or destroy evidence. Without the element of surprise, the effectiveness of the power will in many instances be lost or severely undermined. I agree with counsel for the respondents that the right of medical schemes to privacy should, in the light of these considerations, be attenuated. [10] In terms of s 49(2) of the MSA, the operation of a decision which is the subject of an appeal under s 49(1), is suspended pending the decision of the council on the appeal. And in terms of s 50(3), a person aggrieved by a decision of the registrar acting with the concurrence of the council or by a decision of the council, may within 60 days after the date on which such decision was given, appeal to the appeal board established by s 50(1). Thus, if a decision to order an inspection in terms of s 44(4)(a) were to be subject to an appeal, the inspection could be effectively stymied by simply noting an appeal. This would be subversive of the intended effective intervention and militates strongly against the interpretation contended for by the scheme. [11] Before us, counsel for the scheme recognised the need for urgent investigation and the element of surprise. He argued, however, that that could be achieved by expedition of an appeal to the council or by taking the decision to order an inspection with the concurrence of the council. There is no provision in the MSA for the suspension of the operation of a decision of the council pending an appeal to the appeal board. But both of these proposals require that a meeting of the council be convened. This is hardly practical. In terms of s 4(1) of the MSA, the council shall consist of up to 15 members appointed by the Minister of Health. In making the appointments, the Minister is enjoined to inter alia take into account expertise in law, accounting, medicine, actuarial sciences, economics and consumer affairs. It can therefore safely be accepted that the members of the council are mostly not available on a fulltime basis. This is underscored by the provisions of s 10 of the MSA. In terms of s 10(1), the council shall hold at least four ordinary meetings per year. Section 10(2) provides: ‘Special meetings of the Council may be convened by the chairperson or at the written request of the majority of the members setting forth clearly the purpose for which the meeting is to be held.’ [12] As I have pointed out (para 2 above), the registrar may also order routine inspections in terms of s 44(4)(b). On the argument of the scheme, a decision to order such routine inspection would also be appealable in terms of s 49(1). This is an absurd result that could not have been intended by the Legislature. [13] In addition, ss 44(2) and (3) provide: ‘(2) The Registrar, or such other person authorised by him or her, shall in addition to the powers and duties conferred or imposed upon him or her by this Act, have all the powers and duties conferred or imposed upon an inspector appointed under section 2 of the Inspection of Financial Institutions Act, 1984 (Act 38 of 1984), as if he or she has been appointed an inspector under that Act. (3) Any reference in this Act to an inspection made under this section shall also be construed as a reference to an inspection made under the Inspection of Financial Institutions Act, 1984.’ The Inspection of Financial Institutions Act 38 of 1984 was repealed by the FIA with effect from 28 October 1998. The parties accepted that the reference to Act 38 of 1984 should be read as a reference to the FIA. Section 2 of the FIA provides for the appointment of an inspector to carry out an inspection of the affairs of a financial institution. In terms of ss 4 and 5 of the FIA, such inspector is clothed with very wide powers. The FIA does not provide for an appeal against the appointment of an inspector. The argument of the scheme would thus lead to the anomalous result that a decision to order an inspection in terms of s 44(4) would be appealable, but not a decision to appoint an inspector in terms of s 2 of the FIA. [14] An inspection in terms of s 44(4)(a) is purely investigative. The inspector merely gathers evidence. The inspection does not determine or affect any rights. It follows that there is no need to provide for the protection of substantive rights by way of an appeal against a decision to order an inspection in terms of s 44(4)(a). This may, for instance, be contrasted with the powers of the registrar under s 33(4) (withdrawal of approval of a benefit option of a medical scheme), s 33(5) and s 44(11) (amendment of the rules of a medical scheme) or s 38 (rejecting of the annual financial statements of a medical scheme). [15] There is no material difference between the nature of an inspection in terms of s 44(4)(a) of the MSA and that of the investigation of a complaint by the Competition Commission in terms of the Competition Act 89 of 1998. Such investigation may culminate in a referral of the matter to the Competition Tribunal. In Competition Commission of SA v Telkom SA Ltd & another [2010] 2 All SA 433 (SCA) para 11, this court held that a decision to refer a matter to the Competition Tribunal and the referral itself, are of an investigative and not an administrative nature and are not subject to review under the Promotion of Administrative Justice Act 3 of 2000. In my judgment the same applies to s 44(4)(a) of the MSA. Nevertheless, a decision to order an inspection in terms of the MSA, would be subject to review under the rule of law, on the ground that it was arbitrary or irrational (Pharmaceutical Manufacturers Association of SA & another: In re ex parte President of the Republic of South Africa & others 2000 (2) SA 674 (CC) para 85) or offended against the principle of legality (Telkom (above) para 12 and Competition Commission v Computicket (Pty) Ltd [2014] ZASCA 185 paras 18 and 22). [16] The English text of the MSA was signed by the President. Our courts have over many years referred to the unsigned text of a statute to elucidate an ambiguity in the signed text. (See, for instance, Commissioner for Inland Revenue v Witwatersrand Association of Racing Clubs 1960 (3) SA 291 (A) at 302A-B.) The rule remains applicable in the constitutional era. In Du Plessis & others v De Klerk & another 1996 (3) SA 850 (CC) para 44, Kentridge AJ dealt with the words ‘all law in force’ in s 7(2) of the Constitution of the Republic of South Africa Act 200 of 1993. He said that these words may have some ambiguity, but that any ambiguity was removed by the Afrikaans version of the section that read ‘alle reg wat van krag is’. He added that the English version would prevail in case of a conflict between the two versions but proceeded to say: ‘But where there is no conflict between them, there is another well-established rule of interpretation: if one text is ambiguous, and if the ambiguity can be resolved by the reference to unambiguous words in the other text, the latter unambiguous meaning should be adopted. There is no reason why this common-sense rule should not be applied to the interpretation of the Constitution. Both texts must be taken to represent the intention of Parliament.’ [17] In the Afrikaans text of s 49(1) of the MSA, the word ‘beslissing’ is used for ‘decision’. The word ‘beslissing’, as opposed to the word ‘besluit’, generally denotes the determination of a dispute or issue. The Afrikaans text therefore provides a further indication that the word ‘decision’ in s 49(1) should bear the meaning of the decision of a dispute or issue. [18] To summarise, the purpose of the MSA, the context of s 44(4) read with s 49(1), the nature of an inspection in terms of s 44(4)(a) and the Afrikaans version of s 49(1) lead me to the firm conclusion that the interpretation favoured by the court a quo is correct. [19] A decision to order an inspection in terms of s 44(4)(a) is clearly not a decision envisaged in s 49(1). It follows that the appeal must fail. [20] I now turn to the cross-appeal. The court a quo declined to make an order as to costs, primarily upon application of the principles set out in Biowatch Trust v Registrar, Genetic Resources & others [2009] ZACC 14; 2009 (6) SA 232 (CC). It was submitted on behalf of the respondents that these principles did not find application in this matter. Counsel submitted that the application of the principles in Biowatch constituted a misdirection that entitled this court to interfere with the exercise of the discretion of the court a quo in respect of costs. [21] Counsel for the scheme referred to what was said in Justice Alliance of South Africa v Minister for Safety and Security & others [2013] ZACC 12; 2013 (7) BCLR 785 (CC) para 10, namely: ‘The Minister contends that because there was no challenge to the constitutional validity of any of the provisions of the Act, no constitutional issue in the Biowatch sense was raised. That is not, without more, a proper basis for finding that no constitutional issue was raised. The attack on the validity of the guidelines as being ultra vires s 137 of the Act is based on the principle of legality. Legality is decidedly a constitutional issue. The interpretation of the provisions of the Act in order to decide whether the guidelines fell within their ambit is also a constitutional issue because statutory interpretation must be done in accordance with the dictates of the Constitution. In addition it is clear that the original order forcing the Minister for Police to promulgate guidelines was founded on his failure to comply with the provisions of the Constitution.’ (Footnotes omitted.) [22] As I understood it, the argument was that the mere fact that the interpretation of a statutory provision is at stake, means that a constitutional issue is raised. I am unable to agree. The principles in respect of costs set out in Biowatch apply ‘where matters of genuine constitutional import arise’ (para 24). In para 25 of Biowatch it was stated: ‘Merely labelling the litigation as constitutional and dragging in specious references to sections of the Constitution would, of course, not be enough in itself to invoke the general rule as referred to in Affordable Medicines [2006 (3) SA 247 (CC); {2005] ZACC 3]. The issues must be genuine and substantive, and truly raise constitutional considerations relevant to the adjudication.’ [23] Paragraph 10 of Justice Alliance must of course be read in context. There the applicant sought leave to appeal against an adverse costs order. The court stated that the central issue was whether a genuine and substantive constitutional issue was at stake. In paras 12 and 13, the court pointed out that in order to ascertain whether the interpretation of a statute raised a genuine constitutional issue, it has to be considered whether it was alleged that any specifically articulated right under the Bill of Rights would be adversely affected by the interpretation of the statute. What has to be weighed is whether the interpretation of the statute held an adverse effect on an underlying fundamental right. In the final analysis, the court refused leave to appeal on the ground that the applicant did not seek to vindicate any fundamental right in the litigation. [24] The case of the scheme was about the avoidance of the inspection of its affairs by relying on an interpretation of the statute per se. It did not assert a right under the Constitution nor did it seek to vindicate any fundamental right. In the result, I am persuaded that the costs in the court a quo should have followed the result. [25] Accordingly, the following order is made: 1 The appeal is dismissed with costs. 2 The cross-appeal is upheld with costs and paragraph 2 of the order of the court a quo is set aside and replaced with the following: ‘The respondent is directed to pay the costs of the application.’ __________________ C H G van der Merwe Judge of Appeal APPEARANCES: For Appellant: E Labuschagne SC (with him J W Schabort) Instructed by: Gildenhuys Malatji Inc, Pretoria Honey Attorneys Inc, Bloemfontein For Respondents: M C Maritz SC Instructed by: Savage, Jooste and Adams Inc, Pretoria Symington & De Kok, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 3 October 2016 Status: Immediate BONITAS MEDICAL FUND v THE COUNCIL FOR MEDICAL SCHEMES Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal 1. The Registrar of Medical Schemes (the registrar) ordered an inspection into the affairs of the Bonitas Medical Scheme (the scheme) in terms of s 44(4)(a) of the Medical Schemes Act 131 of 1998 (the MSA). This section provides that the registrar may order an inspection of the affairs of a medical scheme if he or she is of the opinion that such an inspection will provide evidence of any irregularity or non-compliance with the MSA. The scheme lodged an appeal in terms of s 49(1) of the MSA to the Council for Medical Schemes (the council) against the registrar’s decision to order the inspection. The council took the view that a decision to order an inspection is not appealable in terms of the MSA and, together with the registrar, approached the Gauteng Division of the High Court for declaratory relief to that effect. The Gauteng Division granted the declarator. However, it made no order as to costs, on the ground that the scheme raised a constitutional issue in the litigation. The scheme appealed to the Supreme Court of Appeal (SCA) against the declarator and the council and the registrar cross-appealed for a cost order. 2. Today the SCA dismissed the appeal of the scheme with costs and allowed the cross- appeal with costs. The SCA had regard to the context of these statutory provisions, especially the purpose of the MSA, namely the protection of the interests of members and beneficiaries of medical schemes. The SCA held that the power to order an inspection in terms of s 44(4)(a) is intended to be an effective regulatory mechanism, and that the registrar ought to be able to exercise the power with expedition and without notice. The SCA held that to allow an appeal against a decision to order an inspection, would be subversive of the intended effective intervention in the public interest. The SCA held that on a contextual interpretation of the MSA, a decision to order an inspection is not appealable. 3. The SCA further held that the scheme did not raise a genuine and substantive constitutional issue in the litigation. It therefore held that the scheme should bear the costs of the application in the Gauteng Division. --ends--

3219

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT REPORTABLE Case number: 532/06 In the matter between: PROGRESS OFFICE MACHINES CC Appellant and THE SOUTH AFRICAN REVENUE SERVICE 1st Respondent THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA 2nd Respondent THE MINISTER OF TRADE & INDUSTRY 3rd Respondent THE MINISTER OF FINANCE 4th Respondent CORAM: SCOTT, LEWIS, HEHER JJA, MALAN and MHLANTLA AJJA HEARD: 30 AUGUST 2007 DELIVERED: 25 SEPTEMBER 2007 Summary: Imposition of anti-dumping duty in terms of Customs and Excise Act 91 of 1964 – Effect of retrospective imposition of duty – International law – Incorporation into municipal law Neutral citation: Progress Office Machines v SARS [2007] SCA 118 (RSA) ______________________________________________________________ MALAN AJA: [1] This is an appeal with leave of the court a quo against a judgment of Gyanda J dismissing with costs an application brought by the appellant as a matter of urgency for a declarator ‘that the antidumping duties imposed by the Fourth Respondent (at the request of the Third Respondent and enforced by the Fourth Respondent) in terms of GN R685, Government Gazette 20125 (dated 28th May 1999) annexed hereto marked “A”, in respect of paper products and in particular A4 paper imported from Singapore, had no force and effect on 27th November 2003.’ [2] The appellant deals in paper products some of which it imports to sell on the domestic market. From 8 January to 20 September 2004 the appellant imported four consignments of paper from Indonesia through the port of Durban. The appellant paid the applicable duty on these imports before clearance. No anti-dumping duty was imposed on the consignments although they were examined by Customs officials. Thereafter the appellant received a letter from SARS dated 26 October 2004 concerning the importation of the said paper. It intimated that an investigation had shown prima facie that the appellant contravened certain provisions of the Customs and Excise Act 91 of 1964 (the ‘Act’) and that anti-dumping duty in terms of Schedule 2 and value added tax amounting to R 1 565 569-60 were payable in respect of the four consignments. [3] In terms of ss 55 to 57 of the Act the fourth respondent (the Minister of Finance) may impose anti-dumping duty pursuant to a request from the third respondent (the Minister of Trade and Industry). The first respondent (SARS) recovers the duty so imposed. The relevant powers of the Minister of Finance are set out in s 56 of the Act. At the time of the relevant Government Notice, 28 May 1999, s 56 read: ‘(1) The Minister may from time to time by notice in the Gazette amend Schedule 2 to impose anti-dumping duty in accordance with the provisions of section 55 (2). (2) The Minister may, in accordance with any request by the Minister of Trade and Industry and for Economic Co-ordination, from time to time by notice in the Gazette withdraw or reduce, with or without retrospective effect and to such extent as may be specified in the notice, any anti-dumping duty imposed under subsection (1).’ Section 55 (2) at that time provided: ‘(a) The imposition of any anti-dumping duty as defined in the Board on Tariffs and Trade Act, 1986 (Act 107 of 1986) … shall be in accordance with any request by the Minister of Trade and Industry and for Economic Co-Operation under the provisions of the Board on Tariffs and Trade Act, 1986.’1 (b) Any such anti-dumping … duty may be imposed in respect of goods concerned in accordance with such request with effect from the date on which any provisional payment in relation to anti-dumping … duty is imposed in respect of those goods under section 57A.’ The then Board on Tariffs and Trade was empowered to investigate dumping and to report and make recommendations to the Minister of Trade and Industry and Economic Co-ordination.2 The said Minister, if he accepted the report and recommendation, was entitled to ‘request the Minister of Finance to amend the relevant Schedule to the Customs and Excise Act, 1964 …’. [4] Section 57A of the Act in addition provides for the imposition of a ‘provisional payment’. Provisional payments may be imposed by the Commissioner of Customs and Excise when the International Trade Administration Commission (‘ITAC’) or its predecessor, the Board on Tariffs and Trade, publishes a notice to the effect that it is investigating the imposition of anti-dumping duty on certain imported goods. The imposition of a provisional payment must be for the period, amount and goods specified in a request by ITAC.3 The Commissioner may in accordance with such a request also extend the period, or withdraw or reduce the amount of the provisional payment with or without retrospective respect.4 A provisional payment is paid in respect of the goods subject to it ‘as security for any anti-dumping … duty which may be retrospectively imposed’ on the goods in terms of s 56 (and 55) 1 The International Trade Administration Commission (‘ITAC’) is the successor to the Board on Tariffs and Trade (see Item 5(1) of Schedule 2 to the International Trade Administration Act 71 of 2002 (‘ITAA’)). 2 Section 4(1) of the Board on Tariffs and Trade Act 107 of 1986. 3 Section 57A(1) of the Act. Section 57A has been amended by Act 45 of 2003 to replace the references to the ‘Board on Tariffs and Trade’ with references to ITAC. 4 Section 57A(2). and may be set off against the amount of any retrospective anti-dumping duty payable.5 If no anti-dumping duty is imposed before the expiry of the period for which an anti-dumping duty has been imposed the amount of the duty has to be refunded.6 Where the amount of the provisional payment exceeds the amount of any anti-dumping duty retrospectively imposed the difference must be refunded but where it is less than the amount of the duty the difference may not be collected.7 Section 55(2)(b) specifically empowers the Minister of Finance to impose an anti-dumping duty in accordance with a request of the Minister of Trade and Industry ‘with effect from the date on which any provisional payment … is imposed … under section 57A.’ It follows and it was common cause between the parties that it is only where a provisional payment has been imposed that the Minister of Finance may impose a definitive anti- dumping duty retrospectively. This is borne out by the absence in s 56(1) of any reference to the power to introduce anti-dumping duty retrospectively and by the specific inclusion in s 56(2) of the power to ‘withdraw or reduce, with or without retrospective effect’ any duty imposed under s 56(1).8 It is common cause that a provisional payment had been imposed in respect of the goods in question in terms of s 57A and that the Minister of Finance had imposed the definitive anti-dumping duty on 28 May 19999 ‘with retrospective effect to 27 November 1998’. [5] South Africa is a founding member of the World Trade Organisation Agreement (‘WTO’) and also a signatory to the General Agreement on Tariffs and Trade of 1947 (‘GATT’).10 The South African Government acceded to GATT and its accession was published in the Government Gazette.11 Parliament approved the agreement in the Geneva General Agreement on Tariffs and Trade Act 29 of 1948.12 The World Trade Organisation Agreement was the outcome of the so-called Uruguay Round of the GATT negotiations 5 Section 57A(3). 6 Section 57A(4). 7 Section 57A(5). 8 Cf HC Cronje Customs and Excise Service (March 2007) p 6-3. 9 GN R685 GG 20125 of 28 May 1999. 10 John Dugard SC with contributions by Daniel Bethlehem QC, Max du Plessis and Anton Katz International Law: A South African Perspective 3ed (2005) pp 429, 442 ff. 11 GN 2421 of 18 November 1947. 12 Section 2. and was concluded in Marrakesh by the signing of some 27 agreements and instruments in April 1994 by the members including South Africa. The WTO Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the ‘Anti-Dumping Agreement’) forms part of the WTO Agreement.13 Article 11 of the former agreement provides: ’11.1 An anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury. 11.2 The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. 11.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a review.’ [6] The effect of international treaties on municipal law is regulated by ss 231, 232 and 233 of the Constitution. Section 231(4) provides that ‘[a]ny international agreement becomes law in the Republic when it is enacted into law by national legislation.’ The WTO Agreement was approved by Parliament on 6 April 1995 and is thus binding on the Republic in international law but it has not been enacted into municipal law.14 Nor has the Agreement on 13 Dugard pp 447-8. 14 EC Schlemmer ‘South Africa and the WTO Ten Years into Democracy’ (2004) 29 SAYIL 125 at p 135 referring to the WTO Agreements remarks: ‘They are thus binding on South Africa, but will form part of South African law only if parliament expressly so provides [s 231(4) of the Constitution]. A careful reading of the parliamentary debates indicates that this was clearly not the case. The agreements were approved and ratified, but due to incomplete actions of parliament, the WTO Agreements do not form part of South African law and as such are not directly enforceable through South African law.’ At p 134 n 57 she refers to the Implementation of Article VI of the General Agreement on Tariffs and Trade been made part of municipal law.15 No rights are therefore derived from the international agreements themselves.16 However, the passing of the International Trade Administration Act 71 of 2002 (‘ITAA’) creating ITAC and the promulgation of the Anti-Dumping Regulations17 made under s 59 of ITAA are indicative of an intention to give effect to the provisions of the treaties binding on the Republic in international law.18 The text to be interpreted, however, remains the South African legislation and its construction must be in conformity with s 233 of the Constitution.19 [7] The Anti-Dumping Regulations made under s 59 of ITAA which came into operation on 1 June 200320 seek to give effect to provisions of the Anti- Dumping Agreement cited above. The most important is regulation 53.1 which reads:21 Regulation 53.1: ‘Anti-dumping duties shall remain in place for a period not exceeding 5 years from the imposition or the last review thereof.’ [8] On 28 May 199922 the Minister of Finance, gave notice in terms of s 56 of the Act that Part 1 of Schedule 2 was amended ‘with retrospective effect to 27 November 1998’ to impose certain anti-dumping duties (in this case a 70 adoption of the Report of the Portfolio Committee on Trade and Industry of 22 March 1995 by Parliament. The report that was debated and adopted reads: ‘The Portfolio Committee on Trade and Industry, having considered the request to agree to the accession of the Republic … to the Marrakesh Agreement, which establishes the World Trade Organisation, incorporates the General Agreement on Tariffs and Trade (GATT) and was signed in terms of section 231(2) of the Constitution, agrees to the accession to the said Agreement by the Republic …’ (1995 Hansard col 642 - 653 at col 290). See further Dugard p 434; Gary S Eisenberg ‘The GATT and the WTO Agreements: Comments on their Legal Applicability to the Republic of South Africa’ (1993-4) 19 SAYIL 127. 15 In fact, Article 18.4 of the Agreement on Implementation of Article VI specifically provides that ‘Each member shall take all necessary steps … to ensure, not later than the date of entry into force of the WTO Agreement for it, the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement …’ (my underlining). 16 Maluleke v Minister of Internal Affairs 1981 (1) SA 707 (BSC) 712 H. 17 GN 3197 GG 25684 of 14 November 2003. 18 Cf NJ Botha ‘International Law’ in 11 LAWSA First Reissue paras 350 ff. 19 Section 233: ‘When interpreting any legislation, every court must prefer any reasonable interpretation of the legislation that is consistent with international law over any alternative interpretation that is inconsistent with international law.’ 20 GN 3197 GG 25684 of 14 November 2003. 21 See also regulations 38.1, 38.2, 53.2 and 54.1. 22 GN R685 GG 20125 of 28 May 1999. per cent duty) inter alia on the paper imported by the appellant as set out in the Schedule to the notice. [9] On 30 May 2003 the second respondent, ITAC, gave notice23 that the definitive anti-dumping duty (stated to have been imposed on 28 May 1999) would expire on 28 May 2004 unless a request was made for its continuance ‘indicating that the expiry of the duty [would] be likely to lead to continuation or recurrence of dumping and injury’. [10] On 2 April 2004 ITAC published a notice24 that a duly completed petition review questionnaire had been submitted to it on 28 November 2003 by Mondi Limited and Sappi Fine Paper (Pty) Limited which initiated a sunset review on the anti-dumping duties on the paper imported by the appellant and had the effect of extending the period of anti-dumping duties pending the outcome of the review. [11] It is common cause between the parties and it has been conceded on behalf of the second respondent that the duration of the definitive anti- dumping duty imposed by the Minister of Finance is a period of five years. This concession was properly made. The Act gives express powers to the Minister of Finance to amend Schedule 2 to impose anti-dumping duty in accordance with s 55(2)25 and to withdraw or reduce any anti-dumping duty imposed by him.26 In exercising his powers under s 55(2) the Minister of Finance imposed anti-dumping duty by GN R685 GG 20125 of 28 May 1999 without stipulating the period of time the duty would be operative. Despite the seemingly limitless operation of the anti-dumping duty imposed in this case by the Minister of Finance the period of its operation should be limited. Not only is a court bound to ‘prefer any reasonable interpretation of the legislation that is consistent with international law over any alternative interpretation that is 23 GN 1560 GG 24893 of 30 May 2003. 24 GN 552 GG 26180 of 2 April 2004. 25 Section 55(1). 26 Section 55 (2). inconsistent with international law’27 but subordinate legislation such as the notice by the Minister of Finance imposing the anti-dumping duty must be reasonable. Dugard28 submits that a court may ‘insist on compliance with a state’s international obligations as a requisite for the validity of subordinate legislation’. The duration of the anti-dumping duty imposed beyond the period allowed by the Anti-Dumping Agreement would not only be a breach of the Republic’s international obligations29 and an unreasonable interpretation of the notice but also unreasonable and to that extent invalid. The unreasonableness of any period exceeding that provided for by the international instrument is emphasized by regulation 53.1 of the Anti-Dumping Regulations which provides that ‘[a]nti-dumping duties shall remain in place for a period not exceeding 5 years from the imposition or the last review thereof.’ Although the Regulations came into force on 1 June 2003 they may be regarded as an indication that the remaining-in-force of the notice imposing the anti-dumping duty beyond five years would be unreasonable and to that extent invalid. [12] The narrow issue for consideration in this matter is whether the period of five years commenced on 28 May 1999 (the date of the notice) or on 27 November 1998 (the date from which the amendment was to have ‘retrospective’ effect). The appellant imported paper from Indonesia during the period 8 January to 20 September 2004. It follows that if the period of five years commenced on 27 November 1998 the duties would have lapsed on 27 November 2003 and the appeal should succeed. If, on the other hand, the period commenced on 28 May 1999 the appeal should be dismissed. [13] In his judgment in the court a quo Gyanda J accepted that the ‘imposition’ or the ‘act of imposing’ occurred on the date of publication, ie 28 May 1999, and held that ‘the date of imposition must obviously be the date 27 Section 233 of the Constitution. 28 John Dugard ‘International Human-Rights Norms in Domestic Courts: Can South Africa Learn from Britain and the United States?’ in Ellison Kahn (ed) Fiat Iustitia: Essays in Memory of Oliver Deneys Schreiner (1983) 221 p 238 and see Dugard (n 10 above) p 66 ff. 29 Prima facie Parliament does not intend acting contrary to international law or in breach of its treaty obligations; Binga v Cabinet for South West Africa and Others 1988 (3) SA 155 (A) 184I - 185C. when the act of levying the duty is taken i.e. the date of publication.’ The date of ‘imposition’ may thus be different from the date of levying the duty. In coming to this conclusion he was relying on the ‘stated intention’ of the contracting parties to the WTO Agreements to maintain uniformity. He found support in the foreign legislation referred to, ie that of the USA, the EU and India, that the five year period is calculated from the date of ‘imposition’ ie the date of publication of the definitive anti-dumping measures. He also relied for his conclusion on the distinction between a ‘provisional payment’ as described in s 57A and a ‘definitive’ anti-dumping duty provided for in ss 55 and 56 and concluded that there would be no reason to enact s 57A(5) if there was no such distinction. He came to the conclusion that ‘the statute in question is a retrospective one as it indeed says it is in that it “looks backwards, that it attaches new consequences for the future to the event that took place before the statute was enacted.”30 The date of imposition therefore must be the date of publication of the Government Notice No.R 685 published in Government Gazette No.20125 of 28th May 1999. … Retrospective effect of the provision to 27th November 1998 is no more than authorising the levying and collection of duties from the date. It is clear that these retrospective levying of duties was necessary to prevent the evil that was feared and envisaged namely that importers would, in an effort to avoid the imposition of Anti-Dumping measures, import huge quantities of the product in question before the legislation came into force. It is clearly therefore a measure designed to prevent the importers from circumventing the provisions of the law and by putting in place measures to collect or levy the duties even before the law came into force. Under these circumstances the provision in question is definitely retrospective in effect and not a retroactive statute …’. [14] The judge in the court a quo was undoubtedly correct in finding that anti-dumping duty may be imposed in certain circumstances for a period longer than five years: where a sunset review has been initiated under regulation 53.2 of the Anti-Dumping Regulations the anti-dumping duty 30 Gyanda J relied in this respect on National Director of Public Prosecutions v Carolus and Others 2000 (1) SA 1127 (SCA) where Farlam AJA (para 34) cited Benner v Secretary of State of Canada (1997) 42 CRR (2d) 1 in which reference was made to Elmer A Driedger ‘Statutes: Retroactive Retrospective Reflections’ (1978) 56 Canadian Bar Review 264 at 268- 9 who stated: ‘A retroactive statute is one that operates as of a time prior to its enactment. A retrospective statute is one that operates for the future only. It is prospective, but it imposes new results in respect of a past event. A retroactive statute operates backwards. A retrospective statute operates forwards, but it looks backwards in that it attaches new consequences for the future to an event that took place before the statute was enacted. A retroactive statute changes the law from what it was; a retrospective statute changes the law from what it otherwise would be with respect to a prior event.’ remains in force until the review has been finalised. Nothing, however, turns on the fact that anti-dumping duty may in these circumstances endure for a period longer than five years. [15] The court a quo found that the imposition of the duty was ‘retrospective’ and not ‘retroactive’. Whether the imposition was ‘retrospective’ or ‘retroactive’ makes no difference to the burden imposed on the importer to pay the duty as from 27 November 1998. What is clear, however, is that at 27 November 1998 an anti-dumping duty existed that did not exist before the publication allowing for its ‘imposition’ on 28 May 1999. The ‘imposition’ of the duty on 28 May 1999 with effect from 27 November 1998 meant that ‘the law shall be taken to have been that which it was not’.31 It follows that the anti-dumping duty was imposed ‘retroactively’. The fact that the notice uses the word ‘retrospectively’ and not ‘retroactively’ does not offend against this conclusion since a distinction is frequently made between retrospectivity in the ‘strong’ sense (ie ‘retroactivity’) and retrospectivity in the ‘weaker’ sense.32 [16] In holding that the anti-dumping duty was imposed on the date of the notice the court a quo relied on the Oxford English Dictionary meaning33 of the word ‘imposition’ as ‘the action of imposing a charge, obligation, duty, etc’. It does not follow, however, that the date of ‘imposition’ is the date of the notice introducing the duty. The purpose of the imposition was to impose the anti- dumping duty as from 27 November 1998. The duty or the burden was ‘imposed’ on that day just as one would conclude that where the notice provided for the duty to take effect on a future date the duty would be ‘imposed’ on that future date. [17] Perhaps the strongest indication for holding that the duty was ‘imposed’ on 27 November 1998 is to be found in s 57A(3) which leaves no doubt that 31 S v Mhlungu and Others 1995 (3) SA 867 (CC) para 65. 32 National Director of Public Prosecutions v Carolus and Others 2000 (1) SA 1127 (SCA) para 35. 33 The Shorter Oxford English Dictionary (1973) refers to ‘imposition’ as the ‘action of imposing; the action of inflicting, levying or enjoining … (taxation)’ and ‘impose’ as ‘to put a tax, to levy an impost’. the duty imposed is a ‘definitive’ anti-dumping duty for the payment of which any provisional payment already imposed serves as security. It was fully effective on that date just as if it had been ‘imposed’ on that very day. The definitive anti-dumping duty, it is common cause, endures for five years from its imposition. [18] The second respondent, invoking s 233 of the Constitution, sought to find support for its construction of the word ‘imposition’ in the opinions of foreign trade law experts from the United States, India and the European Union. The affidavit of Ms Trossevin of the USA deals with Title VII (ss 701- 782) of the Tariff Act of 1930 as amended and the implementing regulations found in Title 19 of the Code of Federal Regulations, Part 351. She was required to demonstrate ‘how the period of “five years” referred to in section 751(c) is calculated and, in particular, whether the period during which any provisional duties may be applied prior to the imposition of the final or definitive duties is required to be taken into account in the calculation of the five year period.’ She concluded that under US law the calculation of the five year period referred to in s 751(c) of the Tariff Act does not include the period during which provisional measures may have been applied. The latter measure may be applied during an investigation after preliminary findings had been made. A ‘5 year sunset review’ is initiated five years after the date of publication of the anti-dumping duty order. Pursuant to s 351.218(c) of the Regulation notice initiating the review is published 30 days before the fifth anniversary of the anti-dumping order. Should the review lead to a revocation of the order revocation will be effective ‘on the fifth anniversary of the date of publication … of the order…’(Regulation 351.222(i)(2)). An anti-dumping duty order therefore remains effective for five years from the date the order was originally published which is a period after the provisional measures were in force. The evidence of Mr Vermulst concerns the duration of the anti-dumping duty imposed in terms of Article 11(1) and (2) of the European Council Regulation 384/96. Article 11(2) provides expressly that a ‘definitive anti- dumping measure shall expire five years from its imposition or five years from the date of the conclusion of the most recent review’. His conclusion is that in the computation of the five year period any period during which a provisional duty (in terms of Article 7) may have been imposed is not taken into account. In India an anti-dumping duty ceases to have effect on the expiry of five years from the date of its imposition.34 [19] To my mind none of these foreign experts supports the submission of the second respondent: they lead to the conclusion that the five year period is calculated with reference to the period of the definitive anti-dumping duty and excluding the period any provisional anti-dumping duty had been in force. It is common cause in this case that a provisional payment had been imposed in respect of the goods in question in terms of s 57A but that the Minister of Finance had imposed the definitive anti-dumping duty by notice on 28 May 199935 ‘with retrospective effect to 27 November 1998’. There is no suggestion that the anti-dumping duty in force for the ‘retrospective’ period, ie from 27 November 1998 to 28 May 1999, was anything other than a definitive anti-dumping duty. The period of definitive anti-dumping duties and the period of a provisional payment may thus coincide and not follow each other as is apparently the case in the USA and the EU. Moreover, the narrow issue for decision in this case is whether the duration of the anti-dumping duty imposed ‘retrospectively’ is calculated from the retrospective date or from the date of ‘imposition’. This question is not addressed by any of the experts. [20] It follows that the appeal must be upheld with costs. The following order is made: (1) the appeal is upheld with costs including the costs occasioned by the employment of two counsel; (2) the order of the court a quo is set aside and the following is substituted in its place: 34 Section 9A(5) of the Indian Customs Tariff Act, 1975. 35 GN R685 GG 20125 of 28 May 1999. ‘(a) the antidumping duty imposed by the Fourth Respondent in terms of GN R685, Government Gazette 20125 (dated 28th May 1999) in respect of paper products and in particular A4 paper imported from Singapore, had no force and effect on 27th November 2003. (b) the second respondent is ordered to pay the applicant’s costs including the costs occasioned by the employment of two counsel.’ __________ F R MALAN Acting Judge of Appeal CONCUR SCOTT JA LEWIS JA HEHER JA MHLANTLA AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Tuesday, 25 September 2007 Status: Immediate On 25 September 2007 the Supreme Court of Appeal gave judgment in Progress Office Machines v The International Trade Administration Commission upholding an appeal from the Durban High Court concerning the duration of anti-dumping duty imposed by the Minister of Finance in terms of ss 55 and 56 of the Customs and Excise Act 94 of 1964. The Minister of Finance had imposed anti-dumping duty in respect of paper products in particular A4 paper imported from Singapore by notice in the Government Gazette on 28 May 1999. The duty was imposed ‘with retrospective effect to 27 November 1998’. It was common cause between the parties that the anti-dumping duty imposed was to endure for a period of five years. The only question was whether the period commenced on 28 May 1999 or on 27 November 1998. The Supreme Court of Appeal held that the duty was imposed with retroactive effect so that the period of five years commenced to run from 27 November 1998. The appellant imported A4 paper from Singapore during the period 8 January to 20 September 2004. No anti-dumping duty was therefore payable on the imports since the duty had expired five years after its imposition, viz on 27 November 2003. -- end --

3449

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 710/19 In the matter between: SYBRAND SMIT FIRST APPELLANT SOLJE SUSAN SMIT NO SECOND APPELLANT ENID ELIZABETH MULDER NO THIRD APPELLANT SYBRAND SMIT NO FOURTH APPELLANT (SECOND TO FOURTH APPELLANTS AS TRUSTEES OF THE SYBRAND SMIT FAMILIE TRUST) and ORIGIZE 166 STRAND REAL ESTATE (PTY) LTD FIRST RESPONDENT O’NEIL BRENDAL JACOBS SECOND RESPONDENT HANRO ERASMUS STEFFEN THIRD RESPONDENT Neutral citation: Smit and Others v Origize 166 Strand Real Estate (Pty) Ltd and Others (Case no 710/19) [2020] ZASCA 132 (19 October 2020) Coram: PETSE DP, MAKGOKA and NICHOLLS JJA and LEDWABA and EKSTEEN AJJA Heard: 25 August 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 19 October 2020. Summary: Principal and agent – power of attorney granted by company to secure a debt owed to the grantee – Power of attorney given as security for a debt owed is irrevocable for as long as the debt remains unpaid – purported revocation of power of attorney invalid. _____________________________________________________________ ORDER _____________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Bridgman AJ sitting as court of first instance): The appeal is upheld with costs, including the costs of two counsel. The order of the high court is set aside and replaced with the following: ‘1 It is declared that the first applicant may, in terms of the resolution adopted by the first respondent on 21 July 2016: 1.1 Accept and sign on behalf of the first respondent any written offer from an offeror; and 1.2 Sign on behalf of the first respondent all documents required to give effect to the abovementioned written offer and to transfer to the offeror: The real right of extension in respect of 33 units of the scheme known as Ocean View Villas, held under certificate of real right number SK1206/2017 (the real rights). 1.3 The first and second respondents shall pay the costs of the application, jointly and severally.’ _____________________________________________________________ JUDGMENT _____________________________________________________________ Eksteen AJA (Petse DP, Makgoka and Nicholls JJA and Ledwaba AJA concurring) [1] The issue in this appeal relates to the interpretation, enforcement and revocability of two powers of attorney granted to Mr Sybrand Smit, the first appellant, by Origize 166 Strand Real Estate (Pty) Limited (Origize), the first respondent, pursuant to two company resolutions marked ‘irrevocable’. Relying on these resolutions the appellants sought an order authorising Mr Smit to sign any written offer from any offeror and all documents required to give effect to the offer, on behalf of Origize, and to transfer to the offeror the real right of extension in respect of 33 units in the scheme known as Ocean View Villas (the sectional scheme), held under certificate of real right number SK1206/217 (the real rights). The application was dismissed in the Western Cape Division of the High Court, Cape Town (the high court). The appeal to this court is with the leave of the high court. [2] In order to understand the dispute it is necessary to set out briefly the material history thereof. Mr Smit, an attorney, and Mr Jacobs, an estate agent, had been business associates. During 2016, Mr Jacobs purchased the real rights in the sectional scheme, which is situated in Port Edward, KwaZulu- Natal, from the liquidators of CLA Projects (Pty) Ltd for R4.1 million in the name of Origize. Mr Jacobs was the sole shareholder and director in Origize and he paid the deposit of R410 000 immediately upon signature of the agreement. Origize was required to provide guarantees for the remainder of the purchase price within a stipulated period. When it was unable to do so the liquidators threatened to cancel the contract. This prompted Mr Jacobs to approach Mr Smit for assistance. He advised Mr Smit that he had purchased 33 sectional title units and that he had already secured a buyer who would purchase the units from him immediately for R9.5 million. It was accordingly imperative to ward off the threatened cancellation. [3] They agreed that Mr Smit would engage with the liquidators to stave off the cancellation and, if necessary, to arrange that the remainder of the purchase price be paid by a further R1 million in cash, payable immediately, in exchange for an extension of time to provide guarantees in respect of the outstanding balance. They further agreed that Mr Smit would advance the R1 million to Origize and in exchange he would be entitled to share equally with Origize in the profits upon the sale of the units. [4] Mr Smit duly engaged with the liquidators and secured the agreement as set out earlier on condition that the further R1 million would be non-refundable in the event of the contract not proceeding. [5] Further discussions followed between Mr Smit and Mr Jacobs through an exchange of text messages. When Mr Smit was satisfied that an agreement had been concluded, he prepared a written document which reflected his understanding of the agreement. The material terms of the agreement were recorded as follows: ‘1. Smit will lend an advance in the amount of R1 million to the purchaser, to be paid by Smit to the transfer attorneys on 14 July 2016 as part of payment to the purchase price; 2. The parties will be liable in equal shares for the purchase price, interest thereon, transfer costs and all other costs and charges incurred to acquire the property; 3. The parties will endeavour to nominate a VAT registered enterprise to acquire transfer of the property in the purchaser’s stead; 4. The parties agree that the property will be sold with the intention of realising a profit from the sale thereon and that the nett proceeds will be divided equally between the parties; 5. The parties will be liable in equal shares for capital gains tax levied on the results on sale of the property.’ [6] Mr Smit signed the agreement on 14 July 2016 and paid the R1 million to the conveyancing attorneys on the same date. The agreement was forwarded to Mr Jacobs who signed it on the following day. However, he unilaterally deleted clause 2 thereof and in its stead wrote in by hand at the foot of the agreement the following: ‘Please find amendment to clause 2 of page 1. The parties agree that I, Yan (Sybrand Smit) will arrange finance at a financial institute or a business partner of him. Both parties, Sybrand Smit and O’Neil Jacobs will be liable for the repayment of all costs and charges.’ (sic) [7] The legal implications of the alteration to the document are not material for present purposes. Suffice it to record that Mr Smit was unpleasantly surprised by the change in the financial arrangement. Not only had the R1 million already been paid over to the conveyancing attorneys but he was now required to raise the remainder of the purchase price. [8] On 21 July 2016, Mr Smit was provided with a power of attorney from Origize as reflected in a resolution of its board of directors, being Mr Jacobs as sole director. The material portions thereof record: ‘Resolved irrevocably that: 1. Sybrand Smit Identity number . . . is hereby nominated, constituted and appointed with Power of Substitution to be the lawful Attorney and Agent in the name, place and stead of this Company – 1.1 To prosecute and/or negotiate and/or settle on behalf of LCA Projects Development Company and/or its Liquidators and/or legal representatives, in respect of block 1 in Ocean View Villas: . . . 1.9 To act on behalf of the company for the completion of the purchase of Block 1, Ocean View Villas, Port Edward as per the signed Purchase and Sale agreement entered into with LCA Projects Development, which shall include any and all activities relating to, but not limited to, obtaining finance for the remainder of the purchase price, registration of the property in the name of the Purchaser, to do any maintenance and improvements to the said property to get it to a sellable condition, any activities to market the units and transfer the units to the new owners; 1.10 To be my Attorney and Agent for managing and transacting my business in THE REPUBLIC OF SOUTH AFRICA AND IN EVERY TERRITORY OR COUNTRY ANYWHERE IN THE WORLD; 1.11 With full power and authority for me and in my name and for my account and benefit; 1.12 And to deal with my immovable property belonging to me with which I am entitled to deal; 1.13 And to sell my immovable property and in connection with any sale to make the necessary Declaration as to the truth of the amount of the purchase price; 1.14 And to receive and to make and give, as the case may be, the necessary contracts or acts and deeds of transfer or leases of and relating to my immovable or leasehold property in due and customary form according to the local laws an usages; 1.15 And to sign or execute any Deed or Instrument in writing as effectually as I might or could do if personally present.’ Notwithstanding the change in terminology from clause 1.10 onwards it was common cause during argument before us that these clauses related to the property of Origize. [9] Mr Smit alleged that the power of attorney was provided to him as security for the non-refundable R1 million which he had already advanced and the remainder of the purchase price which he was required to obtain. This allegation was met by a bald denial but, there was no attempt to explain what other purpose was intended to be served by the power of attorney. [10] Mr Smit proceeded to raise the outstanding balance of the purchase price in the form of a loan from Business Partners, South Africa, (Business Partners) in the name of the Sybrand Smit Familie Trust. As a condition for the loan to the trust, Business Partners insisted on a power of attorney by Origize in favour of Mr Smit. Accordingly, on 29 July 2016, a further resolution was taken by the board of directors of Origize that repeated the wording set out in clause 1.9 of the earlier resolution. This was the second resolution that the appellants relied on. However, by virtue of the conclusion to which I have come it is not necessary to have further regard to this resolution. I shall therefor confine myself to the first resolution. [11] With the finances in place the transfer of the real rights to Origize was secured. However, the alleged buyer referred to earlier did not materialize and the endeavours of the parties to find a willing and able buyer at a similar price were unsuccessful. In due course Mr Smit secured a buyer willing to purchase at a price of R5.4 million. Mr Jacobs refused this offer. In the interim the partially completed units were vandalised causing substantial damage to the structures with a concomitant reduction in their market value. In the damaged state the best offer that they were able to secure was R3.95 million. This too Mr Jacobs declined. [12] These events contributed to a deteriorating relationship between the parties and eventually, on 15 March 2018, Mr Jacobs passed a further resolution of Origize which purported to revoke the resolution of 21 July 2016. [13] In response the appellants launched the application seeking the relief set out earlier. The appellants relied primarily on clauses 1.12-1.15 of the resolution. On their behalf it was contended that because the resolution was taken, and the power of attorney given, as security for the loan to Origize, and Smit was appointed procurator in rem suam as its agent, the resolution was irrevocable in law. [14] The dispute relating to security is more apparent than real. As recorded earlier, Mr Jacobs offered no contrary explanation for the provision of the power of attorney. On behalf of the respondents it was argued that it was not linked to security as neither the written agreement nor the resolution itself refers to security. The argument is unconvincing. The powers conferred on Mr Smit are far-reaching. In view of the timing thereof and the circumstances under which it was given, and in the absence of any other explanation from Mr Jacobs, the high court correctly found that it was given as security for the money already advanced, and still to be advanced. [15] That brings me to the central issue in the appeal, whether the resolution was revocable and, if not, whether the relief sought was justified by virtue of the terms thereof. In respect of the former, the high court concluded that a power of attorney authorising another to act on one’s behalf can, in law, never be irrevocable. It relied on a passage in Lawsa.1 The essence thereof is summarised in the final paragraph, quoted by the high court: ‘The position then can be summed up as follows: according to Roman-Dutch law, an authority to another person to conclude juristic acts in one’s name or on one’s behalf could not be irrevocable; the exception mentioned by Voet2 is apparent and not real, as Voet refers to a cessionary and not to a representative who acts on behalf of another person; the so-called authority coupled with an interest or forming part of a security is nothing but a cession; cases in which it is suggested that an authority can be irrevocable so as to render valid a juristic act concluded by a person purporting to act on behalf of another person after the other person had revoked his or her authority cannot be regarded as authoritative.’ [16] The view expressed in Lawsa is not universally held. Thus, The Law of Agency in South Africa3 (Silke) records the current position in South Africa as follows: ‘A principal may at any time terminate the authority he has conferred on his agent, whether the agent has commenced to act on it or not, and whether or not it has been expressly or impliedly agreed that the authority will be irrevocable, unless 1 Lawsa 3 ed Agency and representation – termination of authority. 2 17.1.17. 3 J M Silke De Villiers and McIntosh: The Law of Agency in South Africa 3 ed at 614. (a) it was granted for the purpose of protecting or securing some interest of the agent; (b) it forms one of the terms of a contract between the parties; (c) it was given to secure the performance of the promise made by the principal to the agent.’ [17] The Law of Agency4 (Kerr) recognises the general rule that authority given to another may be revoked at any time and that the mere agreement by the parties that a power granted by the one to the other or a mandate given by the one to the other shall be ‘irrevocable’ or ‘in rem suam’ does not deprive the grantor or the mandator of his power to revoke. The author then proceeds to opine: ‘However, grants of power and mandates which are given to enable the grantee or mandatary to obtain security are not revocable by the grantor or mandator while the debt sought to be secured is unpaid.’5 [18] Lawsa argues that the statement by Voet (17.1.17) has long been misunderstood and misapplied. Indeed, it would appear as if, and I accept for purposes of this judgement that the exception to the general rule (the exception), alluded to by Kerr, was not part of the Roman-Dutch law and that it has its origin in English law.6 However, the exception, which lies at the heart of the contentions by Silke and Kerr, has a long history in reported case law in South Africa. [19] The first reference thereto was in Koch v Mair (1894) 11 SC 71 at 83, wherein De Villiers CJ stated: 4 Kerr The Law of Agency 4 ed (2006) at 196-197. 5 See also Harms Amlers Precedence of Pleadings 9 ed at 28. 6 See Lawsa. ‘There can be no doubt, that by our law a principal may effectually bind himself by contract not to revoke his power. Such a contract would be implied where the power is given to secure the performance of a promise made by the agent for valuable consideration, whether the power on the face of it purports to be irrevocable or not.’ De Villiers CJ did not cite any authority for his assertion. [20] It arose again in Marcus’ Executor v Mackie Dunn & Co (1896-1897) 11 EDC 29 where Solomon J, after analysing a number of English decisions concluded: ‘The effect then of the English decisions is that the principle that an authority coupled with an interest is irrevocable, applies only to those cases where the authority is given for the purpose of being a security, or as part of the security. The same rule prevails in our law; it is laid down in Burge’s “Colonial Law” in words identical with those quoted above, “(A mandate) terminates when the mandant himself revokes the authority. But this rule admits of an exception when the mandate forms part of a security for a debt” (Burge’s Comment,’ Juta’s edition, p. 282, and Voet 17.1.17, there quoted).’ [21] Lawsa argues, however, that Solomon J simply accepted, on the authority of Burge, that the exception forms part of our law. Burge, it is argued, relies on Voet, who deals with the procuratio in rem suam, or cession, and not with the power of attorney to sell things belonging to another person. This criticism may be accepted for purposes of the debate. The significance of the statement by Soloman J, as I shall show, lies in the acceptance of the exception and its consistent application in our courts. [22] In Van Niekerk v Van Noorden (1900) 17 SC 63, the plaintiffs had conferred a wide authority on the defendant which was given ‘specially, irrevocably and in rem suam’ as security for a loan advanced. De Villiers CJ, at 65, remarked: ‘It appears to me an important point on the case that this power was given for the protection of the defendant. He was going to some risk in assisting the plaintiffs, and in consideration of that risk he wished to hold control of this business for so long as the debt was still owing to him, and it was for that purpose that the irrevocable power was given.’ He went on to conclude at 66: ‘There has been a great deal of argument as to whether this power is revocable or not, but my idea is that it is revocable to this extent, that the plaintiffs could at any time by paying the whole amount of the debt due to the defendant claim that the power given should be revoked, but so long as the debt remains it is really irrevocable.’ [23] Natal Bank Ltd v Natorp and Registrar of Deeds 1908 TS 1016 followed. There, Natorp had given the bank an ‘irrevocable’ power of attorney which entitled it to pass a bond of £7 000 over certain property named therein. It was clear from the terms of the power of attorney that it was given in connection with a debt due by Natorp to the bank ‘arising from and being for money lent and advanced or to be lent and advanced by the said bank to Natorp and Ireland, merchants, Pietersburg’. On 4 October 1908 Natorp purported to revoke the power by notice to the bank. A few days thereafter the bank proceeded to act on the power but the Registrar of Deeds, who had been notified of the purported revocation, rejected the bond. However, the court ordered that the power of attorney be treated as binding. Solomon J stated at 1019-1022: ‘The object of the transaction was that Natorp should give security to the bank for this overdraft, or for any overdraft which might become due in the future from the firm of Natorp & Ireland. The transaction . . . is a comparatively common banking transaction between a customer and a bank, under which certain facilities are given to the customer, and he in turn grants a power of this nature as security, to be retained by the bank and acted upon by it when it thinks necessary . . . [I]n the circumstances . . . the power cannot be revoked until the firm [Natorp and Ireland] have discharged their liabilities to the bank.’ [24] The position expounded by Voet (17.1.17), that there must be a cession of action before the authority can be deemed to be irrevocable, was advanced. The argument was considered and rejected,7 whether rightly or wrongly. Natal Bank was followed in Hunt, Leuchars and Hepburn Ltd: In Re Jeansson (1911) 32 NPD 493. In Hunt, Jeansson had borrowed money from Hunt, Leuchars and Hepburn and given them an irrevocable power of attorney to let, sell, acquire, mortgage, manage, and generally to administer: a certain piece of land. After Jeansson’s death Hunt Leuchars and Hepburn approached the court for leave to act upon the power of attorney. Leave was granted on the ground that the power, having been given as security, was irrevocable and did therefore not terminate at Jeansson’s death. [25] Glover v Bothma 1948 (1) SA 611 (WLD) was next. Roper J considered the argument based on Voet 17.1.17.8 He concluded: ‘The effect of the rule as stated by Voet appears to be substantially the same as that of the English rule that an agency cannot be revoked where it is coupled with an interest. The following passage occurs in Wille and Millin's Mercantile Law of S.A. (11th Ed., p. 362): “An authority coupled with an interest is one given for the purpose of protecting or securing any interest of the agent. Such an authority or power is usually styled ‘irrevocable’ in the instrument conferring it, and it often takes the form of what is called a procuratorship in rem suam, i.e., an agency in which the agent is given authority to sue in his own name and in which he transacts the business committed to him for his own benefit and not for the 7 At 122-123. 8 625-626. benefit of the principal. In a case of this sort, as well as in every other case where the power has been given by way of security, irrevocability will be implied, even if the power is not express on the point. On the other hand, merely to call a power ‘irrevocable’ is not to make it so. Subject to an action for damages an ordinary power styled irrevocable may be revoked . . . The test is whether it is intended for the protection or securing of an interest of the agent. If it is, it is irrevocable, until such time as the protection or security is no longer needed”.’ [26] Caney J was called upon again to consider the revocability of a power of attorney in Ward v Barrett, NO, and Another 1962 (4) SA 732 (NPD). He opined at 737D-E: ‘Generally, the authority of an agent is revocable by his principal and terminates on the death or insolvency of himself or of the principal. The question whether a power of attorney or the authority of an agent howsoever conferred is irrevocable depends, it seems to me, upon an interpretation of the transaction into which the principal has entered with the agent and an application of the general principles of law to that transaction. There seems to be no particular magic in the use of the terms “irrevocable” or “procuratio in rem suam” or “a power coupled with an interest”; it is essential to discover precisely what was the transaction.’ [27] Caney J proceeded to refer to Natal Bank and stated (at 737G-H): ‘[A] power of attorney (expressed to be irrevocable) to pass a mortgage bond was given, not for the purpose of then and there passing a bond, but for the bank to hold as security for overdraft facilities and to be acted upon by the bank when it thought necessary. The principal’s attempt to revoke the power would have been, as INNES, C.J., said of a bond in similar circumstances, in National Bank of SA Ltd v Hoffman's Trustee, 1923 AD 247 at p. 249, “a fraudulent act which the law could not countenance”.’ [28] These decisions, stretching back more than 125 years, set out the development of our law and the establishment of the principle that a power of attorney given as security for a debt owing, is irrevocable, at least for as long as the debt remains unpaid. The courts have repeatedly considered the pronouncement by Voet and have consistently attributed to it their understanding. I accept that they may have misunderstood his teaching, however, as the law has developed in this country over an extended period the principle has been firmly laid down and the time has come to recognise that it is part of our contemporary law.9 [29] I have alluded earlier to the case law. Solomon J noted in Natal Bank, in 1908, that it was common banking practice for a bank to accept a power of attorney to register a bond if and when so advised, as security for a loan. There is no reason to believe that the practice has materially changed. Vested rights have accrued to parties reliant on the enduring principle affirmed in our courts and a ruling now that the exception has never been part of our law would have a ripple effect, with a concomitant impact on existing rights and obligations. For these reasons I conclude that the resolution of 21 July 2016 was irrevocable, at least until the debt secured was repaid, and its purported revocation is therefore invalid. [30] The remaining question is whether the terms of the resolution entitled the appellants to the order sought. The high court said not. It reasoned that it would be wrong to permit Mr Smit to accept ‘any offer’ as an agent is in law obliged to act in the best interest of his principal and he could therefore not accept an offer of which Mr Jacobs did not approve. The reasoning does not do justice to the relationship between the parties. The history of the dispute 9 Cullinan v Noordkaaplandse Aartappelkernmoerkwekers Koöporasie Bpk 1972 (1) SA 761 (A). demonstrates that they were partners in a joint venture. Mr Smit has assumed a substantial financial risk to assist Mr Jacobs and the power to sell the property was specifically given to secure this risk .As a partner sharing in the profit, if any, he has as great an interest, if not greater, in securing the highest possible price as Mr Jacobs has. [31] Clauses 1.12-1.15 of the resolution confer extensive powers on Mr Smit to sell the property, to receive or to make, as the case may be, contracts and deeds of transfer relating to the property and to sign any deed or instrument in writing as effectually as Mr Jacobs could. In my view the express terms of the power of attorney confer on Mr Smit the authority to accept an offer to purchase and to sign the deed of sale and all documents necessary to pass transfer to the purchaser. [32] On behalf of the respondents it was argued that the power of attorney was time bound and once the transaction with the liquidators had been completed and transfer of the rights effected the power lapsed. The argument ignores the provisions of clause 1.9 which authorises Mr Smit to do maintenance and effect improvements to the property to get it to a sellable condition and to undertake any activities to market the units and transfer the units to new owners. Moreover, once it is accepted that the power of attorney was given as security for the loan, as I have, it is irrevocable for as long as the debt which it sought to secure remains unpaid. The argument can therefore not succeed. [33] In the result: 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: ‘1 It is declared that the first applicant may, in terms of the resolution adopted by the first respondent on 21 July 2016: 1.1 Accept and sign on behalf of the first respondent any written offer from an offeror; and 1.2 Sign on behalf of the first respondent all documents required to give effect to the abovementioned written offer and to transfer to the offeror: The real right of extension in respect of 33 units of the scheme known as Ocean View Villas, held under certificate of real right number SK1206/2017 (the real rights). 1.3 The first and second respondents shall pay the costs of the application, jointly and severally.’ _________________________ J W EKSTEEN ACTING JUDGE OF APPEAL Appearances For appellants: M Seale SC (with him A Walters) Instructed by: Smit & CO Attorneys, Lamberts Bay McIntyre Van Der Post, Bloemfontein For respondent: A Montzinger Instructed by: Hanro Steffen Inc, Brackenfell Symington & De Kok, Bloemfontein

SUPREME COURT OF APPEAL SOUTH AFRICA MEDIA SUMMARY – JUDGEMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 19 October 2020 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgement of the Supreme Court of Appeal. SYBRAND SMIT & OTHERS v ORIGIZE 166 STRAND REAL ESTATE (PTY) LTD & OTHERS (Case no 710/19) [2020] ZASCA 132 ______________________________________________________________________________ The Supreme Court of Appeal today upheld an appeal against the dismissal by the high court of an application for a declaratory order that Mr Smit is entitled, in terms of a resolution adopted by Origize 166 Strand Real Estate (Pty) Ltd (Origize) on 21 July 2016, to: 1. Accept and sign on behalf of Origize, any written offer from any offeror; and 2. Sign on behalf of Origize, all documents required to give effect to such offer and to transfer to the offeror the real right of extension in respect of 33 units of the scheme known as Ocean View Villas, situated in Port Edward, KwaZulu-Natal, held under certificate of real right number SK1206/2017 (the real right). The first and second respondents were ordered to pay the costs of the appeal, including the costs of two counsel. Mr Smit, an attorney, and Mr Jacobs (the second respondent), an estate agent, were business associates. Mr Jacobs was the sole shareholder and director of Origize. It purchased the real right from the liquidators of CLA Projects (Pty) Ltd for R4.1 million with the intension to resell it quickly at a profit. Mr Jacobs paid the deposit, but was unable to provide security for the remainder of the purchase price. He engaged Mr Smit to negotiate with the liquidators to avert the cancelation of the contract. An agreement was reached that Origize would pay a further R1 million, which would be non-refundable, immediately, and an extension would be granted in respect of the provision of security in respect of the balance of the purchase price. Mr Smit undertook to advance the R1 million to, and to raise the balance of the purchase price on behalf of, Origize in exchange for a 50 percent share in the venture. Origize, for its part, provided Mr Smit with a power of attorney, as recorded in the resolution of 21 July 2016, as security for the money lent and advanced. The resolution authorised Mr Smit to deal with and to sell any immovable property of Origize, and ‘to receive and to make and give, as the case may be, the necessary contracts or acts and deeds of transfer’ relating to the immovable property. Mr Smit paid the R1 million to the liquidators and raised the remainder of the purchase price by way of a loan. The real right was transferred to Origize but, the parties were unable to find a purchaser at a price satisfactory to Mr Jacobs. In time the units were vandalised with a concomitant diminution in value. When Mr Smit insisted they sell Mr Jacobs purported to rescind the resolution of 21 July 2016, which Mr Smit contended he was not allowed to do. The high court held that an authority given to another to act on one’s behalf is revocable at any time. It therefor dismissed the application. After hearing argument from both sides the SCA upheld the appeal finding that Mr Smit had established that the power of attorney had been given as security for money lent and advanced .In these circumstances it held that it was irrevocable for as long as the debt remained unpaid.

2717

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 354/11 (Not reportable) In the matter between: PRIMEDIA (PTY) LTD t/a PRIMEDIA INSTORE Appellant and RADIO RETAIL (PTY) LTD First Respondent RADIO RETAIL FOR SPAR (PTY) LTD Second Respondent ZaPOP (PTY) LTD Third Respondent Neutral citation: Primedia v Radio Retail (354/2011) [2012] ZASCA 32 (29 March 2012). Coram: Mthiyane DP, Cloete, Cachalia, Malan, Leach JJA Heard: 15 March 2012 Delivered: 29 March 2012 Summary: Unlawful competition – appellant enforcing rights in terms of pre-existing contracts – no unlawful competition proved. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Western Cape High Court, Cape Town (Henney AJ sitting as court of first instance): 1. The appeal is upheld. Save as set out in para 2, the respondents are ordered to pay the costs of the appeal, including the costs of two counsel. 2. The appellant is to pay the costs of the appeal against the dismissal of its counter-application including the costs of two counsel. 3. Paras 3 and 5 of the order of the court a quo are set aside and the following order is substituted: ‘The main application is dismissed with costs, including the costs of two counsel.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ CACHALIA JA (Mthiyane DP, Cloete, Malan, Leach JJA concurring): [1] This is an appeal against a judgment of the Western Cape High Court (Henney AJ) – with its leave – granting the respondents final interdictory relief against Primedia, the appellant in these proceedings. The high court found that Primedia had unlawfully interfered with the contractual relationships between the respondents and 330 retail franchisees associated with the well-known Spar Group. It also dismissed Primedia’s counter-application for an interdict restraining the respondents from unlawfully interfering with its contractual relationship with 110 of these franchisees. [2] As is evident the parties compete in the retail in-store industry in the area of product marketing. They do so inter alia by providing media types to attract the attention of customers who patronise these stores. Stores that use these services enter into agreements with service providers, such as the parties in this case, who market, sell and install the media types. [3] The three respondents have since early in 2009 collaborated in marketing their services to Spar franchisees, and have entered into exclusive agreements with 330 franchise stores to provide in-store promotions for their media types. [4] The present dispute began when Mr Riaan Labuschagne, the managing director of ZaPOP, learnt that Primedia’s representatives had visited two of the stores with whom the respondents had exclusive agreements to promote its products. So he wrote to Mr Graham Bouwer, Primedia’s chief executive officer, on 6 August 2010 to request Primedia to stop promoting the respondents’ identified media types or similar media types at any of the 330 stores in question, and to remove any such products from the stores where they had been installed. [5] In response, Mr Bouwer distributed a notice on 19 August 2010 to suppliers of the Spar Group. It read thus: ‘TO OUR VALUED CUSTOMERS It has come to my attention that ZaPOP [the third respondent] have announced that they have been awarded rights to provide instore media services in Spar Group stores. The announcement is creating confusion in the market place and I consequently want to reaffirm that Primedia Instore remains the official and exclusive provider of instore media services for the Spar Group (Super Spars, Spars, Kwikspar and Tops). Mike Prentice (Group Marketing Executive – Spar) and Julian Evans (Group Merchandising Manager – Spar) have endorsed this communication. If anyone is still unclear concerning the above status, you can contact Mike or Julian on 031 7191900 or myself on my cell, 082 451 2307 (graham@primeinstore.co.za). I trust that this letter serves to remove all confusion.’ [6] A week later Mr Labuschagne sent another letter to Mr Bouwer complaining that this notice contained several false and misleading statements: it suggested, he said, that ZaPOP had no right to provide media services to Spar stores despite the respondents having written agreements to do so; it implied that the Radio Retail was creating ‘confusion’ in the market by announcing that it had rights to provide these services when it did not, and it asserted untruthfully that the appellant was the ‘official and exclusive’ provider of these services to stores of the Spar Group. The letter called upon Primedia to retract the notice within 14 days. A copy of this letter was sent to Mr Prentice and Mr Evans, the two Spar officials mentioned in the notice. [7] The respondents’ attempts to secure a retraction of the notice failed. On 7 September 2010 Primedia’s attorneys responded to the letter maintaining that the notice was intended only for suppliers of the Spar Group, and not the franchisees. They also requested proof, on behalf of Primedia, that the respondents had in fact entered into exclusive agreements with the franchisees. [8] On 10 September 2010 the respondents’ attorneys made an extract of an agreement with the relevant exclusivity provisions available to Primedia’s attorneys and reiterated their demand that Primedia remove ‘all media types’ installed in any of the 330 stores. [9] Primedia’s attorneys responded by letter on 21 September. They questioned the validity of the exclusivity agreement, asserted that the media types installed by Primedia were ‘markedly different’ from those of the respondents and declared that in the absence of the respondents being able to demonstrate a clear right to provide services to the franchise stores exclusively, Primedia would not accede to the request to remove its media types from the stores in question. [10] On 8 October 2010 the respondents instituted interdictory proceedings against Primedia seeking urgently to restrain it from competing unlawfully with them by interfering with their contractual rights with the franchisees. They alleged that Primedia was marketing, selling and installing media types similar to theirs in those stores. They also sought to prevent Primedia from making false representations, allegedly of the kind in Mr Bouwer’s notice of 19 August 2010, concerning them. [11] The application was initially set down for hearing on 15 October 2010. Two days earlier Primedia’s attorneys had written to their counterparts and had undertaken, on behalf of their client, not to make any false representations about the respondents. The parties then agreed on a timetable for the filing of further affidavits. [12] In its answering affidavit, filed on 28 October 2010, Primedia reiterated its earlier undertaking not to make false representations about the respondents. It also offered three defences to the relief claimed: first, it took issue with the validity of the contracts that the respondents had allegedly concluded with the franchisees by asserting that the respondents had not proved their contractual rights; second and importantly, it asserted that it had pre-existing agreements with 110 franchisees, which entitled it to provide its media services to them – this assertion also formed the basis of the counter-application in which Primedia alleged that the respondents were interfering with its rights under these pre- existing agreements; finally, Primedia alleged that its media types were not the same as those for which the respondents sought protection. [13] When the matter proceeded in the high court the respondents sought final relief, and the matter was argued on this basis. They therefore had to satisfy the well-known requirements for the grant of an interdict: a clear right, reasonable apprehension of irreparable harm to their contractual relationships with the franchisees with whom they had contracted and the absence of any alternative remedy to protect their rights. [14] The learned judge found that the respondents had satisfied these requirements and granted the respondents all the relief they had asked for. He found that the contracts that the respondents had entered into with the franchisees were valid; that by circulating the notice on 19 August 2010, and dealing with the franchisees in question, Primedia had unlawfully interfered with the respondents’ contractual relationships; and he dismissed Primedia’s assertion that it was merely exercising its pre-existing contractual rights. As I have mentioned the judge also dismissed Primedia’s counter-application. [15] When the matter came before us Mr Gautschi, who appeared for Primedia, abandoned his client’s appeal against the dismissal of the counter- application. He, however, persisted with all the defences that Primedia raised before the high court. Because of the approach adopted by Mr Gautschi, it is not necessary to deal with defence concerning the validity of the respondents’ exclusive agreements. [16] The thrust of his submission before us was this. Primedia and ZaPOP are competitors. The competition between them is lawful. Of the 330 franchisees with whom ZaPOP has agreements – assuming their validity, which was not conceded – Primedia has pre-existing agreements with 110. ZaPOP’s exclusive agreements relate to certain media types only. Primedia has its own media types, which are not the same as ZaPOP’s. By virtue of its pre-existing agreements Primedia is entitled to market, sell and install its media-types in any of the 110 stores. There is no suggestion in the papers that Primedia has been entering these stores for a purpose other than to promote its own products. And there is no evidence that Primedia was inducing any of the franchisees to breach their contracts with the respondents, or that it was otherwise unlawfully competing with them. [17] In Schultz v Butt1 this court stated the general rule relating to unlawful competition thus: ‘[E]very person is entitled freely to carry on his trade or business in competition with his rivals. But the competition must remain within lawful bounds. If it is carried on unlawfully, in the sense that it involves a wrongful interference with another’s rights as a trader that constitutes an injuria for which the Aquilian action lies if it has directly resulted in loss . . . In order to succeed in an action based on unfair competition, the plaintiff must establish all the requisites of Aquilian liability, including proof that the defendant has committed a wrongful act. In such a case, the unlawfulness which is a prerequisite for Aquilian liability may fall into a category of clearly recognised illegality . . .’ [18] One such category is inducing or procuring a breach of a contract: an action for damages, or where appropriate, an interdict will lie against any person who intentionally and without justification induces or procures another to breach a contract made with any other person. Where interdictory relief is sought, as in this case, it is not necessary to prove actual injury, ie an actual breach of contract. Proof of reasonable apprehension will suffice.2 [19] Although the judge found that Primedia’s conduct had caused the franchisees to breach their exclusive agreements with the respondents, there was no evidence of any such breach. And before us the respondents did not contend that there was. Their cause of action was that Primedia had been unlawfully competing with the respondents by interfering with their contractual rights with the franchisees – hence their claim for interdictory relief. The respondents therefore had to show that Primedia was intentionally and without justification interfering with their contractual rights. [20] In this regard Mr Olivier, on behalf of the respondents, contended that they were not seeking to prevent Primedia from entering the stores with which the 1 Schultz v Butt 1986 (3) SA 667 (A) at 678. 2 V & A Waterfront Properties v Helicopter & Marine Services 2006 (1) SA 252 (SCA) paras 20- 22. respondents had exclusive agreements, or from promoting its own media types in those stores. The relief sought was, he argued, much more narrowly framed and aimed only at restraining Primedia from: (a) interfering with their contractual relationships with franchisees in question by soliciting them to unlawfully breach or to sever their agreements with the respondents; and (b) marketing, selling or installing the respondents’ media types and diverting corporate opportunities, to which the respondents were entitled in terms of their agreements, to itself. [21] Concerning the diversion of corporate opportunities, Mr Olivier properly conceded that there was no such evidence. The high-water mark for the other relief claimed by the respondents, as Mr Olivier put it, is contained in the founding affidavit of Mr Mark Finestone, the general manager for Radio Retail and Radio Retail for Spar. As most of the relief claimed hinges upon the following extract of the evidence in the affidavit, it is necessary to reproduce it in full. It reads thus: ‘The confusion caused by Primedia’s conduct 1. It is evident that considerable confusion has been created by Primedia’s aforestated notice and actions. Some of the stores are of the impression that they are obliged to contract with Primedia or to allow its activities in-store, given the latter’s “status” with the Spar Group as suggested in the aforestated notice. Primedia has further exacerbated the situation by sending representatives to stores, with which the Applicants’ have exclusive agreements, and insisting upon installing media services there. I mention a few examples. 1.1 Mr Hein Bakkes of the Paarl East Superspar in Paarl reported to me that Primedia had on two separate occasions since 1 August 2010 wanted to place advertising and media products on his shop’s trolleys contrary to our contract with him. The representative was at his store on about 18 August 2010 and again on 25 August 2010, whereupon Mr Bakkes called me to confirm whether the Primedia representative was allowed to install the media on his trolleys. He was concerned that he would be acting in breach of his contract with Radio Retail for Spar if Primedia was allowed to do so. I advised Mr Bakkes not to have the media installed on his trolleys. Mr Bakkes informed me on 15 September 2010 that Primedia nevertheless continued with media installations in his store, and that he was not sure when this would be removed. He accordingly wanted clarification as to by when can he expect the placement of ZaPOP media in- store, and the removal of the Primedia products. Mr Bakkes concluded an exclusive agreement with Radio Retail on 30 March 2010. 2. Mr Shawn Paulsen of the Lakeside Spar in Lakeside sent an e-mail message to the Spar Western Cape Distribution Centre on 27 August 2010 for clarification regarding the interrelationship between ZaPOP’s and Primedia’s activity in-store. I telephoned him on the same day to explain the situation to him. On 16 September 2010 Mr Paulsen confirmed to me that Primedia is currently still active in his store, with its representatives coming and going as they please. They do not announce themselves or their activity in his store. Mr Paulsen has recently received a “quarterly cheque” from Primedia pursuant to media installations in his store. Mr Paulsen concluded an agreement with Radio Retail on 31 March 2010, with effect from 1 August 2010. However, he confirms that he is confused due to Primedia still acting in-store. He has allowed them to continue, but needs clarity. Until the situation is resolved, he will continue to collect his quarterly payments from Primedia. I annex hereto . . . a copy of an email sent by Mr Paulsen to a representative of Spar Western Cape . . .. 3. Mr Yusuf Banderker of the Westerford Kwikspar in Rondebosch, who concluded an agreement with the Applicants on 18 March 2010, informed me on 17 September 2010 that a Primedia representative was in his store some weeks ago with advertising material, and that he (Mr Banderker) had to request the representative to remove the Primedia products from his store. 4. Ms Bernadette Visser of the Kraaifontein Superspar reports that Primedia representatives are very active in her store, and come and go in an ad hoc fashion. They do not announce themselves upon arrival, and place or remove media materials in the store at their own discretion, contrary to the terms of the agreement with us. Primedia has recently contacted the store to request the creation of an invoice to Primedia for the period April to June 2010 for media which had previously been installed for campaigns in this period. Ms Visser feels uncomfortable about the situation, as her store does not wish to become involved in a dispute between the Applicants and Primedia. The Kraaifontein Superspar concluded an agreement with the Applicants on 31 March 2010. 5. Mr Andre van Rensburg of the Kuilsriver Superspar, who concluded an agreement with the Applicants on 18 November 2009, reported that Primedia representatives had been in his store in the week of 17 September 2010. They come in on an ad hoc basis and show him what they will be putting up in store, and which will be in breach of his contract with us. Mr van Rensburg is confused as to what the impact of his agreement with the Applicants is on the situation. He has requested confirmation that Primedia “must go” and ZaPOP must “come in”. He does, however, still collect quarterly rebates from Primedia for previous media installations and campaigns in-store. I annex, marked . . . a copy of a letter dated 18 January 2010 from Primedia to the Kuilsriver Spar, in which various promotions conducted in the store by Primedia for the period July to September 2009 are set out. It is evident from the description of the media types used in respect of each supplier, that those media types are similar to the ones offered by the Applicants. 6. Ms Mari Meyer of the Sonstraal Superspar, who concluded an agreement with the Applicants on 31 March 2010, stated on 17 September 2010 that Primedia representatives come into her store approximately every two weeks, without announcing themselves to her. They simply install their products, in breach of the terms of the agreement with us, and leave. She does not know how to handle the situation. 7. Ms Annalize Putter of the Bellville Kwikspar reported that Primedia was in her store on 17 September 2010, asking her for an invoice for previous media supporting campaigns installed in their store. Primedia had given her a letter . . . from which she had to create the invoice. Ms Putter requires confirmation as to when the Primedia products must be removed from her store. She concluded an agreement with the Applicants on 20 May 2010.’ [22] Primedia answered these allegations by stating that in respect of all of the franchisees mentioned above, except Mr Bardenker’s Westerford Kwikspar in Rondebosch, it had pre-existing contracts with which its representatives were lawfully exercising Primedia’s rights under these agreements. The judge, however, rejected Primedia’s answer on the basis that its contracts were, unlike those of the respondents, not exclusive. And he appeared to attach some significance to the fact that some of the franchisees had been uncomfortable and confused for having to deal with Primedia’s representatives while they also had exclusive agreements with the respondents. [23] It is understandable that some of the franchisees found it awkward in having to deal with two competitors with whom they had contractual arrangements. But the fact that some of the franchisees were not sure how to manage their relationship with the two parties can hardly be laid at Primedia’s door. There is no suggestion from any of them that Primedia’s representatives were doing anything other that enforcing the terms of their contracts with the franchisees in question. [24] I can see no reason why the fact that these were not exclusive agreements had any bearing on Primedia’s right to enforce them. In two of the seven examples of unlawful interference that the respondents mention – Lakeside Spar and Kuilsrivier – the franchisees specifically say that they continued to collect their fees or rebates for Primedia’s media installations – obviously because of their existing agreements with Primedia. In not one of the remaining examples is there even a vague suggestion that Primedia’s representatives were attempting to induce any of the franchisees to breach or to terminate their contracts with the respondents unlawfully. Nor is there evidence to suggest that any of the media types that Primedia’s representatives were marketing, selling and installing were the same as those of the respondents. [25] In the case of Mr Bardenker of Westerford Kwikspar Rondebosch – the only instance where Primedia does not appear to have an agreement – he requested Primedia’s representatives to remove their products from the store. The judge considered this to be a case of ‘clear interference’. But I respectfully disagree. Mr Bardenker does not say that the representatives refused to remove their products from the store or that they in any other way behaved in a manner that suggested that they were intentionally interfering with his agreement with the respondents. And the papers come nowhere near permitting any inference to be drawn that this was the case. [26] This brings me to the only remaining relief that the respondents sought – that Primedia be interdicted from making false representations about the respondents. The basis for this relief was the notice that Mr Bouwer distributed to the Spar suppliers on 19 August 2010. But once Primedia, two days before the respondents had launched their application, and later again in their answering affidavit, had given an undertaking not to disseminate false statements about the respondents, the respondents could have had no reasonable apprehension that Primedia would repeat the statements – assuming that they were unlawful. An interdict is not granted for past invasions of a right; it is concerned only with future infringements,3 and there was no evidence to suggest that the respondents had a legitimate fear in this regard. There was therefore no longer any ground to interdict the further dissemination of false representations. So the high court ought not to have granted the respondents this relief. [27] To conclude, I stated at the outset that the parties to the present dispute are competitors. To succeed in its application for final relief, the respondents had to prove that Primedia was competing unlawfully with them. The interdict could have been granted only if the facts stated by Primedia in its answering affidavit, together with the admitted facts in the respondents’ affidavits, justified this finding. [28] In all but one of the seven examples that the respondents cited as evidence of unlawful interference with their contractual relationships with the franchisees in question, Primedia asserted, as a fact, that they were merely enforcing their pre-existing contacts with those franchisees, as they were entitled to do. That this may have caused some discomfort and uneasiness among of the 3 National Council of SPCA v Openshaw 2008 (5) SA 339 (SCA) para 20; Simonlanga & others v Masinga & others 1976 (4) SA 373 (W) at 375H-376A. franchisees does not mean that Primedia was not entitled to enforce their contracts, and there was no proper basis for the high court to have rejected Primedia’s claim that this is what it was doing. In the only case where Primedia did not have a pre-existing agreement – Westerford Kwikspar Rondebosch – there was simply no evidence that Primedia unlawfully interfered with the respondents’ exclusive contract. Finally, for the reason already given, there were no grounds to interdict Primedia from making false statements about the respondents. [29] It follows that the appeal must succeed and the respondents must pay the costs of the appeal. Primedia belatedly abandoned its appeal against the dismissal of its counter-application. So it will have to pay the costs of the appeal in this regard. We were concerned in this appeal only with the orders at paras 3 and 5 of the order of the high court (which concerned the relief sought in the main application). It follows that those are the only orders that fall to be set aside. [30] The following order is made. 1. The appeal is upheld. Save as set out in para 2, the respondents are ordered to pay the costs of the appeal, including the costs of two counsel. 2. The appellant is to pay the costs of the appeal against the dismissal of its counter-application including the costs of two counsel. 3. Paras 3 and 5 of the order of the court a quo are set aside and the following order is substituted: ‘The main application is dismissed with costs, including the costs of two counsel.’ ____________ A CACHALIA JUDGE OF APPEAL APPEARANCES For Appellant: A Gautschi SC (with him L Hollander) Instructed by: J Sweidan Attorneys c/o Walkers Inc, Cape Town Symington & De Kok, Bloemfontein For Respondent: S Olivier SC (with him P S van Zyl) Instructed by: Werksmans Attorneys, Cape Town McIntyre & Van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF 29 March 2012 STATUS: Immediate Primedia v Radio Retail 354/2011 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 upheld an appeal from the Western Cape High Court, Cape Town interdicting Primedia (Pty) Ltd t/a Primedia Instore from unlawfully interfering in the contractual relationships between ZaPOP (Pty) Ltd and 330 franchisees associated with the well-known Spar Group. The parties are competitors in the retail in-store industry in the area of product marketing. The three respondents (Radio Retail (Pty) Ltd, Radio Retail for Spar (Pty) Ltd and ZaPOP) marketed their services to 330 Spar franchisees with which they had exclusive agreements for in-store promotions. Primedia, however, was also promoting its products in some of the stores that the respondents had exclusive agreements with. The respondents alleged that the Primedia was marketing, selling and installing media types similar to the respondents’ in these stores. The respondents instituted interdictory proceedings against the appellant to restrain it from competing unlawfully with them by interfering with their contractual rights, with the franchisees. They also sought to prevent Primedia from making false representations about them. The high court found that the appellant had unlawfully interfered with the contractual relationships between the respondents and the Spar franchisees in question. The high court therefore granted the respondents the interdictory relief against Primedia that they sought. On appeal, the issue before the court was whether Primedia’s conduct in promoting its own products based on its pre-existing agreements with some of the franchisees with which the respondents also had exclusive agreements, constituted an inducement for the franchisees to breach their contracts with the respondents. The SCA held that to obtain an interdictory relief on inducement to breach a contract, proof of reasonable apprehension was necessary. Based on a factual enquiry, the SCA held that there was no evidence to suggest that Primedia’s conduct caused the franchisees to breach their exclusive agreements with the respondents nor was there any evidence to suggest that the products marketed by the appellant were the same as those of the respondents. All Primedia had been doing, the SCA held, was to lawfully enforce their own contracts with the franchisees, which they were entitled to do. The SCA held further that since the appellant had given an undertaking not to disseminate false statements about the respondents, the respondents could not have any reasonable apprehension that the appellant would not adhere to this undertaking; hence, there was no ground to interdict the further dissemination of false representations. Primedia’s appeal was consequently upheld with costs. -- ends --

2923

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case No: 20085/2014 In the matter between: NEDBANK LIMITED APPELLANT and ALETTA PETRONELLA SUSANNA STEYN FIRST RESPONDENT ANTOINETTE MARTIN NO (In her capacity as duly appointed Executrix in the Estate of the Late Mr Pieter Stefanus Steyn) SECOND RESPONDENT VUSIMUZI PHINEAS MASENYA NO (In his capacity as duly appointed Executor in the Estate of the Late Ms Lindiwe Maureen Masenya) THIRD RESPONDENT LUCAS MLUNGISI FIGLAN NO (In his capacity as duly appointed Executor in the Estate of the Late Mr Themba David Figlan) FOURTH RESPONDENT PETRUS HENDRIK MULLER FIFTH RESPONDENT PETRUS HENDRIK MULLER NO (In his capacity as duly appointed Executor in the Estate of the Late Ms Wilma Roelien Muller) SIXTH RESPONDENT TSHEPO BETHUEL KGOPA NO (In his capacity as duly appointed Executor in the Estate of the Late Mr Malahlela Stephen Kgopa) SEVENTH RESPONDENT LINDIWE PRINCESS NTOMBELA EIGHTH RESPONDENT NORAH THONNY MATHE NO (In her capacity as duly appointed Executrix in the Estate of the Late Mr Wardson Sandile Mathe) NINTH RESPONDENT Neutral citation: Nedbank Ltd v Steyn (20085/2014) [2015] ZASCA 30 (25 March 2015). Coram: Brand, Lewis, Mbha JJA Meyer et Mayat AJJA Heard: 20 March 2015 Delivered: 25 March 2015 Summary: Administration of Estates Act 66 of 1965 – whether claims procedure provided by the Act precludes a creditor from instituting an action against the executor/executrix of a deceased estate for debt owed by the deceased – high court‟s judgment that it does set aside on appeal. ___________________________________________________________________ ORDER ___________________________________________________________________ Six appeals from: Gauteng Division of the High Court, Pretoria (Mabuse J sitting as court of first instance): 1 The six appeals are upheld with no order as to costs. 2 The order of the court a quo in the first appeal of Nedbank Ltd v Aletta Petronella Susanna Steyn & another under GPPHC case number 45338/2013 is set aside and replaced by the following: „Default judgment is granted in favour of the applicant/plaintiff against the first and second respondents/defendants, jointly and severally, the one paying the other to be absolved for: (a) Payment of the sum of R647 286.25; (b) Interest on the sum of R647 286.25 at the rate of 6.80% per annum calculated and capitalised monthly in arrears from 19 June 2013 to date of payment, both dates inclusive. (c) An order declaring: A unit consisting of – (i) Section no 64 as shown and more fully described on Sectional Plan No SS321/2009 in the scheme known as Elephant Mews in respect of the land and building or buildings situated at Erf 468 Vanderbijl Park South East 4 Township, Local Authority: Emfuleni Local Municipality, of which section the floor area, according to the said Sectional Plan is 73 (Seven Three) square metres; and (ii) an undivided share in the common property in the scheme apportioned to the said section in accordance with the participation quota as endorsed on the said sectional plan. Held by Deed of Transfer No ST29384/2009. A unit consisting of – (i) Section no 120 as shown and more fully described on Sectional Plan No SS321/2009 in the scheme known as Elephant Mews in respect of the land and building or buildings situated at Erf 468 Vanderbijl Park South East 4 Township, Local Authority: Emfuleni Local Municipality, of which section the floor area, according to the said Sectional Plan is 23 (Two Three) square metres; and (ii) an undivided share in the common property in the scheme apportioned to the said section in accordance with the participation quota as endorsed on the said sectional plan; Held by Deed of Transfer No ST29384/2009. Specially executable. (d) An order authorising the plaintiff to execute against the said property as envisaged in Rule 46(1)(a)(ii) of the Supreme Court Rules; (e) An order authorising the sheriff to execute the writ of execution; (f) An order for costs on the attorney and client scale.‟ 3 The orders of the court a quo in the other five appeals are set aside and these matters are remitted to the court a quo for reconsideration of the applications for default judgment in the light of this judgment. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Brand JA (Lewis, Mbha JJA Meyer et Mayat AJJA concurring): [1] In October 2013, 17 applications for default judgment came before Mabuse J in the North Gauteng High Court, Pretoria in matters of a similar kind. I say similar because these matters had at least the following features in common: (a) In all of them the plaintiffs were commercial banks. (b) At least one of the defendants in every one of them was the executor/executrix in a deceased estate. (c) The plaintiff‟s cause of action in every case relied on a loan to the deceased, secured by a mortgage bond. (d) Apart from an order for payment of the amount owing under the loan agreement, the plaintiff in each case sought an order declaring the properties mortgaged executable and also applied for the issue of writs of execution in respect of these properties. (e) The applications were predicated on the failure by the defendants to defend the actions instituted by the banks. [2] In the event, Mabuse J ordered all these applications for default judgments to be removed from the roll, in order to enable the plaintiffs to comply with the provisions of the Administration of the Estates Act 66 of 1965 (the Act). For reasons that will soon become apparent, this order meant that the plaintiffs would have to start proceedings all over again and that, in consequence, the applications were effectively dismissed. The appellant in this matter, Nedbank Ltd, was the plaintiff in six of these applications. Those are the matters on appeal before us. Mabuse J, however, gave his judgment with reference to all seventeen applications before him in the case of Standard Bank of South Africa Ltd v Ndlovu (case number 33265/13) on 24 October 2013. Leave to appeal against that judgment, which also pertains to the six appeals before us, is with the leave of Mabuse J. As in the court a quo, there was no appearance for any of the respondents on appeal. [3] In broad outline the reasons given by the court a quo for refusing to grant the default judgments sought, was that the plaintiff banks, including the appellant, had instituted action against the executors or executrixes in the deceased estates under common law, instead of adopting the claims procedure provided for by sections 29, 32, 33 and 35 of the Act. This decision is in direct conflict with the conclusion arrived at by Van Oosten J in Nedbank Ltd v Samsodien NO 2012 (5) SA 642 (GSJ), which Mabuse J pertinently held to have been wrongly decided. Succinctly stated the issue arising in this appeal is therefore whether the provisions of the Act, in the four sections that I have referred to, preclude a creditor from its common law right to institute action against the deceased estate for payment in terms of a loan agreement. In Samsodien Van Oosten J held that they do not, while Mabuse J decided that they do. [4] Although there are six appeals before us, only the papers in the Steyn matter were incorporated in the record on appeal. The papers in the other five matters were not so included. From the papers in Steyn it appears that the deceased, Mr Steyn, passed away on 4 June 2012. Although the second respondent was appointed executrix in his estate in December 2012, she had failed to finalise the estate. The immovable property in the estate is fully bonded. The monthly bond instalment is R4 925.97. At the time when the appellant issued summons on 24 July 2013, the arrears were R132 005.71 which equates to 27 months arrear payments. The court a quo found as a fact that there had been compliance with the requirements of s 29 regarding the publication of notice to creditors in the Government Gazette. I have no reason to doubt the correctness of this finding. [5] In the main, the claims procedure prescribed by s 35, read with sections 29, 32, 33 and 34 of the Act boils down to this: (a) As soon as may be after an executor or executrix (I shall from now on, for convenience, refer only to an executor) is appointed he must, in terms of s 29, cause a notice to be published in the Government Gazette and in newspapers, calling upon persons with claims against the deceased estate to lodge these claims within a stipulated period which is not to be less than 30 days (or more than three months). (b) Claims are then to be submitted in the prescribed form within the period so stipulated. (c) On the expiry of the period specified in the s 29 notice, the executor should satisfy himself as to the solvency of the estate and if it is found to be insolvent, he is to proceed under s 34 of the Act. (d) Otherwise the executor is obliged to submit an account, in the prescribed form, of the liquidation and distribution of the estate as soon as possible after the last day of the period specified in the s 29 notice, but not later than six months after letters of executorship have been granted. This account will indicate, of course, whether or not a particular claim had been admitted. (e) The account lies open for inspection in the Master of the High Court‟s office for a period not less than 21 days. (f) Within that period any person, including a purported creditor whose claim has been rejected, who wants to object to the account, must file that objection with the master. (g) The executor is then afforded an opportunity to respond to the objection. (h) Thereafter the master decides whether the objection is well-founded or not. (i) If the master concludes that it is not, s 35(10) comes into play. This section provides: „Any person aggrieved by . . . a refusal of the Master to sustain an objection so lodged, may apply by motion to the Court within thirty days after the date of such . . . refusal or within such further period as the Court may allow, for an order to set aside the Master's decision and the Court may make such order as it may think fit.‟ [6] The question, whether the claims procedure thus prescribed by the Act must be understood to have taken away a creditor‟s common law right to proceed by way of action against the deceased estate, is not new. It also arose in a number of reported decisions with reference to the claims procedure stipulated by the predecessor of the Act, the Administration of Estates Act 24 of 1913 (the old Act). For present purposes it can be accepted that the procedure prescribed by the old Act had virtually been re-enacted in terms of the new Act. The first of these decisions under the old Act was Estate Stanford v Kruger 1942 TPD 243, which held that there was nothing in the old Act to indicate that the legislature intended to deprive a creditor of his or her common law right to sue the deceased estate. [7] On this aspect Estate Stanford was followed in a closely reasoned judgment by Watermeyer AJ in Davids v Estate Hall 1956 (1) SA 774 (C). Davids had lodged a claim against the estate of Hall, which was rejected by the executors in the estate. He then objected to the omission of his claim from the liquidation and distribution account, but this objection was not sustained by the master. Thereafter he instituted action against the executors in the magistrates‟ court. In their plea the executors raised the defence that Davids‟ action was not competent in that his exclusive remedy was to apply on motion for the setting aside of the master‟s decision in terms of s 68(9) which was the counterpart of s 35(10) of the Act. Davids filed an exception to this plea on the basis that it disclosed no defence, but this exception was denied by the magistrate. Thereupon Davids took the dismissal of his exception on appeal to the Cape Provincial Division. [8] From the judgment of Watermeyer AJ on appeal, it appears that the executors sought to support their defence, ie that Davids‟ action was excluded by the provisions of the old Act, on the basis of a principle recognised, for instance in Madrassa Anjuman Islamia v Johannesburg Municipality 1917 AD 718, that where a statute creates a right or an obligation and gives a special remedy for enforcing it, the remedy provided by the statute must be followed and it is not competent to proceed by way of action at common law. But Watermeyer AJ held that this principle found no application. His reasons for this finding appears from the following statement (at 776H-777A): „The principle as stated above has however no application to the present case because the Administration of Estates Act did not create the right which the appellant seeks to enforce. That right arose from a contract and under the Common Law appellant was entitled to enforce it by action. In any event, even if the principle in the Madrassa case, supra, does extend to cases where the statute does not itself create the right or obligation, then it must at least be clear that the Legislature intended that the remedy provided is to be the only remedy available. As was stated by Tindall JA in Mhlongo v Macdonald 1940 AD 299 at p 310, the question is one depending upon the construction of the particular statute and: “If the Legislature's intention be to encroach on existing rights of persons it is expected that it will manifest it plainly, if not in express words, at least by clear implication and beyond reasonable doubt. . . .” There are no express words in the Act which deprive a creditor of his Common Law right to proceed by way of action against an executor for recovery of his debt, nor, in my opinion, are there any words from which that conclusion must be implied.‟ [9] Davids was in turn followed by Smuts J in Benade v Boedel Alexander 1967 (1) SA 648 (O). In that case Benade lodged no claim in response to the executor‟s notice in the Government Gazette. Instead, he instituted action for the recovery of his claim and obtained judgment in the magistrates‟ court. On the basis of this judgment he then sought to sequestrate the deceased estate. In answer the executrix in Alexander‟s estate contended that the magistrates‟ court judgment was invalid since Benade was bound to follow the claims procedure laid down in the old Act. On the basis of Stanford Estate and Davids, Smuts J held, however, that this answer could not be sustained. Subsequently, these decisions were also approved and applied to the virtually identical provisions of s 35 of the (new) Act in Jones & another v Beatty NO & others 1998 (3) SA 1097 (T) 1101D-1102D. [10] This brings me to the judgment of Van Oosten J in Nedbank Ltd v Samsodien NO 2012 (5) SA 642 (GSJ), which Mabuse J refused to follow because, in his view, it had been wrongly decided. Samsodien was also the executrix in a deceased estate. When Nedbank instituted action against the estate by way of summons, she raised the special plea that the procedure adopted by Nedbank was incompetent in that it should have followed the claims procedure laid down in the Act instead. On the authority of Estate Stanford, Davids and Benade, Van Oosten J held, however, that this claims procedure does not deprive a creditor of its common law right to enforce a claim against the deceased by way of action against his or her estate. Hence he held the special plea to be unfounded. [11] Mabuse J analysed the decisions relied upon in Samsodien NO and came to the conclusion that they do not support that judgment. In all these cases, so Mabuse J held, the plaintiffs had submitted claims against the estates and when the executor nonetheless omitted those claims from his account, the plaintiffs had lodged an objection against the account to the master who in turn rejected their objections. It is only then, so Mabuse J concluded, that the plaintiffs in those three cases instituted action. On that basis he found these cases distinguishable from the present case on the facts. Purely with reference to the facts of the three cases under consideration, I believe that Mabuse J‟s analysis holds true of Estate Stanford and of Davids, but not of Benade. In the latter case the plaintiff did indeed bypass the claims procedure of the old Act completely. He never lodged any claims against the estate. To that extent Benade is therefore not distinguishable from the facts in the present consideration. But be that as it may, in my view Mabuse J‟s analysis of the three cases misses the ratio decidendi of all three. That ratio decidendi, as I see it, is in short that the procedure laid down in the Act does not preclude the plaintiff from instituting an action in common law against the estate. Thus understood, all three judgments do indeed lend direct support to the judgment of Van Oosten J in Samsodien NO. [12] Moreover, I believe these cases were correctly decided. Unless it can be said that the Act must be construed to deprive the plaintiff of the common law action against the estate, that action remains extant. The finding by Watermeyer AJ that there is no express provision to that effect in the old Act, also holds true of the Act. Moreover, in the same way as Watermeyer AJ, I do not find any clear implication to that effect in the provisions of the Act. In this regard Mabuse J seems to have found that clear implication in the considerations that the institution of common law actions alongside the application of the statutory claims procedure, will delay the finalisation of the estate. And that, so he said, „would also constitute an involved and costly procedure to claim payments of the debts from the estate when the Act provides for an inexpensive and speedy manner to do so‟. I believe, however, that there is more than one answer to these considerations. First, the claims procedure can hardly be said to be speedy if, as happened in Steyn, the executor delays the finalisation of the estate for years. Secondly, there appears to be no factual basis for the suggestion that the statutory claims procedure would be less expensive. It seems to lose sight of the fact that the creditor would have to launch a review application in the high court and, if a factual dispute should arise, it would lead to the hearing of oral evidence, which is akin to a trial. Hence it raises the rhetorical question: why would an action in the magistrates‟ court, for example, be more expensive than an opposed high court application with the concomitant risk of the proceedings being converted into a trial? Thirdly, and in any event, even if there is some merit in these considerations, they do not constitute sufficient grounds for a finding that by implication the common law action had been repealed. [13] Finally, in the light of the legislative history there is in my view another consideration why the ultimate conclusion by Mabuse J cannot be sustained. It is this. We know that prior to the Act (ie Act 66 of 1965) there was a line of decisions in which the courts attributed a particular meaning to the pertinent provisions of the old Act (ie Act 24 of 1913). According to established authority, the legislature is presumed to have known of these decisions. When it subsequently introduced virtually the same provisions in the new Act, it must be taken to have endorsed the meaning attributed to those provisions by the courts. [14] It follows that, in my view, the six appeals before us should be upheld and the orders of the high court be set aside. Since the appeal was not opposed by any of the respondents, I think the appellant should bear its own costs on appeal, which translates into no order as to costs. With reference to the facts, counsel for the appellant submitted that in the Steyn appeal a good case had been made out for default judgment in the terms it was sought. Since I can find no reason to believe otherwise, that is the order I propose to make. But with regard to the other five matters on appeal, counsel for the appellant conceded, rightly in my view, that there is insufficient evidence before us to consider these applications for default judgment on their merits. In consequence I believe they should be remitted to the high court for reconsideration in the light of this judgment. [15] In the result: 1 The six appeals are upheld with no order as to costs. 2 The order of the court a quo in the first appeal of Nedbank Ltd v Aletta Petronella Susanna Steyn & another under GPPHC case number 45338/2013 is set aside and replaced by the following: „Default judgment is granted in favour of the applicant/plaintiff against the first and second respondents/defendants, jointly and severally, the one paying the other to be absolved for: (a) Payment of the sum of R647 286.25; (b) Interest on the sum of R647 286.25 at the rate of 6.80% per annum calculated and capitalised monthly in arrears from 19 June 2013 to date of payment, both dates inclusive. (c) An order declaring: A unit consisting of – (i) Section no 64 as shown and more fully described on Sectional Plan No SS321/2009 in the scheme known as Elephant Mews in respect of the land and building or buildings situated at Erf 468 Vanderbijl Park South East 4 Township, Local Authority: Emfuleni Local Municipality, of which section the floor area, according to the said Sectional Plan is 73 (Seven Three) square metres; and (ii) an undivided share in the common property in the scheme apportioned to the said section in accordance with the participation quota as endorsed on the said sectional plan. Held by Deed of Transfer No ST29384/2009. A unit consisting of – (i) Section no 120 as shown and more fully described on Sectional Plan No SS321/2009 in the scheme known as Elephant Mews in respect of the land and building or buildings situated at Erf 468 Vanderbijl Park South East 4 Township, Local Authority: Emfuleni Local Municipality, of which section the floor area, according to the said Sectional Plan is 23 (Two Three) square metres; and (ii) an undivided share in the common property in the scheme apportioned to the said section in accordance with the participation quota as endorsed on the said sectional plan; Held by Deed of Transfer No ST29384/2009. Specially executable. (d) An order authorising the plaintiff to execute against the said property as envisaged in Rule 46(1)(a)(ii) of the Supreme Court Rules; (e) An order authorising the sheriff to execute the writ of execution; (f) An order for costs on the attorney and client scale.‟ 3 The orders of the court a quo in the other five appeals are set aside and these matters are remitted to the court a quo for reconsideration of the applications for default judgment in the light of this judgment. F D J Brand Judge of Appeal APPEARANCES: For the Appellant: A C Ferreira SC; C G v O Sevenster Instructed by: Vezi & De Beer Attorneys Pretoria c/o Symington & De Kok, Bloemfontein For the Respondents: No appearance for the respondents

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 25 March 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Nedbank Ltd v Steyn (25 March 2015) MEDIA STATEMENT Today the Supreme Court of Appeal upheld 6 appeals in these matters against a judgment of the Gauteng Division of the High Court. The 6 appeals arose fom applications for default judgment before Mabuse J, which he refused. They were similar in the following respects: (a) In all of them the appellant, a commercial bank, was the plaintiff. (b) At least one of the defendants in every one of them was the executor/executrix in a deceased estate. (c) The appellant’s cause of action in every case relied on a loan to the deceased, secured by a mortgage bond. (d) Apart from an order for payment of the amount owing under the loan agreement, the appellant in each case sought an order declaring the properties mortgaged executable and also applied for the issue of writs of execution in respect of these properties. (e) The applications were predicated on the failure by the defendants to defend the actions instituted by the banks. In broad outline the reasons given by the court a quo for refusing to grant the default judgments sought, was that the plaintiff banks, including the appellant, had instituted action against the executors/executrixes in the deceased estates under common law, instead of adopting the claims procedure provided for in the Administration of Estates Act66 of 1965 (the Act). This decision was in direct conflict with the conclusion arrived at in an earlier decision in the same division, Nedbank Ltd v Samsodien NO 2012 (5) SA 642 (GSJ), which Mabuse J pertinently held to have been wrongly decided. Succinctly stated the issue arising in the appeals was therefore whether the provisions of the Act preclude a creditor from its common law right to institute action against the deceased estate for payment in terms of a loan agreement. In Samsodien it was held that they do not, while Mabuse J decided that they do. In the end the SCA agreed with the decision in Samsodien. In consequence the appeal was upheld with no order as to costs.

3291

non-electoral

2006

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA Case no: 344/05 REPORTABLE In the matter between: Jimmy H CHARZEN First appellant Brian M MSIBI Second appellant and The STATE Respondent Before: Cameron JA, Jafta JA and Maya AJA Appeal: Friday 24 February 2006 Judgment: Thursday 9 March 2006 Criminal law – Evidence – Identification – Error in description of attacker – Error unignorable, and not explained – Doubt created about other aspects of identification – Absence of physical evidence (fingerprints or retrieved items) creating reasonable doubt Neutral citation: This judgment may be cited as S v Charzen [2006] SCA 6 (RSA) JUDGMENT _____________________________________________________ CAMERON JA: [1] This appeal turns on the reliability of identification evidence. On Tuesday 23 January 2001 at Chiawelo in Soweto, three armed men committed a bloody robbery at the home of the complainant, Mr Alexius Lambert Amtaika, a political science lecturer at Vista University. They took his Audi A4 motor vehicle, a wallet containing R600 in cash, a mobile phone, books, cassettes and a blue baby seat. One of the robbers threw his eleven-month old daughter, who had been strapped into the seat, from the car before they left. In the course of their depredation two of them shot the complainant – seemingly quite gratuitously, for he offered no resistance. He suffered five gunshot wounds to his legs and was fortunate not to undergo an amputation. [2] Two days later, on Thursday 25 January 2001, two men were arrested in Eldorado Park in connection with the Chiawelo robbery. Since the investigating officer was not called to testify, we do not know the circumstances of their arrest, nor (so far admissible) what led to it. We only know that on 8 February 2001, after the complainant was discharged from hospital, an identification parade was held at Protea Police Station in Soweto. Amongst nine other persons, three suspects in connection with the Chiawelo robbery were on parade. They were the two appellants and one Julius Hlongwane, who had apparently been arrested earlier. [3] The complainant identified two persons at the parade as the two robbers who shot him. They were Brian Musa Msibi and Jimmy Hlangabeza Charzen, the two appellants. He could not identify the third. His wife, who fled the scene, distressed but unharmed, was unable to make any identification at the parade, and was not called to testify. [4] In June 2002 Msibi and Charzen stood trial in the Protea Regional Court in Soweto as accused 1 and 2 on charges of robbery and attempted murder, together with associated arms and ammunition counts.1 There were only two state witnesses: the complainant, and inspector Luthuli, who was in charge of the identification parade. Neither accused offered any plea explanation, but both testified in their own defence. They denied involvement in the robbery. The regional magistrate, Mr H Badenhorst, convicted both of robbery, and accused 2 (who 1 Since the order in which the appellants appeared at the trial created some confusion in the high court, and since the order in which they are cited in the appeal has been reversed, it seems clearest to refer to them as at the trial. the complainant said fired four of the five shots) in addition of attempted murder. Both were convicted of unlawful possession of arms and ammunition. Applying the minimum sentence provisions of the Criminal Procedure Act 51 of 1977, he sentenced accused 1 to effective imprisonment of 20 years, and accused 2 to 32 years. [5] The Johannesburg High Court (Masipa J, Tshiqi J concurring) dismissed the appeals against conviction, but ordered that accused 2’s twelve-year sentence on the attempted murder charge run concurrently with the other sentences, thus making both accused’s effective sentence 20 years. The high court granted accused 2 leave for this further appeal against conviction and sentence. Shortly before the hearing, accused 1 obtained similar leave. [6] Before us, as in the high court, the principal question was the adequacy of the complainant’s evidence identifying the accused as the two robbers who shot him; and to appreciate the argument on their behalf it is necessary to set out the state’s case in more detail. State case [7] The complainant was the sole witness to the robbery. He testified that he arrived at his home and parked his car in the garage. His wife and daughter were with him. As he was locking and immobilising the vehicle, he heard his dog barking and saw three armed men entering his property. One – whom he identified as the first accused – ordered him to hand over his keys. While accused 1 was searching him, a second robber – whom he identified as accused 2 – shot his dog. Accused 1 ordered him to lie down, but while he was trying to do so, accused 1 shot him in his right foot. He fell to the ground. Accused 2 then came forward and fired four further shots at him: in his left hip and calf, and on his right leg and ankle. A third robber was at or near the gate, but did not enter the garage. The two robbers dragged him outside, where they left him lying face up. Accused 1 could not start the car. He returned and fired further shots into the ground next to the complainant, who explained to him what had to be done. The car started. As accused 1 reversed he threw the toddler out (she landed on the complainant’s chest), picked up his two accomplices, and sped off. [8] The complainant testified that he had ample opportunity to identify two of the robbers. He saw accused 1 at close range several times, and had considerable time to look at accused 2 while he was lying face-up outside his garage, pleading for mercy. The third he could not identify: the man did not enter the garage, but retired to the gate to keep a look-out. [9] During the complainant’s ten-day stay in hospital (the date unfortunately does not appear from the record), Inspector Swanepoel took a sworn statement from him. Swanepoel did not testify, so we do not have his account of the complainant’s apparent physical and mental state, but in cross-examination the complainant affirmed that the statement recorded accurately what he told Swanepoel and that its contents were confirmed with him before he signed. Was the complainant’s identification of the accused reliable? [10] The complainant was emphatic that his identification was accurate. He related that when asked in hospital whether he could identify his attackers, he told Swanepoel, ‘Yes, even in a million years I’ll be able to identify them.’ During cross- examination he stated that not only did he have time ‘to look at them thoroughly, but I had physical contact with them, verbal contact with them, and eye contact with them’. ‘All I was interested [in] is to look at their faces, because I knew that maybe I will survive ... to help the police in drawing the identikit of the people who came – who invaded my home, took my car and shot me.’ What is more, as the magistrate pointed out in his judgment, and the high court emphasised on appeal, the complainant was a good witness: clear, coherent, specific and verbally expressive. [11] But, as our courts have emphasised again and again, in matters of identification honesty and sincerity and subjective assurance are simply not enough. There must in addition be certainty beyond reasonable doubt that the identification is reliable, and it is generally recognised in this regard that evidence of identification based upon a witness’s recollection of a person’s appearance can be ‘dangerously unreliable’, and must be approached with caution.2 This case illustrates the risks. [12] In his statement to Swanepoel, the complainant ascribed one feature only to each of his attackers, whom he had never seen before. The first – identified as accused 1 – was a ‘man with 2 DT Zeffertt, AP Paizes and A St Q Skeen, The South African Law of Evidence (2003) page 142. dreadlocks’. The other – accused 2 – ‘had a light complexion’. The trial confirmed that accused 2 was light in complexion. But neither at the identification parade, held some sixteen days after the robbery, nor at trial did accused 1 have dreadlocks. His hair was short. [13] On its own, this would not be remarkable, for dreadlocks (‘a Rastafarian hairstyle in which the hair is twisted into tight braids or ringlets’)3 are eminently removable; and indeed a criminal may deliberately remove them to try to mask his identity. What is significant is the complainant’s response when challenged on the apparent absence of dreadlocks. His response suggested that there may have been no dreadlocks at all: ‘He was putting on something like you know, something like that lady has on. It’s a – it was something like a hat, but – yes, of that type, yes.’ This proved to be a woollen hat, as worn by a person in court, pulled down to the hairline. After conceding that ‘dreadlocks and that hat … are totally different things’, the complainant proceeded: 3 Concise Oxford Dictionary. ‘Well, to me what he was wearing is not very important. To me the face mattered most, because I knew that I cannot go for identity parade to identify somebody who has got dreadlocks, or who has got a hat. To me, what matters most is the face. You cannot identify someone by a hat or dreadlocks. The face matters most.’ [14] The complainant’s observation is correct: facial characteristics are a more reliable and enduring source of identification than variable features such as hairstyle or clothing. But that assertion – propounded repeatedly during his cross-examination – underscores the significance of his mention of the dreadlocks. If they were immaterial to his recollection, why did he mention them at all? On the other hand, if they were material, but there were no dreadlocks, his error is unignorable. [15] The mystery was not cleared up during the complainant’s evidence, for he neither insisted that there were dreadlocks during the robbery (which must have been shaved off later), nor conceded that he had made an error: instead, he attempted to minimise the importance of what was in his statement by insisting on the irrelevance of non-facial features. In keeping with this approach, counsel for the State urged us on appeal to find that the complainant was an impressive witness overall, and that the dreadlocks were immaterial. But they cannot be dismissed, for the complainant’s statement mentions them twice; and his very articulacy as a witness, and the precision of his recall in other respects, make the unaccounted error the more obtrusive. It unavoidably raises the question of how reliable his recall was in other respects. And it makes it the more regrettable that the police officers who arrested the accused were not called to testify, since they would have been able to relate whether accused 1 had dreadlocks two days after the robbery. We shall never know. [16] If the complainant did err, his error may be explained in another feature of his evidence, namely the time at which the attack occurred. He testified very specifically that he returned at about 19h15, having left home at 18h30 to fetch his spouse in Coronationville. In his police statement, too, he gave the time as 19h15. When quizzed about visibility at this hour, he recorded that there was no electric light inside his garage, but that (a) the sun was still shining; and (b) the street lights outside were on. When the cross-examiner suggested a contradiction, he insisted that in his area the streetlights could be on at any time. [17] Yet, if the complainant was correct about the time, we must take notice that more than a month after the summer solstice in Gauteng the sun has already set by 19h15, and that dusk is settling in. The absence of electric illumination inside the garage would have deepened the gloom in which the complainant faced his attackers. While outside there would have been more light, the unsettling uncertainty must obtrude that he may have mistaken the nature and appearance of his first attacker’s headgear because the light was bad. And if that is so, then there must be a measure of perceptible doubt also about his identification of his attackers’ faces. [18] This is an unhappy conclusion, for by their own admission the two appellants are friends; and the chance that from a twelve-person line-up the complainant would have wrongly picked out two persons so connected, who were arrested on the same occasion, in each other’s company, must be statistically small. But the dreadlocks issue raises unavoidable doubt about the reliability of the identification on its own. [19] This is inevitable mainly because the only evidence the state called about the robbery was the single testimony of the complainant. There was no physical evidence: not a fingerprint, not a recovered cellphone, nor wallet, nor purse, nor baby seat: nothing to connect the accused to the crime and thus to provide a measure of objective assurance against the pitfalls of subjective identification. The greatest assurance of guilt must lie in such evidence, rather than in identification on its own, which as this case shows can be beset by error and misdescription and doubt, in which case possibly and even presumably guilty persons must walk free. [20] The appeal must succeed. The order of the court below is set aside. In its place there is substituted: ‘The appeal succeeds. The accused are acquitted of the charges.’ E CAMERON JUDGE OF APPEAL CONCUR: JAFTA JA MAYA AJA

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Thursday 9 March 2006 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal S v Charzen 344/05 In a judgment delivered today, the Supreme Court of Appeal has upheld the appeal of two men who were convicted in the Protea Magistrates’ Court, Soweto, of robbery and of arms and ammunition charges, and sentenced to 20 years’ imprisonment. The appeal turned on the reliability of identification evidence. The complainant identified the two accused at an identification parade just more than two weeks after the robbery. This was the only evidence the state called. But the complainant had said twice in his police statement that one of his attackers was wearing dreadlocks, while in court he said instead that the man was wearing a hat. Both at the identification parade and in court the man had short hair. The complainant could not explain why he spoke of dreadlocks, and admitted that dreadlocks and a hat were ‘totally different’. The robbery occurred at dusk, and there was no electric lighting in the complainant’s garage. In upholding the appeal, the SCA emphasised that the courts had repeatedly stated that identification evidence had to be approached with caution, since people make mistakes in identifying others. The greatest assurance of guilt lies in physical evidence (fingerprints, recovered items, blood samples) connecting the accused to the crime, rather than identification evidence alone, which can be beset by error and misdescription and doubt.

1247

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Not reportable Case no: 305/07 In the matter between: THE DIRECTOR OF PUBLIC PROSECUTIONS (KWAZULU-NATAL) APPELLANT and ALECK HENRY 1ST RESPONDENT PRISHIKA PILLAY 2ND RESPONDENT SAROJINI NADAR 3RD RESPONDENT ______________________________________________________________ Coram: SCOTT, MTHIYANE, CLOETE, MLAMBO JJA et MHLANTLA AJA Date of hearing: 19 MAY 2008 Date of delivery: 29 MAY 2008 Summary: Power of Court of Appeal to interfere with exercise of discretion as to costs by court of first instance – only in event of misdirection, irregularity or no grounds on which court acting reasonably could have made the order it did. Neutral citation: Director of Public Prosecution v Henry (305/07) [2008] ZASCA 63 (29 May 2008) SCOTT JA/ …. SCOTT JA: [1] This is an appeal against an order of costs granted against the appellant in review proceedings in the High Court, Pietermaritzburg. The order was granted by Combrinck J with whom Balton J concurred. On a subsequent occasion, in the absence of Combrinck J, Balton J, with Koen J concurring, granted leave to appeal to the full bench of that court. Later, no doubt because such an appeal would be incompetent, the order was altered and leave was granted to this court. [2] It is well established that in awarding costs, a court of first instance exercises a judicial discretion and a court of appeal will interfere only if the exercise of that discretion is vitiated by misdirection or irregularity, or if there are no grounds on which a court, acting reasonably, could have made the order in question. Merely because the court of appeal may have made a different order is no justification for interference. See eg Naylor v Jansen 2007 (1) SA 16 (SCA) para 14 and the authorities there cited. [3] Against this background, I turn to the circumstances in which the order appealed against was made. On 24 February 2003 the third respondent, a 27 year-old woman, to whom I shall refer as the complainant, consulted the second respondent who is a clinical psychologist and to whom I shall refer as the ‘psychologist’. At the time the complainant was experiencing marital problems and was suffering from depression. In the course of the consultation she reported that she had been raped and indecently assaulted by the first respondent when she was 10 years old, ie 17 years previously. Thereafter, she was assessed and treated in the course of 14 further sessions. Subsequently she laid a charge of rape and indecent assault against the first respondent. [4] In due course the first respondent was charged and given a list of witnesses the State intended to call, one of whom was the psychologist. The first respondent requested particulars from the State. He asked to be placed in possession of a copy of ‘every document that [the State] intends to use at the trial’. In response, the prosecutor furnished the first respondent with a copy of the psychologist’s report dated 31 October 2003. It contained details of the alleged rape and the effect it had had on the complainant. Under the sub-heading ‘summary’, the psychologist expressed the opinion that: ‘[The complainant’s] clinical picture is typical of an adult survivor of childhood sexual abuse. She has tried to block out the alleged incident, that she at the age of ten, had no control over. She was exposed to age inappropriate sexual knowledge which distorted her perception of sexual behaviour and resulted in her avoiding sexual intimacy.’ On receipt of this document the first respondent had every good reason to believe that the psychologist would be called as an expert witness to give credence to the complainant’s veracity. [5] The State was also requested to indicate to whom it would be alleged the ‘so-called first report’ was made. The answer given was that it was the psychologist. I mention that the psychologist’s report does record that the complainant had informed her husband before their marriage that at the age of 10 she had been ‘molested’. However, the request that ultimately resulted in the litigation culminating in this appeal was for the State to make available, in the event of the psychologist being called to testify, all her ‘working documents/notes of the 11 sessions of psychotherapy and 4 sessions of psychological assessment’. The request was refused. [6] The first respondent then launched an application to compel the prosecution, alternatively the psychologist, to hand over all the files and documents in the psychologist’s possession relating to the 15 sessions of psychotherapy and assessment undergone by the complainant. The psychologist and the complainant gave notice of their intention to intervene and oppose the order sought on the grounds of the latter’s right to privacy and confidentiality. [7] The matter came before the regional magistrate on 20 July 2004. Counsel for the first respondent announced that the court would be required to make a finding which would involve a ‘fine balancing act’ between certain entrenched rights. However, a preliminary issue that arose was the locus standi of the Legal Resources Centre to intervene on the grounds of the ‘wider public interest’ which the application was believed to entail. In the course of the argument on this issue the prosecutor made a statement which was subsequently to gain importance with regard to the question of costs. She is recorded as saying: ‘The interests that are at stake here are that of the complainant of what she had disclosed to the [psychologist] and to the State, that is confidential information, which the State is basically not going to rely on Your Worship. The evidence of the [psychologist], according to the State, is basically that being the first report, because the report was initially made to the [psychologist].’ In the event, the Legal Resources Centre was recognised as having locus standi and the parties proceeded to argue the application on the basis that it involved balancing the first respondent’s right to a fair trial against the complainant’s right of confidentiality, privacy and dignity. Of significance, are the following remarks of the prosecutor made in the course of her argument: ‘Your Worship, in this case a request for further particulars was made by the defence. They were afforded statements of witnesses that would testify in this matter, as well as the report by the psychologist. Your Worship, this is actually the evidence that the State will be relying on to prove the charges against the accused, which are simple Your Worship, which are that of rape as well as that of indecent assault. Your Worship, the State views the relationship of the [psychologist] with the client, with the victim in this matter as that of a confidential relationship. Your Worship, what was discussed on a personal basis by the victim in this matter to the psychologist, the State is not relying on that Your Worship, as it is a very confidential information.’ She added: ‘Your Worship, the interest of the complainant in this matter must be taken into consideration. My learned friend Mr Chetty, has indicated that the constitutional right of the complainant in the matter, that of privacy, dignity as well as psychological integrity must be upheld by this Court, Your Worship. Furthermore, if the Court allows that the eleven sessions that were held by the psychologist and the client in this matter, be handed to the complainant, the State will not rely on those sessions. Because as I have indicated earlier that these are treated as confidential information.’ [8] On 30 August the regional magistrate gave judgment in which she ordered copies of some, but not all, of the documents requested to be handed over to the first respondent. The psychologist and the complainant thereafter launched review proceedings in the court a quo to have the order of the regional magistrate set aside. The latter chose to abide the decision of the court. The first respondent opposed the application and filed affidavits. The State filed no affidavits but at the last moment filed heads of argument and was represented at the hearing. The amicus curiae was represented by counsel and filed a document setting out reasons for supporting the psychologist and the complainant. [9] At the hearing the parties were ready to argue what promised to be a difficult issue relating to the tension between, on the one hand, the complainant’s right to dignity, privacy and confidentiality and, on the other, the first respondent’s right to a fair trial. However, at the commencement of proceedings, the learned judge presiding referred counsel for the State to the statements made by the prosecutor to which I have referred above and sought clarity as to precisely what the State’s attitude was in relation to the evidence of the psychologist. It was only then that it was made clear in unequivocal terms that the State would not be calling the psychologist to give expert evidence as to the genuineness of the complaint’s account of what had occurred and that the former’s evidence was to be limited simply to the report that the complainant had made to her that she had been raped by the first respondent when she was 10 years old. In the result it became unnecessary for the court to decide the constitutional issue that had been raised. It was also common cause that the regional magistrate had misdirected herself in proceeding on the basis that it was only after the 15 sessions of psychotherapy that it finally came out that the complainant had been raped. It followed that the decision of the regional magistrate had to be reviewed and set aside. [10] On the question of costs, Combrinck J said the following: ‘In my view, there was confusion as to the purpose for which the State intended calling the psychologist. In reply to the original question as to whether the State intended to make use of the evidence of the psychologist and a request for the more detailed report, the State in reply acknowledged that it intended calling the psychologist and furnished a copy of her report. It was logical to deduct from this, that the State did not intend restricting the psychologist’s evidence to that of the first report but intended calling her as an expert witness to testify to her conclusions reached after the fifteen sessions with the complainant. The State should, in my view, have indicated clearly in answer to the request by the accused for further particulars, that it only intended calling the psychologist for the restricted purpose of the so-called first report. I would further have expected, after the launching of the review proceedings, that the State would file an affidavit indicating clearly the restricted nature of the evidence relating to the psychologist. It did not do so. I do not think that the portions of the prosecutrix’s address before the magistrate to which I alluded earlier were sufficient to bring to everybody’s knowledge that the State was only going to call the psychologist on the question of the first report. Not even the magistrate understood it as such as is clear from her judgment. I conclude therefore that the State is liable to pay the costs of the proceedings.’ [11] In this court counsel for the State submitted that the prosecutor in the proceedings before the regional magistrate had made it clear what the State’s attitude was. I cannot agree. Not only did counsel for the other parties involved not understand this to be the case but the regional magistrate was similarly misled. There were several opportunities for the State to correct the misapprehension under which everyone else concerned with the case was labouring. Had this been done the application and the review would have been unnecessary. As previously stated, the court a quo exercised a judicial discretion in ordering the State to pay the costs of the proceedings. No acceptable ground has been advanced for interfering with the exercise of that discretion. In my view there is no merit in the appeal and leave to appeal should never have been granted. [12] The appeal is dismissed with costs. _________ D G SCOTT JUDGE OF APPEAL CONCUR: MTHIYANE JA CLOETE JA MLAMBO JA MHLANTLA AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL THE DIRECTOR OF PUBLIC PROSECUTIONS (KWAZULU-NATAL) AND A HENRY AND OTHERS CASE NO 305/07 From : The Registrar, Supreme Court of Appeal Date: 29 May 2008 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The SCA today dismissed an appeal brought by the Director of Public Prosecutions (KwaZulu-Natal) against a costs order granted against it in review proceedings in the High Court, Pietermaritzburg. The SCA referred to the well established rule that a court of first instance exercises a judicial discretion and a court of appeal will interfere only if the exercise of that discretion is vitiated by misdirection or irregularity, or if there are no grounds on which a court, acting reasonably, could have made the order in question. In the present case there was a valid ground for the order made and the appellant was unable to point to any irregularity or misdirection on the part of the High Court. Accordingly the appeal had to fail. --- ends ---

3063

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 994/2013 In the matter between: SOUTH AFRICAN LOCAL AUTHORITIES PENSION FUND APPELLANT and MSUNDUZI MUNICIPALITY RESPONDENT Neutral Citation: South African Local Authorities Pension Fund v Msunduzi Municipality (994/2013) [2015] ZASCA 172 (26 November 2015) Coram: Lewis, Ponnan, Theron, Willis and Mathopo JJA Heard: 16 November 2015 Delivered: 26 November 2015 Summary: Where a pension fund seeks to rely on an amended rule in claiming contributions to members‟ benefits from employers, it must show that the rule was amended in accordance with s 12 of the Pension Funds Act 24 of 1956: absolution from the instance rightly granted where the South African Local Authorities Pension Fund did not adduce any evidence to show that it had complied with the Act and its own rule, and thus that the approval of the amendment by the Registrar of Pension Funds was valid. ___________________________________________________________________ ORDER On appeal from: KwaZulu-Natal High Court, Pietermaritzburg (Gyanda J sitting as court of first instance). The appeal is dismissed with costs including those of two counsel where so employed. ___________________________________________________________________ JUDGMENT Lewis JA (Ponnan, Theron, Willis and Mathopo JJA concurring) [1] In 2008, the appellant, the South African Local Authorities Pension Fund (the Fund) instituted action in the KwaZulu-Natal High Court, Pietermaritzburg, against the respondent, the Msunduzi Municipality (the Municipality), for payment of some R324 000 plus interest. This sum was claimed as the Municipality‟s arrear contribution, in its capacity as employer, in respect of employee members‟ pension benefits. The action was one of a number brought against several municipalities on the same basis. [2] The Fund relied in its particulars of claim on an amendment to the Pension Fund Rules which, it alleged, allowed for an increase in the Municipality‟s contribution and which the Municipality refused to pay. The trial before the high court commenced in May 2013. At the end of the Fund‟s case, and after the evidence of one witness for the Fund was led, the Municipality applied for absolution from the instance, which was granted by the trial judge, Gyanda J. He held that the Fund had failed to put up a prima facie case showing that the amendment had been validly adopted by the Board of Trustees of the Fund, and approved by the Registrar of Pension Funds (the Registrar). The relevant statutory provisions and rules of the Fund [3] Before dealing with the particulars of claim that form the basis of the Fund‟s action, it is useful to consider s 12 of the Pension Funds Act 24 of 1956, as well as Rule 2.3.1 of the Fund rules, both of which which deal with the amendment of rules. The rule provides: „The Trustees may by resolution amend these rules (which shall include, if necessary and after consultation with the Valuator, reducing Members‟ benefits in respect of future service or increasing Members‟ contributions). No amendment to the Rules by the Fund may be made unless the amendment has been approved by the Registrar of Pension Funds.‟ [4] The rule is consonant with s 12 of the Act. The relevant provisions read: ‘12. Amendment of rules (1) A registered fund may, in the manner directed by its rules, alter or rescind any rule or make any additional rule, but no such alteration, rescission or addition shall be valid - (a) if it purports to affect any right of a creditor of the fund, other than as a member or shareholder thereof; or (b) unless it has been approved by the registrar and registered as provided in sub- section (4). [My emphasis.] (2) Within 60 days from the date of the passing of a resolution adopting the alteration or rescission of any rule or for the adoption of any additional rule, a copy of such resolution shall be transmitted by the principal officer to the registrar, together with the particulars prescribed. . . . (4) If the registrar finds that any such alteration, rescission or addition is not inconsistent with this Act, and is satisfied that it is financially sound, he shall register the alteration, rescission or addition and return a copy of the resolution to the principal officer with the date of registration endorsed thereon, and such alteration, rescission or addition, as the case may be, shall take effect as from the date determined by the fund concerned or, if no date has been so determined, as from the said date of registration. (5) A registered fund may at any time consolidate its rules, and in such event the principal officer shall forward to the registrar a copy of such consolidated rules and if the registrar is satisfied that the consolidated rules are not different from the existing rules of the fund, the registrar shall register such consolidated rules and return a copy thereof to the principal officer with the date of registration endorsed thereon, and such consolidated rules shall take effect as from the date determined by the fund concerned or, if no date has been determined, as from the date of registration thereof. (6)(a) The registrar may request such additional information in respect of any alteration, rescission, addition or consolidation of the rules of a registered fund transmitted or forwarded to the registrar for approval as the registrar may deem necessary. (b) If a registered fund fails to furnish the information requested by the registrar within 180 days from the date of that request, any submission for approval of an alteration, rescission, addition or consolidation of the rules of that fund lapses.‟ [5] Thus in order for a rule amendment to be properly made, there must be a resolution taken at a meeting of the Board to amend a particular rule; that resolution must be transmitted to the Registrar within 60 days „from the date of passing the resolution‟ (s 12(2)) adopting the alteration, and the Registrar must decide whether to approve that resolution. To found a claim on an amended rule, therefore, the Fund must prove that a resolution has been properly adopted, transmitted to the Registrar timeously and approved by him or her. [6] The power to condone non-compliance with the time periods laid down in the Act is given to the Registrar in s 33(2), but it must be at the request of the person obliged to perform the specified act (33(1)); and the Registrar may only extend the specified period in „special circumstances‟ (s 33(2)). (The subrules are set out above.) In terms of s 12(6)(a) the Registrar may request additional information about the amendment. If the Fund fails to provide this within 180 days of the request, the resolution to amend the rule lapses (s 12(6)(b)). The basis of the Fund’s claim [7] I turn now to the relevant allegations made by the Fund in its particulars of claim in the action against the Municipality. It alleged that the Municipality was obliged in terms of s 13A of the Act to pay to the Fund any contribution for which it was liable as employer „in terms of the rules‟ (para 4.2.2.2). It further alleged (in para 5) that on 20 August 2003, the Board duly adopted a resolution amending rule 4.2.2 in such a way as to require the Municipality to make an increased annual contribution to the Fund being 20,78 per cent of a member‟s annual salary including the annual bonus (annual salary and bonus is regarded as the pensionable salary), with effect from 1 July 2003. The Fund attached the resolution on which it relied as Annexure B to the particulars. Rule 4.2.2 before the purported amendment required a contribution of 18,07 per cent of pensionable salary. [8] In para 6.1 of the particulars, the Fund alleged that by „letter dated 24 October 2003 and received on 28 October 2003‟, a copy of which was attached as Annexure C, the Fund, represented by the Fund administrator, submitted the resolution to the Registrar for approval. In para 6.2, which obviously follows immediately, the Fund stated that „As appears from the Registrar‟s letter of 6 July 2006, together with its annexure, copies of which are annexed marked “D”, such approval was granted by the Registrar on 5 July 2006.‟ [9] The Fund alleged further that the Municipality was accordingly liable to pay the difference between the contributions it had paid and the amount that it should have paid pursuant to the rule amendment. I shall revert to the details of the additional percentage of the contributions that it claimed, as these give rise to some difficulty. [10] The particulars of claim are completely silent on what occurred between the adoption of the resolution by the Board and the approval of the Registrar some three years later. We cannot glean from the particulars, and the annexures attached, precisely when a resolution that was approved by the Registrar was actually taken by the Board, for the resolution of 20 August 2003 was not approved in its terms, and no other resolution or meeting of the Board is pleaded. The defences pleaded [11] The Municipality raised several preliminary defences to the claim. Some of these, such as prescription, that the Fund lacked locus standi and that it had not given notice to the Municipality, as required by the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002, have fallen away. [12] The substantive defence in the amended plea amounted to a denial of the allegations in paras 5 and 6 that I have discussed above. In amplification, the Municipality denied the validity of the amended rule 4.2.2.1, stating that the amendment effected was incompetent and unlawful; and that the resolution adopted on 20 August 2003 was not adopted with due process. It did not expressly plead that the approval of the resolution by the Registrar was invalid. The Fund replicated, alleging inter alia that the resolution was validly adopted. The process leading to the adoption of the resolution is not in issue now, although I shall refer to it to explain some of the difficulties that arise in connection with the resolution apparently approved by the Registrar. [13] On appeal the Fund contends that the validity of the approval was never placed in issue. I shall deal with its approach on appeal later. But it is important to state now that at the start of the trial before Gyanda J, counsel for the Municipality recorded that all issues remained in dispute and the validity of the approval was contested throughout. The background to the purported rule amendment [14] The background to the purported rule amendment providing for an increase in the employer‟s contribution is not clearly revealed by the papers in this matter. The Fund asks us to puzzle out the muddle in the appeal record from correspondence with the Registrar‟s office that is randomly placed in the record, and to which it did not refer in its heads of argument. [15] It appears from a reading of other judgments dealing with this particular rule amendment (see especially the unreported judgment of Dolamo J in South African Local Authorities Pension Fund v George Municipality Case No 2064/08, handed down on 11 September 2015) and as further explained by the Municipality‟s counsel, and to be gleaned from the documents placed before us, that the following occurred. [16] In 2003, and for some years preceding that, the Fund had been in an unsound financial position. Because of a deficit, the Fund‟s valuator made various proposals to the Registrar that, it transpired, were not effective in reducing the Fund‟s deficit. The valuator then proposed that the employers‟ contributions to members‟ benefits be increased by 2,5 per cent on members‟ pensionable salaries, which included the annual bonus. A scheme of arrangement pursuant to which the increase would be adopted was approved by the Registrar. [17] On 9 April 2003 the principal officer of the Fund wrote to all municipal managers in the country advising of the proposed increase and stating that it would implement it over the next five years when it was anticipated that the deficit would be settled. The Fund advised that the increased benefits would be payable with effect from 1 July 2003. Meetings were held by the Fund with Provincial Committees on which municipalities were represented and the increase agreed. The meetings with the provincial committees were held at different times, mostly in 2003. The KwaZulu- Natal committee passed a resolution accepting the increase on 13 March 2003, signed only on 31 August 2005. The resolutions that form the basis of the Fund’s claim [18] I turn now to the resolutions of the trustees of the Fund annexed to the particulars of claim. The rules of the Fund were annexed to the particulars as Annexure A. The rules are preceded by a resolution of the Fund taken at Port Elizabeth on 25 August 2006. The particulars of claim do not refer to any resolution of the trustees taken in August 2006. The resolution was, however, to adopt consolidated rules with effect from 1 November 2006. Rule 4.2.2.1B provides that in the case of members of the Fund other than municipal police (governed by A), an employer‟s contribution for each month to the fund „shall be equal to 20,78 (twenty comma seven eight) per cent of such members‟ annual salary including his annual bonus.‟ [19] Annexure B is the resolution of the trustees at the meeting held in Port Elizabeth on 20 August 2003, referred to in para 5 of the particulars. In para 2 of the resolution, reference is made to rule 4.2.2.1B, and there it is said that an employer‟s current contribution is „R20,78 (twenty comma five seven)‟ of such member‟s annual salary including his annual bonus. The resolution was signed by the chairman of the Board of Trustees, the principal officer and a third trustee on 5 May 2006. [20] The discrepancy between the figures and the words setting out the percentage contribution is immediately apparent. So too is the difference in date between the meeting at which the resolution was purportedly adopted and the date on which the resolution was signed. [21] Annexure C is the same resolution as that reflected in Annexure B, save that it refers in both numbers and words to 20,57 per cent in respect of the employer‟s contribution. It is dated 10 October 2003, and is signed again by the chairman, the principal officer and a third trustee (the signature is not the same as on the resolution dated 5 May 2005). It is that resolution that was apparently approved by the Registrar on 5 July 2006. [22] The papers are confusing. In particular, the Fund has nowhere made it clear what happened between August 2003 and July 2006 when the Registrar approved the amendment. There is no allegation that another meeting of the Board of Trustees was held before 5 May 2005 when the resolution put up as annexure B was signed. Nor is there any explanation why the resolution embodied in Annexure C is dated 10 October 2003. The evidence before the high court [23] The Fund called Mr Wilberforce Kgakane, then its principal officer, to testify in support of its claim. Much of his evidence was not audible and it is hard to decipher all that he said. But what was made clear was that the resolution actually adopted is that reflected in Annexure C, and that was forwarded in October 2003 to the Registrar. This is the resolution approved by the Registrar. Kgakane also testified that there was only one meeting of the Board of Trustees – that held on 23 August 2003 – and no other resolution in respect of employers‟ contributions was passed. [24] Kgakane explained that when the Registrar‟s office had received the resolution of August 2003 it had raised numerous enquiries about it, and correspondence had been exchanged between the Fund‟s office and the Registrar‟s office over three years. That is why it took so long for the Registrar to approve and register the resolution. In particular there was a lack of clarity about whether the resolution effected an increase of 2,5 per cent on a member‟s pensionable salary (including the annual bonus) or whether it was applied only to the annual salary. It should have been the former in accordance with the valuator‟s recommendation. [25] The Fund‟s reliance on annexure B, signed on 5 May 2005, as the resolution approved by the Registrar, is thus unwarranted. Moreover, the valuator had recommended an increase of 2,5 per cent on the pensionable salary. That was regarded by the Fund, in its letter to the municipalities on 9 April 2003, as being an increase of 2,71 of annual salary. [26] Prior to the purported amendment, employers paid an 18,07 per cent contribution in respect of an employee‟s benefits. This was allegedly increased to 20,78 per cent in respect of the annual salary including the bonus, but that was not in accordance with the valuator‟s recommendation. The correct calculation would have resulted in only a 19,18 per cent of pensionable salary contribution by employers. The correct calculation was communicated to the Registrar‟s office by the valuator of the Fund, Mr S Feldman, on 24 March 2006. [27] Where the resolution referred thus to 20,78 per cent it should have been in respect of only the annual salary and not the pensionable salary. That is neither what the rule attached as Annexure A provides, nor what the resolution stated. So the purported amendment did not follow the recommendation. And it was inherently contradictory anyway because of the discrepancy between the numbers and the words. The findings of the high court [28] Gyanda J accordingly considered that the Fund had not made out a case that the Municipality had to meet, and granted absolution from the instance. Thus he did not have to deal with the argument raised by the Fund, that has reared its head in several of the cases, that when a municipality seeks to rely on the invalidity of an administrative act – the Registrar‟s approval of the amended rule in this instance – the action stands until it is set aside by a court on review. I shall deal with this contention when considering the arguments raised on appeal. The arguments on appeal [29] As I understand the Fund‟s approach, it is that the Registrar in fact approved a resolution to amend the rules of the Fund, that consolidated rules were approved and came into effect on 1 November 2006, and that the Fund had thus proved that rule 4.2.2.1B required an employer municipality to contribute, for the member‟s benefit, a monthly amount equal to 20,78 per cent of a members annual salary including the annual bonus. We are asked to glean from various documents the existence of a rule amendment made pursuant to a resolution that was approved by the Registrar. [30] However, as Gyanda J found, and as the Municipality argues, the Fund is unable to show when the resolution amending rule 4.4.2.1B, as now reflected in the consolidated rules, was taken at a meeting of the Board of Trustees. The only meeting at which the purported rule amendment was discussed was held on 23 August 2003. The resolution agreed to was signed only on 5 May 2006. The resolution in respect of the rule was contradictory. The resolution that was actually sent to the Registrar was signed on 10 October 2003, and that reflected the employer‟s contribution as being 20,57 per cent of the member‟s annual salary including annual bonus. [31] The annexures to the particulars of claim thus do not bear out the claims made. And the evidence for the Fund also did not support the particulars. The fund has failed dismally in presenting its own case. The Municipality was accordingly rightly held not to have to answer the Fund‟s case. The test for granting absolution from the instance at the end of a plaintiff‟s case is set out in Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A) at 409G-H where Miller AJA said: „[W]hen absolution from the instance is sought at the close of plaintiff‟s case, the test to be applied is not whether the evidence led by the plaintiff establishes what would finally be required to be established, but whether there is evidence upon which a Court, applying its mind reasonably to such evidence, could or might (not should or ought to have) find for the plaintiff.‟ [32] In Gordon Lloyd Page & Associates v Riviera & another 2001 (1) SA 88 (SCA) Harms JA repeated the test set out in Claude Neon Lights and added (para 2): „This [the passage quoted above] implies that a plaintiff has to make out a prima facie case – in the sense that there is evidence relating to all the elements of the claim – to survive absolution because without such evidence no court could find for the plaintiff . . . .‟ [33] The Fund has not provided any evidence at all that supports its claim that the amended rate of contribution was agreed by its Board of Trustees and validly approved by the Registrar. It has also not pleaded that condonation for the late transmission of the resolution to the Registrar was applied for and granted. The particulars are silent on this point. We cannot simply accept that condonation was granted and that the rule amendment was validly made and approved. [34] The argument that the validity of the approval was not placed in issue at the trial or in the pleaded defence is contrary in any event to the general denials in the plea and that which was placed on record at the commencement of the trial. It can hardly be expected, moreover, that a defendant be required to deny that which is not pleaded. The Fund simply did not plead a valid approval of a valid rule amendment. [35] The Fund nonetheless argued that even if the Registrar‟s approval was invalid, as an administrative act it stood and had legal consequences until set aside on review. It referred in this regard to Oudekraal Estates (Pty) Ltd v City of Cape Town & others 2004 (6) SA 222 (SCA) (para 26) where Howie P and Nugent JA held that an administrative act, despite being invalid, may have legal consequences until it is set aside. (See now also MEC for Health, Eastern Cape & another v Kirland Investments (Pty) Ltd t/a Eye and Laser Institute 2014 (3) SA 219 (SCA), confirmed by the Constitutional Court 2014 (3) SA 481 (CC).) [36] This court said in Oudekraal, however, that when there is a collateral challenge to the validity of an act, a court has no discretion but to set it aside. (See also City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd 2010 (3) SA 589 (SCA) para 15 on the absence of discretion.) A collateral challenge will generally arise where the subject is sought to be coerced by a public authority into compliance with an unlawful administrative act (para 32 of Oudekraal). But, said the court (para 35): „It will generally avail a person to mount a collateral challenge to the validity of an administrative act where he is threatened by a public authority with coercive action precisely because the legal force of the coercive action will most often depend on the legal validity of the administrative action in question. A collateral challenge to the validity of the administrative act will be available, in other words, only “if the right remedy is sought by the right person in the right proceedings” [a reference to Wade Administrative Law 7 ed by Christopher Forsyth and H R Wade].‟ [37] In my view, the appellant has misconceived the position. As Oudekraal itself makes plain (para 36) „the right to challenge the validity of an administrative act collaterally arises because the validity of the administrative act constitutes the essential prerequisite for the legal force of the action that follows and ex hypothesi the subject may not then be precluded from challenging its validity.‟ Thus faced with the general denial of the kind encountered here, it remained for the appellant to prove the validity of the amendment, which was an essential feature of its claim. The Fund simply did not adduce evidence upon which a court could determine whether the administrative action of the Registrar in approving the rule amendment was valid or invalid. Gyanda J in the high court referred to the judgment of Singh AJ in South African Local Authorities Pension Fund v Ethekwini Metropolitan Municipality and the Registrar of Pension Funds (unreported judgment delivered on 1 July 2011, in case number 10330/2008), in which the same rule amendment was in issue. There, however, the Fund excepted to the municipality‟s defences that included one that the amendment was invalid for a number of reasons. The court rejected the argument that the Fund was entitled to rely on the invalid administrative act until it was set aside on review and dismissed the exception. It held that the right to challenge an administrative action collaterally was available to the municipality. [38] Similarly in George Municipality (above) Dolamo J held that the municipality was entitled to challenge the validity of the Registrar‟s approval. The learned judge relied in this regard on National Industrial Council for the Iron, Steel, Engineering & Metallurgical Industry v Photocircuit SA (Pty) Ltd & others 1993 (2) SA 245 (C) where Scott J said (at 253E-G): „A Court, however, will not in every case permit an administrative act to be challenged in collateral proceedings. Indeed an administrative act or order will be treated as invalid „only if the right remedy is sought by the right person in the right proceedings [Wade Administrative Law 7 ed by Christopher Forsyth and H R Wade] . . . . Where, however, the enforcement of such an act or order is resisted, whether in criminal or civil proceedings, on the ground that in making it the official acted beyond his powers, our Courts, to my knowledge, have never refused to allow the question of validity to be canvassed.‟ The decision was approved in Oudekraal para 33. Dolamo J in George Municipality accordingly found that it was open to the municipality to challenge the validity of the resolution and the consequent approval by the Registrar and dismissed the Fund‟s claim. [39] The Fund in this matter sought to distinguish Oudekraal with reference to V & A Waterfront Properties (Pty) Ltd & another v Helicopter & Marine Services (Pty) Ltd & others 2006 (1) SA 252 (SCA). In V & A (para 10), Howie P stated that, in brief, a collateral challenge is applicable in proceedings where a public authority seeks to coerce a subject into compliance with an unlawful admibistrative act. He added: „[i]f these proceedings are not of that nature then the . . . order will have legal effect until set aside by a reviewing Court.‟ He concluded (para 15): „[I]n the circumstances the proceedings a quo were not such that the defence of collateral challenge was available‟. I do not understand how that case bears on this one. Nor do I propose to discuss the appropriate circumstances in which a collateral challenge may or may not be permissible. I do not think that this case is one where a collateral challenge even arises. And I do not consider that the Registrar‟s act in purportedly approving a rule amendment must stand until it is set aside on review. [40] The Fund itself relies on the Registrar‟s approval to enforce a claim against the Municipality. It is for it to show that it complied with s 12 of the Act in obtaining that approval. It has failed to adduce any evidence to establish even on a prima facie basis that the resolution agreeing to the amendment was taken, when it was taken, whether or when it complied with the provisions of s 12(2) of the Act, and that the Registrar‟s approval was in respect of that resolution. Accordingly the high court correctly granted absolution from the instance. [41] The appeal is dismissed with costs including those of two counsel where so employed. _______________________ C H Lewis Judge of Appeal APPEARANCES For Appellant: N M Arendse SC Instructed by: Thipa Incorporated Attorneys, Sandton Honey Attorneys, Bloemfontein For Respondent: Y N Moodley SC (with him V Moodley) Instructed by: Logan Chetty Attorneys, Pietermaritzburg Symington & De Kok, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 26 November 2015 STATUS Immediate South African Local Authorities Pension Fund v Msunduzi Municipality [2015] ZASCA 172 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 Pension Fund sued the municipality in the KwaZulu-Natal High Court, Pietermaritzburg, for payment of arrear contributions that it alleged were owing in respect of members’ benefits in terms of an alleged amendment to the Fund’s rules. The high court found that the Fund had not shown that the rule amendment was valid, and granted absolution from the instance. The Supreme Court of Appeal today upheld the decision of the high court. It found that in its pleadings, the Fund had made inconsistent allegations, and had not shown that the amendment had been validly made and validly registered by the Registrar of Pension Funds in terms of s 12 of the Pension Funds Act 24 of 1956. Moreover, it held, the evidence led by the Fund was inconsistent with the claim it sought to make in its particulars of claim.

4150

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1138/2022 In the matter between: SOUTH AFRICAN LEGAL PRACTICE COUNCIL APPELLANT and LEBOHANG MICHAEL MOKHELE RESPONDENT Neutral citation: South African Legal Practice Council v Mokhele (1138/2022) [2023] ZASCA 177 (14 December 2023) Coram: NICHOLLS, MABINDLA-BOQWANA and GOOSEN JJA and MASIPA and TOKOTA AJJA Heard: 22 November 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via 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 at 10h00 on 14 December 2023. Summary: Legal Practice – s 43 of the Legal Practice Act 28 of 2014 – whether the court may hear a matter that has become moot – the issues for determination may engage the interests of other parties who are not before this Court – declaratory relief sought on appeal not set out in the notice of motion – appeal struck from the roll. ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Mthimunye AJ and Mathebula J, sitting as court of appeal): The matter is struck from the roll with no order as to costs. JUDGMENT Nicholls JA (Mabindla-Boqwana and Goosen JJA and Masipa and Tokota AJJA concurring): [1] This is an appeal by the South African Legal Practice Council (the LPC), a regulatory body with oversight function over all legal practitioners and candidate legal practitioners in the country. The LPC brought an urgent application in the Free State Division of the High Court, Bloemfontein (the high court), against Lebohang Michael Mokhele (Mr Mokhele), the respondent, for his suspension from the roll of legal practitioners pending the finalisation of a disciplinary inquiry. This was a result of the LPC’s investigation team having discovered prima facie evidence of trust shortages, pursuant to complaints from the public. [2] The high court (per Mthimunye AJ with Mathebula J concurring) dismissed the application and ordered the LPC to finalise its disciplinary hearing against Mr Mokhele. It held that the difficulty for the LPC was that the relief was sought on an interim basis for the purposes of conducting further investigations. Leave to appeal was granted to this Court. [3] The application was brought by the LPC in terms of s 43 of the Legal Practice Act 28 of 2014 (the Act) which provides: ‘Despite the provisions of this Chapter, if upon considering a complaint, a disciplinary body is satisfied that a legal practitioner has misappropriated trust monies or is guilty of other serious misconduct, it must inform the Council thereof with the view to the Council instituting urgent legal proceedings in the High Court to suspend the legal practitioner from practice and to obtain alternative interim relief.’ [4] The LPC acknowledged that it was obliged to investigate the complaints received against Mr Mokhele before launching the application. This is because such an application is conditional upon a ‘disciplinary body’ being satisfied that there has been misappropriation of trust funds. The Act defines a disciplinary body as ‘an investigating committee; a disciplinary committee; or an appeal tribunal . . .’. The investigations established serious misconduct1 and evidence of a trust shortage in at least two matters.2 On conclusion of the investigations, the LPC brought the current application on an urgent basis. [5] The high court held that ‘the irresistible conclusion was that there was such a trust shortfall.’3 Despite this, it found that it was only on finalisation of the disciplinary process that the LPC could approach the court for an order for 1 Mr Mokhele was subjected to a disciplinary committee in the case of Mr Mokoena. In the case of Mr Thulo he entered into a settlement agreement to pay back R42 000 to Mr Thulo on condition that he withdrew his complaint to the LPC. 2The complaints of Ms Radebe and Mr Yawa. 3 Paragraph 19 of the high court judgment. suspending Mr Mokhele from practice. The wording of s 43 may not necessarily support such a conclusion. [6] In the intervening period, the LPC has been granted an order by the high court, suspending Mr Mokhele from the roll of legal practitioners, pending an application for his name to be struck from the roll. The striking off application has been heard and judgment is awaited. [7] There is thus no longer a live controversy between the parties. This appeal will have no practical effect. Nevertheless, the LPC has requested that we proceed with the appeal, since there is no clarity as to the test for the suspension of a legal practitioner, in proceedings brought in terms of s 43, not as a penalty for misconduct, but rather as a precautionary measure pending the finalisation of disciplinary hearings. In addition, the different divisions of the high court are not applying s 43 of the Act uniformly. The LPC calls upon this Court to determine and settle the interpretation of s 43. In other words, the LPC wants this Court to grant a declaratory order. [8] Mootness is not an absolute bar to the justiciability of an issue, and a court may entertain a matter even where no live dispute exists, if the interests of justice so dictate. The Constitutional Court in various matters4 has set out the factors to be considered when deciding whether or not to hear the matter. These are: ‘(a) whether any order which it may make will have some practical effect either on the parties or on others; 4 Normandien Farms (Pty) Limited v South African Agency for Promotion of Petroleum Exportation and Exploitation (SOC) Limited and Others [2020] ZACC 5; 2020 (6) BCLR 748 (CC); 2020 (4) SA 409 (CC) para 50; Agribee Beef Fund (Pty) Ltd and Another v Eastern Cape Development Agency and Another [2023] ZACC 6 para 24; 2023 (5) BCLR 489 (CC)MEC for Education, KwaZulu-Natal v Pillay [2007] ZACC 21; 2008 (1) SA 474 (CC); 2008 (2) BCLR 99 (CC) para 32. (b) the nature and extent of the practical effect that any possible order might have; (c) the importance of the issue; (d) the complexity of the issue; (e) the fullness or otherwise of the arguments advanced; and (f) resolving the disputes between different courts.’ [9] There may well be conflicting judgments on the interpretation of s 43 of the Act. Undoubtedly, this is a matter of importance for the LPC, and the public at large. However, the issues for determination have the potential to engage the interests of other parties who are not before this Court. For example, parties in the legal profession, and even the Minister of Justice, may want to express views on s 43. They are entitled to be cited in any matter on the interpretation of s 43, particularly given that the notice of motion did not formulate the declaratory order sought by the LPC. Accordingly, this Court would be a court of first instance in respect of the declaratory relief which was not foreshadowed in the application. This is clearly undesirable. The correct procedure would be for the LPC to bring an application in the high court for the appropriate relief, with all interested parties cited. [10] Unfortunately, mention must be made of Mr Mokhele’s conduct and that of his legal representative. Mr Mokhele did not file any heads of argument prior to the hearing of the matter in terms of the Rules of this Court. At the commencement of the hearing before this Court, counsel for the LPC informed the Court that heads of argument, together with an application for condonation, were served on behalf of Mr Mokhele the day before. Mr Mokhele, however, did not make an appearance. About 30 minutes after the proceedings before this Court had started, a legal practitioner purporting to act for Mr Mokhele arrived at Court. He had no explanation for his lateness and the failure to file heads of argument, and clearly had no appreciation of the issues in the matter. He sought to make incomprehensible submissions and to make matters worse, proceeded to request that a costs order be granted against the LPC because the appeal was an abuse of the process of the court. Another serious allegation against Mr Mokhele was that the high court, in its judgment, referred to death threats that the complainants had received from Mr Mokhele. It also noted that he had been less than candid with the court. This conduct ill befits an officer of court and must be strongly deprecated. [11] In the circumstances, the following order is made: The matter is struck from the roll with no order as to costs. __________________________ C E HEATON NICHOLLS JUDGE OF APPEAL Appearances For the appellant: M S Mazibuko Instructed by: Amade Company Inc, Bloemfontein For the respondent: T O Dlabantu Instructed by: Dlabantu & Associates 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: 14 December 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal South African Legal Practice Council v Mokhele (1138/2022) [2023] ZASCA 177 (14 December 2023) The Supreme Court of Appeal (SCA) today struck from the roll the appellant’s appeal and made no order as to costs. The appeal was against the judgment of the Free State Division of the High Court, Bloemfontein (the high court), which made an order dismissing the urgent application made by the appellant to have the respondent suspended from legal practice, pending the finalisation of a disciplinary inquiry. The inquiry had established prima facie evidence of trust shortages in the respondent’s trust account following complaints from the public. The core issues before the SCA were whether the court may hear a matter that has become moot, and the correct interpretation of s 43 of the Legal Practice Act 28 of 2014. The respondent has since been suspended pending a striking application, and judgment is awaited in his striking off application. Despite the matter now being moot, the appellant sought clarity on the interpretation of s 43, claiming inconsistency in its application across the different divisions of the high court, and its importance to the appellant and the public. The SCA found that the appeal was moot and inappropriate for this Court to consider a declaratory relief which was not foreshadowed in the papers. The SCA held that the appellant should bring an application for appropriate relief in the high court, citing all interested parties, who were not before the SCA. As a result, the SCA struck the matter from the roll with no order as to costs. It is worthy to note that the SCA criticised the conduct of the respondent and his legal representative. Heads of argument were not filed, the legal representative arrived late at court and made incomprehensible submissions, and there were allegations of death threats by the respondent towards the complainants. The SCA placed emphasis on the need for adhering to proper legal procedure and condemned unprofessional conduct by legal practitioners and their representatives that are instructed in a matter. ~~~~ends~~~~

2484

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case No: 941/2012 In the matter between: ROYAL ANTHEM INVESTMENTS 129 (PTY) LTD APPELLANT and YUEN FAN LAU FIRST RESPONDENT SHUN CHENG LIANG SECOND RESPONDENT Neutral citation: Royal Anthem Investments v Yuen Fan Lau (941/2012) [2014] ZASCA 19 (26 March 2014) Coram: Ponnan, Mhlantla and Leach JJA and Mathopo and Mocumie AJJA Heard: 21 February 2014 Delivered: 26 March 2014 Summary: Sale of immovable property ─ deposit and transfer duty paid by purchaser to conveyancing attorney ─ sale subsequently cancelled ─ attorney obliged to repay deposit and transfer duty to purchaser and not to hold them on behalf of seller. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Kruger AJ sitting as court of first instance): (a) Paragraphs 1 and 2 of the order of the high court of 6 June 2012 are amended to read as follows: ‘1 The first defendant is ordered to pay the plaintiffs─ (a) the sum of R720 000; (b) the sum of whatever interest accrued on the said sum of R720 000 pursuant to its investment in an interest-bearing account calculated up to and including 9 December 2009; (c) interest on the sum of R720 000 calculated at the legal rate of 15,5% per annum from 10 December 2009 to date of payment. The first defendant is further ordered to pay the plaintiffs the sum of R264 723 together with interest thereon calculated at the legal rate of 15,5% per annum from 29 June 2011 to date of payment.’ (b) The appeal is otherwise dismissed with costs, such costs to include the costs of two counsel and to be taxed on the scale as between attorney and client. ___________________________________________________________________ JUDGMENT __________________________________________________________________ Leach JA (Ponnan and Mhlantla JJA, Mathopo and Mocumie AJJA concurring) [1] The present dispute arises out of a written agreement of sale concluded by the parties on 1 June 2009 under which Yuen Fan Lau and Shun Cheng Liang, the first and second respondents respectively, a married couple, agreed to pay the appellant, Royal Anthem Investments 129 (Pty) Ltd, a purchase price of R3,6 million for certain immovable property on a golf estate in Tshwane. After the sale failed the respondents sought to recover both a deposit of R720 000 and a further sum of R264 723 in respect of transfer duty that they had paid to the attorneys appointed by the appellant to attend to transfer of the property. When those amounts were not repaid, the respondents instituted action against both the appellant and the attorneys in the North Gauteng High Court. (The attorneys, who are not parties to this appeal were cited as first defendant and for convenience I shall refer to them as such.) [2] The first defendant played no part in the proceedings when the matter came to trial and the hearing continued as if the appellant was the sole defendant. It concluded on 6 June 2012 when the high court upheld the respondents’ claim and granted the following order: ‘1. Second defendant is ordered to pay the plaintiffs the amount of R720 000.00 plus interest thereon at the rate of 15,5% as from 1 August 2009 until date of payment; 2. Second defendant is ordered to pay to the plaintiffs the amount of R264 723.00 plus interest thereon at the rate of 15,5% from date of payment made by plaintiffs to first defendant until date of payment; 3. Second defendant must (excluding what is stated in paragraph 4 infra) pay plaintiff’s costs at a scale as between attorney and client, inclusive of the costs occasioned by the employment of two counsel; 4. Plaintiffs must pay the costs occasioned by the postponement on 7 November 2011 on a scale as between attorney and client.’ The appeal to this court against that order is with the leave of the court a quo. [3] As so often happens in matters concerning the sale of immovable property, the dispute between the parties arose out of the terms relating to the financial arrangements to be made for payment of the purchase price. Clause 2.2 of the agreement provided that the price of R3,6 million was to be paid as follows: ‘2.2.1 Cash: R540 000 . . . Payable by 15 June 09 after acceptance hereof which amount is to be deposited at the Conveyancing Attorneys. The amount will be invested in accordance with Section 78(2)(A) of the Attorney’s Act No 53 of 1979, as amended, pending the registration of transfer of the property in the name of the [respondents]. The deposit and any other amounts will be paid over to the [appellant] on date of registration of the property in the name of the [respondents]. Interest earned will be for the benefit of the [respondents]. 2.2.2 For the balance of R3 060 000 . . . an acceptable guarantee in favour of the [appellant] or his agent must be issued within 45 days after acceptance of this offer, free of bank commission payable at PRETORIA on registration of transfer of the property in the name of the [respondents].’ It should be recorded that under the agreement the appellant was entitled to appoint the ‘Conveyancing Attorneys’ referred to in clause 2.2.1 quoted above. This led to the first defendant being appointed for this purpose. [4] Importantly, the sale was made conditional upon the respondents being able to raise the necessary finance to pay the purchase price. In this regard clause 3 of the agreement provided as follows (I quote the clause verbatim; drafted by the estate agent through whom the sale was negotiated, it is a model of neither language nor precision): ‘3.1 This offer is subject to the raising of a loan not later than 31 July 2009 . . . for the amount of R3 060 000 . . . By a registered financial institution (at such rates and other conditions as instituted by the institution). The [respondents] undertakes to immediately apply for a loan. The [respondents] authorise the BANK or [the estate agent] to make an application on [their] behalf and undertakes further to sign, to complete and to make available any documentation as required by the BANK or [the estate agent]. 3.2 These conditions will be regarded as complied with when a financial institution grants the loan, regardless of the fact that the granting is subject to a suspensive condition. If the [respondents] should delay to co-operate by not giving the necessary information or by not applying for a loan, or if [they] should refuse to accept a loan that has been granted then the suspensive conditions in 3.1 will seemed to be fulfilled. 3.3 If this or any other suspensive condition is not fulfilled, this contract of purchase and sale will . . . and be of no effect and the deposit with interest will be refunded to the [respondents].’ [5] It can be accepted for present purposes that the word ‘seemed’ in clause 3.2 quoted above should be read as ‘deemed’ and that the ellipsis after the word ‘will’ in clause 3.3 should be read as ‘lapse’. It is not necessary for present purposes to deal with further anomalies such as the failure to identify the bank to which reference was made or the apparently meaningless provision that the condition would be regarded as fulfilled should a financial institution grant a loan subject to a suspensive condition. [6] In any event, although the respondents purchased the property jointly, it was the second respondent who assumed responsibility for applying for the necessary loan. Notwithstanding the provisions of clause 3.1 she asked neither the unidentified bank nor the estate agent to apply for a loan on her behalf. Instead, or so she alleged, when testifying, she initially approached Absa Bank (Absa) to provide the required funds. This she did as Absa had previously provided her with a home loan and, presumably, she thought that her good payment record in that instance would count in her favour. Whether she applied to Absa on 1 July 2009 (the very day the agreement was signed) as she alleged at one stage, or at a later date, was a matter of great dispute, but one which for the reasons that follow is unnecessary to decide. The second respondent also alleged that she had approached Standard Bank for a loan, but when she first did so is unclear. I must mention that the second respondent, who is Chinese, was not proficient in English which unfortunately compromised the clarity of her evidence. Be that as it may, in the light of my views set out below, it matters not precisely when and to which financial institution the second respondent made her initial approach. What can be accepted is the following: (a) The second respondent flew to Hong Kong the day after the sale agreement had been signed and returned to this country on 11 July 2009. (b) Four days later, on 15 June 2009, the second respondent paid the first appellant R720 000 in respect of the deposit due under clause 2.2.1 of the agreement. Although this was far more than had been agreed, she paid it at the insistence of the estate agent. The amount was invested by the first defendant in an interest bearing account with Nedbank. (c) On 20 July 2009, nine days after she had returned from China and five days after she had paid the deposit, the second respondent formally applied in writing to Absa for a loan. (d) On 29 July 2009, Absa refused this application: a subsequent request for it to reconsider its decision was similarly unsuccessful and was rejected by Absa on 31 July 2009. [7] Thus by the end of July 2009, the respondents had applied to a registered financial institution for a loan albeit without success. At first blush, the suspensive condition in clause 3.1 of the sale agreement had not been fulfilled and the sale accordingly lapsed. [8] But things are not always so simple. On 19 August 2009, after the first defendant had written to the respondents calling on them to provide proof of a loan, their attorney asked for a further 14 days to do so. He explained that a default judgment had been granted by mistake against a close corporation of which the second respondent was a member and that it was necessary to have this set aside before the respondents could obtain a loan. In light of this, the matter was allowed to drag on. Eventually the default judgment was set aside and thereafter, on 18 September 2009, Standard Bank agreed to grant the respondents the necessary finance. Despite this, it appears that the respondents were unhappy with Standard Bank’s interest charges and sought to arrange an alternative source of funding at a better rate. The appellant eventually lost patience and threatened to ‘cancel’ the agreement. Not only did the respondents then provide the required financial guarantee from Standard Bank but, when the first defendant called on them to pay transfer duty of R264 723 required for registration of transfer (for which they were liable under clause 10.1 of the agreement1) they promptly did so. The first defendant, in turn, proceeded to pay the necessary duty to the South African Revenue Services (SARS) to facilitate registration of transfer. [9] Consequently, at that stage, the sale appeared to be going ahead with the respondents having obtained the necessary loan and having paid both the deposit and the transfer duty. However, on 26 November 2009, the first defendant addressed a lengthy letter to the respondents making various demands. Not only were the respondents called on to pay a substantial sum of interest for having delayed transfer, but they were told in no uncertain terms that the property would not be transferred to them until such time as this interest was paid. 1 Clause 10.1 provided: ‘Transfer of the property will be affected by the Seller’s Conveyancer and all transfer costs including stamps must be paid immediately by the Purchaser if requested by the Conveyancing Attorney.’ [10] This led to the respondents seeking legal advice and, on 9 December 2009, their attorney wrote to the appellant on their behalf, refusing to pay the interest and demanding repayment of the deposit, alleging that the sale had lapsed on 31 July 2009 through non-fulfilment of the suspensive condition in clause 3. In response, the appellant denied that the agreement had lapsed and contended that the condition in clause 3 was deemed to have been fulfilled due to the respondents having failed to apply immediately for a loan. [11] Neither side gave way and, eventually, the stalemate was broken when the appellant purported to cancel the sale, alleging the respondents had breached their agreement. One way or the other, the sale fell through and, as mentioned at the outset, the property was sold to a third party. The deposit, however, remained invested by the first defendant in an interest-bearing account and both it and the interest that has accrued thereon have never been repaid. We were informed by counsel for the appellant that the appellant is responsible for this as the first defendant, in refusing to repay, has acted on its instructions. [12] For convenience, I intend at the outset to deal with the claim for repayment of the deposit. The debate both in the court a quo and in this court (certainly as set out in the heads of argument) focused mainly on whether the sale had lapsed on 31 July 2009 due to non-fulfilment of the condition or whether that condition should be deemed to have been fulfilled as the respondents had breached their undertaking in clause 3.1 of the agreement. [13] The essence of the appellant’s argument is that despite the respondents’ unsuccessful application to Absa that had been rejected by 31 July 2009, they had breached their undertaking to apply ‘immediately’ for a loan as undertaken in clause 3.1 of the sale. In that regard the appellant submitted that the respondents had been obliged to apply by no later than the day following the conclusion of the agreement. It was also argued that the respondents’ application to Absa was not bona fide as the respondents knew by the time it was made that it would not be granted due to the default judgment having been granted against the second respondent’s close corporation. [14] At first blush these contentions do not hold water. The undertaking to apply immediately for a loan was designed to procure certainty as to the respondents’ loan application by the end of the month. That end was achieved. Moreover, the fact that a judgment by default had been entered against the second respondent’s close corporation does not mean that her application for a loan can be disregarded. The appellant’s basis for suggesting that the clause should be deemed to be fulfilled therefore appears to be without substance. [15] The obvious problem the appellant faces at the outset is the general rule that the failure of the agreement obliges parties to restore each other to the position they were in immediately before the conclusion of the agreement. Thus, a purchaser who has paid a portion of a purchase price as a deposit is generally entitled to be repaid that sum. But of course the duty to restore is not immutable and may be excluded by agreement (eg in the case of a penalty stipulation) and the appellant, relying upon the conditions of clause 6 of the agreement of sale, argued that this was such a case. That clause provided as follows: ‘If the [respondents] is in default of this agreement and refuse to rectify the default within 14 (fourteen) days after acceptance of this written notice, the [appellant] will be entitled, without prejudice to any other rights that he may have such as liquidated damages, cancel the agreement and to keep any other amounts payable, as rouwkoop or by means of any pending decision by a court of the real damages suffered or demand specific performance of the conditions of the contract with or without a claim for damages.’ (My emphasis) [16] The immediate problem facing the appellant in relying on this is that the clause relates to amounts it was entitled ‘to keep’, a phrase that connotes an amount received and being held by the appellant. However the deposit was paid to the first defendant in his capacity as the conveyancing attorney, to be held in trust pending registration of transfer, and as transfer never took place it was never paid to the appellant. The deposit appears therefore not to be an amount envisaged by clause 6. [17] The appellant sought to meet this by arguing that the first defendant had received the deposit as the appellant’s agent, so that the payment to the first defendant was thus, effectively, a payment to it. This raises the somewhat vexed question as to whether a conveyancing attorney in circumstances such as the present, entrusted to hold a portion or the whole of the purchase price until registration of transfer, receives the sum as agent of the seller, or of the buyer, or of both, or as ‘trustee for both to await the event’2 – see in this regard the conflicting judgments in Minister of Agriculture and Land Affairs v De Klerk 2014 (1) SA 212 (SCA).3 This is an issue unnecessary to decide as even if the payment to the first defendant is to be regarded as a payment to the appellant, as to which I refrain from expressing an opinion, the deposit had to be repaid unless it can be construed as falling within the category of ‘any other amounts payable’ referred to in clause 6. [18] Essentially, the question becomes what are the ‘other amounts’ to which clause 6 referred? Of course that phrase connotes that certain amounts would not fall within the category of ‘other amounts’, but what amounts those would be was not clearly spelled out. However, clause 2.2.1 provided for the deposit ‘and any other amounts’ to be paid on registration of transfer, and this is a clear indication that the deposit was not envisaged as being one of the ‘other amounts’ envisaged by clause 6. This is all the more so in the light of the further provision in clause 3.3 that the deposit would be repaid in the event of the agreement lapsing should any suspensive condition not be fulfilled. [19] Appellant’s counsel sought to meet this by arguing that clause 6, properly construed, should be interpreted to mean that the appellant was entitled to keep ‘all amounts’ payable rather than ‘any other amounts’. Not only does this essentially amount to a request to rectify the agreement without rectification ever having been previously raised as an issue, but there is no scope to interpret the clause in this way. Not only would it be inconsistent with both clauses 2.2.1 and 3.1 but on its clear meaning clause 6 was intended to apply only to certain, and not all amounts, that had been paid. 2 Per Botha JA in Baker v Probert 1985 (3) SA 429 (A) at 443B-C adopting the phraseology of Denning MR in Burt v Claude Cousins & Co Ltd [1971] 2 All ER 611 (CA) at 615d-e. 3 What is apparent not only from De Klerk but judgments such as Baker v Probert is that each case must be considered in the light of its own particular facts and the particular contractual terms under which the conveyancer received the payment. [20] Counsel for the appellant conceded, quite correctly, that unless the deposit was brought within the aegis of clause 6, the appellant had no right to either retain it or to receive it from the first defendant. For the reasons set out above, the appellant has failed to establish that the deposit was indeed an amount envisaged by that clause and the respondents were thus entitled to it being repaid. The appeal relating to repayment of the deposit cannot succeed. [21] I turn to the claim for repayment of the amount of R264 723 paid as transfer duty. As registration of transfer did not proceed, it became necessary to reclaim the duty paid in anticipation of transfer from SARS. This was done by the first defendant requesting repayment by lodging the prescribed TD3 form with SARS. This form contained a declaration, signed by both the appellant and the second respondent on 31 July 2009, that the agreement had lapsed due to the non-fulfilment of a suspensive condition to obtain a loan (a significantly different stance from that adopted by the appellant thereafter). In any event, it appears from the TD3 form that only R233 000 of the amount of R264 723 the respondents had paid to the first defendant had been paid to SARS as transfer duty. How this came about I do not know but it matters not as it is common cause that the respondents had paid the larger sum to the first defendant. Be that as it may, SARS was asked to repay the lesser sum and did so by way of a cheque received by the first defendant on 21 June 2011. Thereafter, on 27 June 2011, the first defendant informed the respondents’ attorneys that it had received the payment of R233 000 and stated that, as the matter was the subject of a legal dispute, it was their intention to lodge the sum in an interest bearing account until such time as a court order indicated to whom it should be repaid. The immediate response from the respondents’ attorney on 28 June 2011 confirmed the existence of a dispute in regard to the deposit but went on: ‘However the amount paid by our clients to the Receiver of Revenue does not form part of the dispute, as you are well aware. You are also well aware that this amount was paid by our client in regards to an agreement which never came to being due to a suspensive condition not being fulfilled. There are no grounds on which [the appellant] can lay claim to this money.’ [22] This protest notwithstanding, the first defendant appears to have invested the amount of R233 000 with Nedbank on 28 June 2011 and presumably it is still there. Apart from the appellant’s instruction not to pay it over, I cannot understand why the first defendant could ever have thought it should not be immediately repaid to the respondents. They had received R264 723 from the respondents in order to pay SARS and not to pay the appellant. That sum was never payable to, nor paid over to, nor held by or on behalf of, the appellant; it could thus never have been an amount the appellant was entitled ‘to keep’ under clause 6. This is all the more so as, at the time of cancellation, the duty had already been paid over to SARS and was not available to the appellant to keep. Consequently SARS repaid the sum of R233 000 after the sale had fallen through and at a time when neither the first defendant nor the appellant had any entitlement to retain it, as was correctly pointed out by respondents’ attorney in his letter of 28 June 2011 quoted above. In the circumstances, the respondents were entitled to be repaid the transfer duty of R264 723. [23] Accordingly, the appeal must fail in respect of both the deposit and the transfer duty. As I have mentioned, the first defendant’s failure to refund both amounts was pursuant to the appellant’s instructions, and it was accepted by the appellant that, in consequence, it should bear the costs both in the court below and in this court should its appeal fail. That being said, it is necessary to mention a number of ancillary issues. [24] First, the order of the court a quo directed the appellant to pay the disputed amounts to the respondents. But the parties are ad idem that the funds lie with the first defendant and the latter, rather than the appellant, is the party who should be ordered to make payment of the capital sums and interest. [25] Then there is the question of what interest is payable on the deposit of R720 000. The high court ordered interest to be paid at the prescribed legal rate of 15,5% per annum ‘as from 1 August 2009 until date of payment’. However, as appellant’s counsel pointed out, the deposit had been invested in an interest-bearing account for the benefit of the respondents under clause 2.2.1 of the sale, but at a substantially lower rate of interest than the prescribed rate. Thus on cancellation and demand on 9 December 2009, the respondents were entitled to interest on the deposit at no more than the lower rate of the investment up to then and thereafter at the higher prescribed rate. The order of interest at the higher rate from 1 August 2009 must accordingly be corrected. I should mention that the interest that had accrued to 9 December could have been claimed separately and the respondents therefore appear to be liable for interest on that sum as well, calculated at the prescribed rate to date of payment. But that interest was never claimed and this court, in the circumstances, can neither determine the issue nor make any order in that regard. Hopefully the first defendant will do what is required in regard thereto without further litigation. [26] Finally, in regard to the interest on the transfer duty of R264 723, the court a quo ordered it to be paid at the prescribed legal rate ‘from date of payment made by plaintiffs to first defendant until date of payment’. However, the respondents were not entitled to interest from when they had paid the transfer duty to the first defendant as they had agreed that it be paid to SARS to facilitate transfer, and R233 000 was used for that purpose. As mentioned, this sum was repaid by SARS to the first defendant on 21 June 2011 and, at best for the respondents, interest would have begun to run only on 28 June 2011 when their attorney queried why the respondents was not being refunded (the letter essentially being a demand). The order of the court a quo therefore must be varied to limit the interest payable on the amount of R264 723 to be calculated from 29 June 2011 to date of payment. [27] These alterations affect only the first two paragraphs of the order of the court a quo. Thus although the appeal should otherwise be dismissed, those two paragraphs ought to be amended. I should hasten to add it was not suggested that this would entitle the appellant to a costs order in its favour on appeal. In regard to those costs, the parties were correctly agreed not only that the costs of two counsel were justified but that, as agreed in the agreement of sale, costs should be on the scale as between attorney and client. [28] In the result the following order is made: (a) Paragraphs 1 and 2 of the order of the high court of 6 June 2012 are amended to read as follows: ‘1 The first defendant is ordered to pay the plaintiffs─ (a) the sum of R720 000; (b) the sum of whatever interest accrued on the said sum of R720 000 pursuant to its investment in an interest-bearing account calculated up to and including 9 December 2009; (c) interest on the sum of R720 000 calculated at the legal rate of 15,5% per annum from 10 December 2009 to date of payment. The first defendant is further ordered to pay the plaintiffs the sum of R264 723 together with interest thereon calculated at the legal rate of 15,5% per annum from 29 June 2011 to date of payment.’ (b) The appeal is otherwise dismissed with costs, such costs to include the costs of two counsel and to be taxed on the scale as between attorney and client. ______________________ L E Leach Judge of Appeal APPEARANCES: For Appellant: J L van der Merwe SC (with him A M Heystek) Instructed by: Alex May Inc, Pretoria Lovius Block, Bloemfontein For Respondent: T P Krüger (with him L Badenhorst) Instructed by: Grosskopf Attorneys, Pretoria 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 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. ROYAL ANTHEM INVESTMENTS 129 (PTY) LTD V YUEN FAN LAU & ANOTHER The parties in this appeal had concluded a conditional agreement of sale relating to an immovable property in a golf estate in Tshwane that the respondents wished to purchase for R3,6 million. The sale eventually fell through but only after the respondents had paid a deposit of R720 000 and transfer duty of R264 723 to the conveyancing attorney appointed by the appellant to attend to transfer of the property. The respondents demanded that the deposit and transfer duty be repaid to them. Acting on instructions from the appellant, the conveyancing attorney refused to do so. The respondents successfully sued the appellant in the North Gauteng High Court for repayments of that amounts but the appellant appealed to the Supreme Court of Appeal, arguing that he was entitled to keep the amounts under the terms of the conditional agreement of sale. The Supreme Court of Appeal dismissed this appeal, holding that the amounts were not sums the appellant had been entitled to retain and that they ought to have been repaid when the sale fell through.

3143

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Rapporteerbaar Saaknr: 316/06 In die saak tussen: WILLEM JACOBUS DU PLESSIS Appellant en DIE STAAT Respondent Coram: HEHER, MLAMBO ARR en SNYDERS Wnd AR Verhoor: 22 MAART 2007 Gelewer: 29 MAART 2007 Opsomming: Onsedelike aanranding – vonnis ingevolge art 276(1)(i) bekragtig. Neutral Citation: Du Plessis v Die Staat [2007] 42 (RSA) SNYDERS Wnd AR/ SNYDERS Wnd AR: [1] Die appellant is in die Distrikshof Wonderboom, gehou te Pretoria- Noord, skuldig bevind aan ‘n klag van bedrog, drie klagtes van diefstal en sewe klagtes van onsedelike aanranding. Nadat hy gevonnis is, het hy, met verlof van die verhoorhof, geappelleer na die Pretoriase Hooggeregshof teen sy skuldigbevinding en vonnisse op al die klagtes behalwe die klag van bedrog. Sy appèl is van die hand gewys. Nou is die appellant, met verlof van die Pretoriase Hooggeregshof, op appèl in hierdie hof teen sy skuldigbevinding op een van die klagtes van onsedelike aanranding, klagte 35, en die vonnisse op die klag van bedrog, klagte 5, drie klagtes van diefstal, klagtes 8, 9 en 10 en drie klagtes van onsedelike aanranding, klagtes 25, 29 en 36. [2] Op elkeen van klagtes 5, 8, 9 en 10 is die appellant gevonnis tot een jaar gevangenisstraf ingevolge art 276(1)(i)1 van die Strafproseswet 51 van 1977 wat samelopend uitgedien moet word. Op elkeen van klagtes 25, 29 en 36 is die appellant gevonnis tot twee jaar gevangenisstraf ingevolge art 276(1)(i) van die Wet wat ook gelas is om samelopend uitgedien te word. [3] Klagte 35 spruit voort uit ‘n vlotvaart op die Hartebeespoortdam deur die personeel van ‘n laerskool waarvan die klaagster ‘n lid was en die appellant die skoolhoof. Tydens die plesierige uitstappie het die weer onverwags onguur geraak en almal het in ‘n bondel saamgedrom op die 1 Artikel 276(1)(i) stel ‘n vonnis van direkte gevangenisstraf daar, aangesien ‘n persoon wat ingevolge daardie artikel gevonnis word, mag, volgens die diskresie van die Kommissaris van Korrektiewe Dienste, onder korrektiewe toesig geplaas word. Artikel 73(7) van die Wet op Korrektiewe Dienste 111 van 1998 bepaal ‘n verpligte periode van gevangesetting van minstens een sesde van die vonnis ingevolge a 276(1)(i) voordat plasing onder korrektiewe toesig mag geskied, tensy die hof anders gelas het. vlot teen die reën, koue en wind. Die drank het vryelik gevloei. Volgens die klaagster het die appellant tydens die samedromming aan verskeie vrouens probeer vat en het haar verskeie kere van agteraf vasgedruk. Die appellant se gedrag het die klaagster nie aangestaan nie, maar sy was ongemaklik om teen hom op te tree, daarom het sy ‘n mede personeellid en vriendin, Theresa van der Merwe, gevra om haar weg te roep uit die groep uit wanneer sy sien dat die appellant haar vasdruk. By geleentheid wat hy haar so vasgedruk het, het hy aan die knoop van haar langbroek gevroetel. Sy het omgekyk, hom weggestamp en gesê, ‘Nee man, los my uit. Los, wat maak jy.’ Van der Merwe het toe die klaagster weggeroep en toe sy wegtree van die groep af, het sy opgemerk dat haar langbroek se knoop los was. [4] Van der Merwe het bevestig dat die appellant die klaagster herhaaldelik vasgedruk het, dat sy, volgens hulle afspraak, die klaagster weggeroep het en gesien het, toe die klaagster wegtree van die groep af, dat die knoop van haar langbroek los was. [5] Die appellant, tydens sy getuienis, het ontken dat hy die klaagster se broek se knoop losgemaak het. Die klaagster is egter nie gekruisvra oor hierdie aspek van haar getuienis nie. [6] Namens die appellant word in hierdie hof aangevoer dat: (a) die respondent nie die appellant se opset om onsedelik aan te rand bo redelike twyfel bewys het nie; (b) dat daar geen direkte getuienis teen die appellant is dat hy die klaagster se langbroek se knoop losgemaak het nie en dat die feite nie die afleiding regverdig dat hy dit gedoen het nie; en (c) dat die landdros hom wanvoorgelig het oor die appellant se verweer. [7] Die bevinding van die landdros dat die betrokke twee staatsgetuies geloofwaardige getuies was en die appellant nie, word nie in hierdie Hof aangeval nie. Daar is ook niks in die rekord wat hierdie Hof sou noop om met daardie bevinding in te meng nie.2 [8] Benewens die feite wat blyk uit die getuienis van die klaagster en Van der Merwe het die Staat se saak die appellant ontbloot as iemand wat voortdurend seksueel uitlokkend teenoor vrouens opgetree het onder die waan van speletjies en grappies. [9] Daar is geen direkte getuienis dat die appellant die klaagster se broeksknoop losgemaak het nie. Die knoop was los, die klaagster en Van der Merwe het dit vir die eerste keer opgemerk nadat die appellant die klaagster vasgedruk het en aan die knoop gevroetel het, volgens sy gewone uitlokkende gedrag. Hierdie getuienis regverdig die afleiding3 dat die appellant die klaagster aangerand het met ‘n onsedelike opset en sluit die afleiding uit dat die broeksknoop toevallig los gegaan het. [10] Die appellant se verweer was ‘n blote ontkenning. Daar was geen wanvoorligting ten opsigte van die appellant se verweer deur die landdros nie. Inteendeel hy het die appellant tereg op hierdie klag skuldig bevind. 2 Sien R v Dhlumayo 1948 (2) SA 677 (A) vir die welbekende beperkings op ‘n hof se bevoegheid om op appèl in te meng met geloofwaardigheidsbevindings van die verhoorhof. 3 In S v Sesetse 1981 (3) SA 353 (A) te 369H-370A word die geykte beginsels vir die maak van afleidings uit omstandigheidsgetuienis soos vervat in R v Blom 1939 AD 188 herhaal:’In reasoning by inference there are two cardinal rules of logic which cannot be ignored: (1) The inference sought to be drawn must be consistent with all the proved facts. If it is not, the inference cannot be drawn. (2) The proved facts should be such that they exclude every reasonable inference from them save the one sought to be drawn. If they do not exclude other reasonable inferences, then there must be a doubt whether the inference sought to be drawn is correct.’ [11] Na ‘n uitgerekte verhoor het die verhoorhof namens die Staat die getuienis en verslae van ‘n assesseringsbeampte van die Departement van Korrektiewe Dienste, Fourie, ‘n proefbeampte van die Departement van Maatskaplike Dienste, Van Schalkwyk, en namens die appellant ‘n verslag deur ‘n kliniese sielkundige, Dr Uken, ontvang. [12] Die appellant was die skoolhoof van ‘n laerskool ten tyde van die pleging van die misdrywe. Hy was ‘n gesiene en prominente leiersfiguur. Ten tyde van sy vonnis was hy 53 jaar oud. Hy is getroud, het twee kinders, onderskeidelik 22 en 19 jaar oud. Sy vrou is ook ‘n onderwyseres. Hy is ‘n kranige sportman. Gedurende die tydperk van die verhoor, vermoedellik aangevuur deur spanning, is die appellant se hele liggaam verlam en is hy gediagnoseer met Guillain-Barre Sindroom. Sedertdien is hy op ‘n stadige pad van herstel, hy het reeds die meeste van sy spierfunksies herwin, hoewel hy nog pyn verduur. As gevolg van sy skuldigbevinding het hy sy pos verloor, en het sy aansien in die gemeenskap verdwyn. Hy het sy gesin uitermatige hartseer, verleentheid en finansiële verknorsing besorg. [13] Al die misdrywe waaraan die appellant skuldig bevind is, is gepleeg tydens die periode 1998 tot 2001. Die appellant is skuldig bevind aan bedrog4 omdat hy valslik en bedrieglik voorgegee het dat briefhoofde en besigheidskaartjies vir die skool gedruk is, met die gevolg dat die skool daarvoor betaal het, terwyl die drukwerk inderwaarheid vir sy vrou en haar besigheid gedoen is. Die appellant is aan diefstal skuldig bevind omdat hy 500 bakstene wat die skool se eiendom was, gebruik het om vir homself ‘n lapa op sy eie eiendom te laat bou,5 hy het 10 palmbome 4 Klagte 5. 5 Klagte 8. wat aan die skool geskenk is rondom sy eie lapa op sy eie eiendom geplant6 en hy het ‘n radio-kassetspeler van die skool vir sy seun gegee.7 [14] Selfs met inagneming van die feit dat die radio-kassetspeler teruggegee is aan die skool is hierdie ernstige misdrywe. Dit is gepleeg uit ‘n vertrouensposisie, ten opsigte van eiendom wat onder die appellant se direkte beheer was en aangewend moes word tot voordeel van die skoolgemeenskap. [15] Die klagtes van onsedelike aanranding is gedurende dieselfde periode gepleeg en telkens in omstandighede waar die personeel op spanbou-, leierskaps- of sportnaweke moes gaan sonder hulle lewensmaats. Die appellant het so ver gegaan om, terwyl al die ander personeel op ‘n wildrit was, by een van die klaagsters wat wou rus, op haar bed te gaan lê, sy hand tussen haar bo-bene in te druk, haar te omarm en vas te druk en bo-op haar te probeer klim8 Toe dieselfde klaagster by ‘n ander geleentheid op die strand op haar maag in die son gelê het, het hy ‘n handdoek oor haar gegooi, sy hand onder haar ingedruk, aan haar bors gevat en woorde gebruik wat aan haar gekommunikeer het dat hy seksueel met haar wou verkeer.9 Hy het ‘n ander klaagster wat beskonke en naar was, se styfpassende bo-stuk opgetrek en aan haar bors gevat.10 [16] Die appellant was in ‘n gesagsposisie teenoor die klaagsters. Daardie posisie het hy uitgebyt om sy eie afwykende behoeftes te 6 Klagte 9. 7 Klagte 10. 8 Klagte 25. 9 Klagte 29. 10 Klagte 36. bevredig, tot hulle voortslepende nadeel en psigiese skade. Wanneer hulle reaksie teenoor hom nie na sy wense was nie, het hy hulle in die werksplek geviktimiseer. Hy het hulle soveel trauma besorg dat hulle terapie moes ondergaan. [17] Die verdere verswarende faktore, relevant tot al die misdrywe, is nie net veelvuldig nie, maar ook aangrypend. Die aansien van die betrokke laerskool en die atmosfeer waarin leerders hulle bevind het, is belemmer as gevolg van die appellant se misdadige gedrag. In plaas daarvan dat hy dissipline tussen sy personeel gehandhaaf het en ‘n gesonde omgewing geskep het tot voordeel van die jong leerders van sy skool, het hy juis onmin, onvrede en ongelukkigheid gesaai en aangevuur. Aan die een kant het hy homself as ‘n rolmodel voorgedoen en aan die ander kant het hy verwerplik opgetree. [18] Die appellant was uiters manipulerend. Nie alleen is dit die kern van die staatsgetuies se getuienis nie, maar beide Fourie en Van Schalkwyk het die appellant tydens hul onderhoude met hom manipulerend ervaar. Hy het selfs die persoonlikheidstoets wat afgeneem is deur Uken probeer manipuleer. [19] Sy arrogansie dwarsdeur die verhoor was verbysterend. Hy het deurgaans andere probeer swart smeer. Hy het homself as die slagoffer van ‘n wrede komplot voorgehou en die klaers, klaagsters en staatsgetuies as gewetenslose konkelaars. [20] Selfs tydens vonnisverrigtinge het die appellant nog geen insig getoon in sy misdadige gedrag nie en gevolglik was sy prognose op rehabilitasie en gedragsaanpassing uiters swak. Die drie deskundiges was eenstemmig hieroor, maar volgens Uken was die appellant weens die sielkundige krisis waarin hy hom bevind het as gevolg van sy misdade en gevolglike verhoor, nie in staat om insig of berou te toon nie. Die argument namens die appellant is dat die landdros hom inderwaarheid wanvoorgelig het deur hierdie getuienis van Uken te verwerp. [21] Indien ‘n wanvoorligting voorgekom het, staan dit hierdie Hof vry om van nuuts af op die beskikbare getuienis ‘n gepaste vonnis te oorweeg.11 [22] Die landdros het nie hierdie getuienis verwerp nie, inteendeel, hy het dit in sy uitspraak aangehaal, maar het dit nie as ‘n versagtende faktor beskou nie. Uken se uiteensetting van die rede vir die appellant se gebrek aan berou bevestig dat die appellant se psige, op die stadium van vonnis, sodanig was dat hy nie insig in sy eie gedrag kon toon nie. In die afwesigheid van ‘n realistiese moontlikheid van rehabilitasie behoort straf, afskrikking en vergelding as oogmerke van vonnis swaarder te weeg. Die landdros het dus heeltemal tereg die getuienis van Uken in aanmerking geneem as ‘n verswarende faktor. Daar was dus geen wanvoorligting nie. [23] Gevolglik is hierdie Hof slegs by magte om met die vonnis in te meng indien dit skokkend onvanpas is.12 Namens die appellant is geargumenteer dat dit inderdaad skokkend onvanpas is dat die appellant hoegenaamd tot direkte gevangenisstraf gevonnis is. Die 11 S v Zinn 1969 (2) SA 537 (A) te 540G. 12 S v Pieters 1987 (3) SA 717 (A) te 734D-F; Director of Public Prosecutions, KwaZulu-Natal v P 2006 (1) SASV 243 (HHA) te 254c-f. appellant stel korrektiewe toesig ingevolge art 276(1)(h) van die Wet as die enigste gepaste vonnis voor. [24] Die erns van die misdade, die verswarende faktore en die oogmerke van die oplegging van vonnis verg dat ‘n vonnis van direkte gevangenisstraf opgelê word. Die opmerkings van Cameron AR in S v Scheepers13 is toepaslik in die huidige geval: ‘The particular advantage of s 276(1)(i) should always be in the foreground when the sentencer considers that a custodial sentence is essential, but the nature of the offence suggests that an extended period of incarceration is inappropriate. In such cases, s 276(1)(i) achieves the object of a sentence unavoidably entailing imprisonment, but mitigates it substantially by creating the prospect of early release on appropriate conditions under a correctional supervision programme.’ [25] Die verhoorhof het in die uitoefening van ‘n diskresie behoorlike en gebalanseerde oorweging geskenk aan al die relevante feite en ‘n uiters geskikte vonnis opgelê. [26] Dit was gemeensaak tydens vonnisverrigitnge dat die appellant sielkundige hulp nodig het. Volgens Van Schalkwyk is sielkundige behandeling in die gevangenis beskikbaar maar kan dit ook deur ‘n privaat sielkundige daar onderneem word. [27] Die opgelgde vonnis spreek die spesifieke behoefte aan van toesig oor die appellant se behandeling en die geleentheid om die tydperk van direkte gevangenisstraf, na gelang van sy vordering, aan te pas. [28] Op sterkte van die geykte reg is daar geen ruimte vir hierdie hof om in te meng met enige van die vonnisse nie. 13 2006 (1) SASV 72 (HHA) para 10. [29] Die appèl ten opsigte van skuldigbevinding en vonnis word van die hand gewys. ____________________________ S SNYDERS WAARNEMENDE APPèLREGTER STEM SAAM: HEHER AR MLAMBO AR

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA OPSOMMING - IN DIE HOOGSTE HOF VAN APPèL VAN SUID-AFRIKA In die saak tussen: WILLEM JACOBUS DU PLESSIS APPELLANT en DIE STAAT RESPONDENT Van: Die Griffier, Hoogste Hof van Appèl Datum: 29 Maart 2007 Status: Onmiddellik Die HHA het vandag die appèl van ‘n skoolhoof wat skuldig bevind is aan bedrog, diefstal en onsedelike aanranding van die hand gewys, met die effek dat hy ‘n periode van direkte gevangenisstraf sal moet uitdien. Die appellant was die skoolhoof van ‘n laerskool en is in ‘n landdroshof daaraan skuldig bevind dat hy, oor ‘n tydperk van jare, eiendom van die skool gesteel het, bedrog gepleeg het en van sy vroulike personeellede onsedelik aangerand het. Na ‘n onsuksesvolle appèl na die Pretoriase Hooggeregshof het die appelant na die HHA geappelleer teen sy skuldigbevinding op een van die klagtes van onsedelike aanranding en sy vonnis op die klagtes van bedrog, drie van diefstal en drie van onsedelike aanranding. Die vonnis wat deur die HHA gehandhaaf is, is, kumulatief ten opsigte van die bedrog en drie klagtes van diefstal, een jaar gevangenisstraf ingevolge art 276(1)(i) van die Strafproseswet en, kumulatief ten opsigte van drie klagtes van onsedelike aanranding, twee jaar gevangenisstraf ingevolge dieselfde artikel. Die effek daarvan is dat die appellant verplig is om een sesde van die vonnisse hom opgelê in die gevangenis uit te dien waarna hy, volgens die diskresie van die Kommissaris van Korrektiewe Dienste, onder korrektiewe toesig geplaas kan word. Die verswarende omstandighede rondom die pleging van die misdrywe het ‘n periode van direkte gevangenisstraf onafwendbaar gemaak: die appellant was in ‘n gesagsposisie; hy het sy gesagsposisie misbruik; hy het uiters manipulerend teenoor die klaagsters opgetree en hulle viktimiseer as hulle nie na sy sin opgetree het nie; hy het uiters arrogant opgetree; hy het die atmosfeer waarin jong leerders opgevoed moes word vertroebel; hy het die klaagsters en staatsgetuies gedurende die verhoor as deel van sy verweer swartgesmeer; hy het volgehou dat die klagtes teen hom spruit uit ‘n wrede komplot teen hom deur al die klaagsters en staatsgetuies; hy het geen berou en insig in sy gedrag getoon nie, gevolglik was sy prognose op rehabilitsie swak. --einde--

3905

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 887/2021 In the matter between: CORAL LAGOON INVESTMENTS 194 (PTY) LTD FIRST APPELLANT ASH BROOK INVESTMENTS 15 (PTY) LTD SECOND APPELLANT and CAPITEC BANK HOLDINGS LIMITED RESPONDENT Neutral citation: Coral Lagoon Investments 194 (Pty) Ltd and Another v Capitec Bank Holdings Limited (Case no.887/2021) [2022] ZASCA 144 (24 October 2022) Coram: ZONDI, GORVEN and HUGHES JJA and WINDELL and CHETTY AJJA Heard: 5 September 2022 Delivered: 24 October 2022 Summary: Contract – agreement not to sue – pactum de non petendo anticipando – enforcement thereof not against public policy. ________________________________________________________________________ ORDER ________________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Wille J, sitting as court of first instance). The appeal is dismissed with costs on an attorney and client scale, including the costs of two counsel. ________________________________________________________________ JUDGMENT ________________________________________________________________________ WINDELL AJA (ZONDI, GORVEN and HUGHES JJA, and CHETTY AJA concurring) [1] This is an appeal against an order of the Western Cape Division of the High Court, Cape Town (the high court). The order directed the appellants, Coral Lagoon Investments 194 (Pty) Ltd (Coral) and its holding company, Ash Brook Investments 15 (Pty) Ltd (Ash Brook) to withdraw an action for damages against the respondent, Capitec Bank Holdings Limited (Capitec) (the 2020 action). In doing so the high court, per Wille J, enforced a clause not to sue contained in a written ‘consent agreement’ concluded between Capitec and the appellants.1 Such a clause is known as a pactum de non petendo (the pactum). The high court found that the appellants had breached the pactum by instituting the 2020 action against Capitec. It further found that Capitec was entitled to specific performance of the consent agreement and that the use of motion proceedings was permissible. It also dismissed the appellants’ counter application contending that the pactum is contrary to public policy. The appeal is with leave of the high court. 1 There were also other parties to the consent agreement namely K2017134938 (South Africa) (Pty) Ltd (Bidco) and CB Employee Holdings (Pty) Ltd. [2] Two main issues arise for determination in this appeal. Firstly, the interpretation of the consent agreement and, secondly, whether the pactum, which was a permanent one, was contrary to public policy. Background [3] Coral is wholly owned by Ash Brook, a broad based black economic empowerment consortium comprising 13 black shareholders in different formations. In 2006 Capitec, Coral, Ash Brook, the shareholders of Ash Brook (all of which are black persons and black-owned entities) and the Industrial Development Corporation (IDC) concluded a linked set of written agreements. Part of the set of agreements was a subscription of shares and shareholders agreement (the subscription agreement), concluded between Capitec and the appellants on 12 December 2006. The purpose of the subscription agreement was to facilitate and promote the achievement of the transformational objectives set out in the Broad-Based Black Economic Empowerment Act 53 of 2003 (B-BBEE Act), the Financial Sector Charter2 (FSC) and the Codes of Good Practice on Black Economic Empowerment3 (the transformation practises). As a result, Capitec allotted and issued, and Coral subscribed for ten million ordinary shares in Capitec at R30 per share for a total subscription price of R300 million (the CPI shares). The CPI shares were equivalent to a 12,21 per cent stake in Capitec. The black shareholders leveraged finance of R285 million to fund the acquisition using a third party, the IDC. [4] An important element of the subscription agreement are three sets of selling restrictions, aimed at keeping the CPI shares in black shareholders’ hands. One of these selling restrictions is clause 8.3 of the subscription agreement. This clause provides that, should Coral in any manner endeavour to dispose of any of the CPI 2 The South African Financial Sector Charter is a transformation charter in terms of the Broad- Based Black Economic Empowerment (B-BBEE) Act 53 of 2003. The Charter came into effect in January 2004. 3 Codes of Good Practice on Black Economic Empowerment published in General Notice 112 in Government Gazette 29617 of 9 February 2007, as amended from time to time. shares to any entity or person who, in Capitec’s opinion, does not comply with the B-BBEE Act and transformation practises, Capitec will determine the number of CPI shares sold and may require Coral to acquire an equal number of CPI shares and cause them to be registered in Coral’s name. [5] It was always Capitec’s and the appellants’ understanding of clause 8.3 that Capitec’s consent was required for Coral to trade in the CPI shares. However, in court proceedings instituted by the appellants against Capitec in September 2019 (which I deal with later in the judgment), Capitec stated that it had realized that clause 8.3 is concerned with the consequences for Coral of selling any of its CPI shares to an entity or person who, in Capitec’s opinion, does not comply with the B-BBEE Act and transformation practices. The effect of this concession was that Coral did not need Capitec’s consent to sell its CPI shares. Capitec’s understanding of clause 8.3 was recently affirmed by this Court in Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others.4 [6] In any event, after holding the shares for 5 years, Coral sold 5 284 735 CPI shares to the Public Investment Corporation in 2012 in order to repay its debt to the IDC. Coral obtained Capitec’s consent prior to the transaction. In addition, Capitec required as a condition of its consent that the CPI shares be subject to a further locked-in period of 10 years. That meant that the shareholders in Ash Brook would not be entitled to dispose of, or trade, their CPI shares in the open market during the locked-in period. The CPI shares were sold at a 15 per cent discount to the market. [7] From about 2014 there was ongoing dissatisfaction about the selling restrictions by Ash Brook and its shareholders. In 2016 the appellants instituted action against Capitec and its subsidiary, Capitec Bank Limited, in which they 4 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA). challenged the validity of certain provisions of the subscription agreement (the 2016 action). They specifically sought an order that they were entitled to dispose of their shares without the selling restrictions. In 2018, the 2016 action was removed from the pre-trial roll for purpose of settlement negotiations. It has not been re-enrolled and is still pending. [8] In 2017, Coral sought to sell 3 360 830 of its CPI shares to a subsidiary of a 100 per cent black-owned company called Petratouch (Pty) Ltd (the 2017 Petratouch transaction). It involved numerous parties and the transaction was embodied in numerous agreements. By then, Capitec’s relationship with the appellants had deteriorated. At the time the appellants had remained invested in Capitec for over 10 years and had already fully repaid the funding for the CPI shares provided by the IDC. The CPI shares were thus fully owned by the appellants without any residual financial obligations to third parties. [9] Consistent with the practice adopted by the parties in the previous transactions, Coral sought Capitec’s consent for the 2017 Petratouch Transaction. Capitec agreed, subject to certain conditions, inter alia, that Petratouch could only sell the CPI shares to people who are black persons approved by Capitec in writing, and further that the purchaser had to enter into a written agreement with Capitec on substantially the same terms. Coral accepted the conditions and sold the CPI shares to Petratouch. One of the agreements constituting the 2017 Petratouch Transaction was the consent agreement entered into between Capitec and the appellants, which contains the pactum. [10] After the 2017 Petratouch Transaction, Coral held 1 354 435 CPI shares. In 2019 Coral sought to dispose of 810 230 CPI shares to the Transnet Second Defined Benefit Fund. When Capitec was called upon to consent to the sale, it refused. The appellants launched an urgent application seeking to declare the refusal of consent to be in breach of Capitec’s duty of good faith to the appellants. It is in this application that Capitec, for the first time, indicated that clause 8.3 of the subscription agreement did not require Capitec’s consent to sell the CPI shares and did not entitle Capitec to impose further restrictions on a sale of CPI shares by Coral. [11] On 19 June 2020 the appellants instituted the 2020 action against Capitec. They claimed, in broad terms, that, but for Capitec’s conduct, Coral would not have concluded the 2017 Petratouch Transaction at a discount of 52 per cent to the prevailing 30-day weighted average, amounting to a loss of R 1,225 billion. This led to the application before the high court that is the subject of this appeal. Capitec’s main claim in the high court was that the 2020 action should be withdrawn because the appellants agreed in clause 7.1.6.2 of the consent agreement not to institute legal proceedings against Capitec in which they sought to use or rely upon the 2017 Petratouch Transaction or any part of it. 5 [12] Before the hearing of the application in the high court, Capitec filed its plea in the 2020 action. In the plea Capitec raised special defences which were similar to the objections in its application. It also pleaded to the merits of the 2020 action. Agreement not to sue [13] Capitec’s consent to the 2017 Petratouch Transaction was embodied in the written consent agreement, entered into between Capitec and the appellants. The purpose of the consent agreement was for Capitec to waive various rights in connection with the selling restrictions imposed in terms of the subscription agreement so that the 2017 Petratouch Transaction could proceed. Without these waivers, which Capitec was not obliged to make, the 2017 Petratouch Transaction would have breached the selling restrictions in the subscription agreement. Because of certain concerns (dealt with below), Capitec proposed the inclusion of the pactum in the consent agreement, to which the appellants agreed. It is necessary to quote the clause containing the pactum in extenso: 5 Capitec also sought alternative relief, directing the appellants to refer their claims for arbitration. ‘7.1 Each of Ash Brook and Coral hereby give the following warranties to Capitec Holdings. ………… 7.1.6 it shall not and shall procure that its related and inter-related persons (as defined in the Companies Act) do not: 7.1.6.1 directly or indirectly use or rely on the Transaction (or any part thereof) or any of the Transaction Agreements in the Legal Proceedings or any other legal proceedings related thereto or flowing therefrom: and/or 7.1.6.2 directly or indirectly institute any legal proceedings against Capitec Holdings and/or any of its subsidiaries (as defined in the Companies Act), whether as plaintiff, applicant, defendant, respondent or otherwise, wherein it seeks to use or rely upon the Transaction (or any part thereof). (Transaction warranties)’. It is common cause that the word ‘Transaction’ in the clauses above refers to the 2017 Petratouch Transaction and that ‘Legal Proceedings’ refers to the 2016 action. The interpretation of clauses 7.1.6.1 and 7.1.6.2 [14] The appellants contend that clauses 7.1.6.1 and 7.1.6.2 are warranties that do not give rise to the rights and obligations that Capitec contends for. It is submitted that the only basis for the inclusion of the clauses was to protect Capitec in the 2016 action. [15] It is trite that interpretation is, generally speaking, an objective process of attributing meaning to the words used in a document, read in the context of the document as a whole and having regard to the apparent purpose of the words.6 It is a unitary exercise which must be approached holistically: simultaneously considering the text, context and purpose.7 In addition, extrinsic evidence may be admitted as relevant to context and purpose.8 6 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para [18]. 7 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (6) SA 1 (CC) para [65]. 8 Footnote 1 para 47. Unterhalter AJA remarked, that ‘reasonable disagreements as to the relevance of such evidence should favour admitting the evidence and the weight of the evidence [16] The point of departure in interpreting the subject clauses is the text. The introductory words in Clause 7.1.6, read with 7.1.6.1 and 7.1.6.2, make clear that the institution of legal proceedings by Coral and Ash Brook and its related entities against Capitec are not permitted under two distinct circumstances. Clause 7.1.6.1 is specifically directed to the 2016 action. It stipulates that the appellants (and its related and inter-related persons) shall not use or rely on the 2017 Petratouch Transaction in the 2016 action or any other legal proceedings related to the 2016 action. Clause 7.1.6.2 is framed in wider terms. It applies not only to the 2016 action but to any legal proceedings against Capitec where the appellants seek to use or rely upon the 2017 Petratouch Transaction. The singular purpose of the words used in clause 7.1.6.2 is clearly to prevent the appellants from instituting any future legal proceedings against Capitec in which it seeks to use or rely upon the 2017 Petratouch Transaction. [17] The context in which the parties agreed to the pactum is similarly clear. In the introduction to the consent agreement, it is recorded that the appellants and other parties had proposed the 2017 Petratouch Transaction to Capitec (clause 1.2). Various steps in the 2017 Petratouch Transaction required the consent or approval of Capitec in terms of the subscription agreement (clause 1.3). The parties requested Capitec to consent to those steps (clause 1.3). Capitec was willing to provide that consent on the terms and subject to the conditions in the consent agreement (clause 1.4). Clause 7.1.6 then addressed Capitec’s two main concerns: Clause 7.1.6.1 prevents the appellants from using or relying upon the 2017 Petratouch Transaction in the 2016 action; and clause 7.1.6.2 prevents the appellants from instituting any other legal proceedings in which it will use or rely upon the 2017 Petratouch Transaction. Clause 7.1.6.2 clearly does not refer to the 2016 action. may then be considered. It is this enquiry into relevance that will determine the admissibility of the evidence’. [18] The appellants contend that on the assumption that clause 7.1.6.2 only applies to new litigation in which it seeks to escape ‘from the selling restrictions’, it is not triggered by the 2020 action as the 2020 action does not relate to the ‘selling restrictions’. In support of this contention the appellants refer to Capitec’s founding affidavit in which it stated that at the time the 2017 Petratouch Transaction was concluded, it was ‘concerned that [the appellants] intended to use the 2017 Petratouch Transaction to either support that litigation, or to institute new litigation in which it sought to escape from the Selling Restrictions’. [19] The passage in the founding affidavit referred to above is not the only instance in the founding affidavit where Capitec explained the reason for the inclusion of the pactum. Capitec also averred that it gave its consent for the 2017 Petratouch Transaction only because it knew that the appellants could not subsequently hold the 2017 Petratouch Transaction against it in litigation. Clause 7.1.6. catered for both the 2016 action (which attacks the selling restrictions directly) and any legal proceedings other than, and in addition to, the 2016 action. [20] The context established that Capitec agreed to give its consent to the 2017 Petratouch Transaction only if the appellants agreed not to use or rely on the 2017 Petratouch Transaction or any part thereof against Capitec in the 2016 action or any other legal proceedings which they might institute against Capitec. Is clause 7.1.6.2 a warranty? [21] Clause 7, in which the pactum is located, is headed ‘Warranties, representations and undertakings by Ash Brook and Coral’. In Clause 7.1 it is recorded that ‘Ash Brook and Coral hereby give the following “warranties” to Capitec Holdings’. Clause 7.1.1 to 7.1.6 are also referred to in the agreement as ‘Transaction Warranties’. Clause 7.3 further states that the ‘transaction warranties are a material representation inducing Capitec Holdings to enter into this Agreement’. [22] The appellants contend that clause 7.1.6.2, properly interpreted, is a warranty that ‘reflected a position at the time the consent agreement was concluded’. The appellants submit the purpose of the clause was limited and does not give rise to legally enforceable rights and obligations beyond those specified in clause 7.4 which provides: ‘If Ash Brook or Coral breach any of the Transaction Warranties, then Capitec Holdings shall be entitled to immediately without having to give notice as envisaged in clause 11, upon written notice to the other Parties and without prejudice to any other remedies Capitec Holdings may be entitled in law, forthwith revoke all or any of the consents, approvals, undertakings and confirmations envisaged in clause 6 ab initio, and/or exercise its rights pursuant to the Mandatory Acquisition Option and/or the Repurchase option as the case may be.’ At most, so it is argued, a breach of a warranty would give rise to a damages action, and not the ‘drastic remedy’ granted by the high court. In support of their argument the appellants rely, inter alia, on Absa Bank v Swanepoel.9 In that matter Cameron JA emphasised that not all terms in a contract create enforceable rights and obligations. He remarked that to establish whether a clause has an operational effect ‘depends on what it says within its context in the contract, against the background in which the parties concluded it’. [23] Although clause 7.1.6.2 is referred to as a ‘warranty’ in the consent agreement, there is no magic in the contractual terminology. As remarked by Hoexter JA in Resisto Dairy v Auto Protection Insurance Co:10 ‘The terms of the contract cannot be changed into suspensive conditions merely by calling them conditions precedent. A term of the contract may be so material that a breach of it will entitle the other party to repudiate the contract, and in the present case the parties have used the words “conditions precedent to any liability” to indicate that the so-called conditions are material terms of the contract.’11 9 ABSA Bank Ltd v Swanepoel [2004] ZASCA 60; 2004 (6) SA 178 (SCA) paras 6-8. 10 Resisto Dairy v Auto Protection Insurance Co 1963 (1) SA 632 (A). 11 Ibid at 644F-G. [24] In Parsons Transport (Pty) Ltd v Global Insurance Ltd12 this Court had to interpret certain clauses in an insurance contract. In dealing with the ‘warranties’, Mpati DP applied the approach adopted in Resisto Dairy, and held that they were material terms of the contract and did not ‘become warranties merely because they are referred to as warranties in the schedule’.13 In Protea Property Holdings (Pty) Ltd v Boundary Financing Ltd (formerly known as International Bank of Southern Africa Ltd) and Others,14 Griesel J said: 'In the final analysis, there is no unanimity among the authorities as to what the expression "warranty" connotes, save that it is a contractual term. It accordingly becomes necessary, as pointed out by Farlam JA in Masterspice (Pty) Ltd v Broszeit Investments CC, "in every case where the expression is used, to examine the terms of the contract in question closely in order to endeavour to ascertain in what sense the parties have used it". (Footnotes omitted) [25] Warranties, in the narrow sense, can give rise to contractual remedies if they were intended to do so. But, depending on the context, they can also be used in a wider sense to mean contractual undertakings.15 I have already dealt with the context in which the pactum was included in the consent agreement. Clause 7.1.6.2 was clearly intended to create obligations and afford rights and remedies. This is made clear by clause 7.4. Clause 7.1.6.2 is not a warranty in the true sense of the word, ie a representation about a past or present state of affairs.16 It is about how the appellants warrant or undertake that they shall not conduct themselves in future. It is a contractual undertaking. This interpretation is fortified by the use in the heading to clause 7 of the word ‘undertakings’. Breach of the consent agreement 12 [2005] ZASCA 95. 13 Ibid para [7]. 14 Protea Property Holdings (Pty) Ltd v Boundary Financing Ltd (formerly known as International Bank of Southern Africa Ltd) & Others [2007] ZAWCHC 39; 2008 (3) SA 33 (C) para 39. 15 See Wessels: The Law of Contract in South Africa 2 ed Vol 2 paras 3044 and 3049. 16 Lewis Ltd v Norwich Union Fire Insurance Co 1916 AD 509. [26] The claim against Capitec in the 2020 action is based on four causes of action, which are all framed in the alternative. Capitec’s synopsis of the four claims can be summarized as follows: 1. Claim A: This is a contractual claim for damages based on a breach of duty of reasonableness and good faith allegedly owed in terms of the subscription agreement, alternatively the common law duty of good faith, and what the appellants described as the duty to achieve BEE. It is alleged that Capitec breached these duties by imposing a condition that its consent be obtained for the 2017 Petratouch Transaction, which caused Coral to sell its CPI shares at a discount. 2. Claim B: This is a delictual claim for damages based on an alleged grossly negligent and/or fraudulent material misrepresentation by Capitec that the 2017 Petratouch Transaction was conditional upon Capitec’s consent. 3. Claim C: This is a delictual claim for damages based on pure economic loss allegedly suffered by Coral as a result of Capitec’s breach of duty to ‘not engage in conduct that diminished or reduced the value of [Coral’s and Ash Brook’s] proprietary interest in the [Capitec] shares’. Capitec allegedly breached this duty by facilitating the 2017 Petratouch Transaction. 4. Claim D: This is a statutory claim for damages based on an allegation that Capitec engaged in a fronting practice in contravention of the B-BBEE Act, which amounted to conduct or the conducting of Capitec’s business in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of Coral in terms of s 163(1)(a) and (b) of the Companies Act 71 of 2008 or which amounted to unfair discrimination on the basis of race as contemplated in s 7 of the Promotion of Equality and the Prevention of Unfair Discrimination Act 4 of 2000. Capitec allegedly engaged in a fronting practice by requiring the appellants to sell their sale shares at a discount. [27] It is clear from the above that the appellants ‘use or rely on’ the 2017 Petratouch Transaction in support of their claims. But, if there was any doubt, the following paragraphs in the particulars of claim, describing the conduct causing loss, make it plain: ‘96. At the time of the 2017 Petratouch Transaction, Capitec maintained that Coral was prohibited from disposing of its CPI shares without Capitec’s consent. 97. As a condition for granting its consent, Capitec required that Coral could only sell its CPI shares subject to the requirement of Capitec’s consent as to the identity of the purchaser and the terms on which the sale takes place, including subjecting the Sale Shares to further restrictive conditions as a condition of its consent as reflected in the Framework Agreement, the Capitec Consent Agreement and the Relationship Agreement to persuade BidCo to conclude the transaction.17 98. At the time of imposing this condition, Capitec knew or would have known with the exercise of reasonable care, that imposing this condition would have the effect of the Black shareholders having to sell the Sale Shares at a significant discount of 52% of their market value, given the highly restrictive nature of the restrictive conditions. 104. But for Capitec’s conduct in breach of one or more of the legal duties pleaded below, Coral would not have concluded the 2017 Petratouch Transaction and would have been able to sell its CPI shares to any Black purchaser at a discount of at most 5% of the value of the Sale Shares.’ [28] To finally test if the claims in the 2020 action contravene clause 7.1.6.2, is to ask whether they can be sustained without using or relying upon the 2017 Petratouch Transaction. The answer is no. The institution of the 2020 action clearly breached the undertaking not to sue. Remedy The nature of a pactum de non petendo in anticipando [29] A pactum de non petendo in anticipando forms part of our law.18 It is a contractual undertaking not to institute an action. The appellants contend that our courts have recognised such a pactum only (a) as a defence and (b) to grant a 17 The particulars of claim define “Sale Shares” as meaning the shares sold by Coral in the 2017 Petratouch Transaction. 18 Miller v Dannecker 2001 (1) SA 928 (C); Tuning Fork (Pty) Ltd t/a Balanced Audio v Greeff and Another [2014] ZAWCHC 78; 2014 (4) SA 521 (WCC) para 43 (iv). temporary stay of proceedings to afford a debtor an opportunity to repay, alternatively (c) as part of settling (compromising an already existing dispute). [30] A pactum is an agreement like any other. It is a contract that gives rise to rights and correlative duties. The nature of the right in question varies from case to case and is dependent on the text and the facts. Although the court in Miller v Dannecker19 held that the pactum merely suspends the enforcement of a contract, usually for a specific period or until the occurrence of some contingency, the court in that matter was dealing with a pactum that was temporary. In the present matter the limitation of the right not to be sued is not linked to time. The pactum in the present matter is one operating in perpetuity.20 Van Zyl makes it clear that there is no bar in our law to such a pactum.21 Formulations emphasising time limitation or contingency aspects cannot therefore be said to mean that such features are requirements for a pactum to be valid. Specific performance [31] The law on specific performance is well established. Injured parties have the right of election whether to hold the parties in breach to their contract and claim performance by them for precisely what they had bound themselves to do, or to claim damages for the breach.22 It is in the court’s discretion to award specific performance. The discretion must be exercised judicially upon a consideration of all relevant facts.23 The ultimate principle is that the order which the court makes should not produce an unjust result such as in a situation where it is impossible for the appellants to comply with the order or if the order would operate unduly harshly on the appellants.24 19 Ibid at 937A-B. 20 Van Zyl v Auto Commodities (Pty) Ltd [2021] ZASCA 67; 2021 (5) SA 171 SCA. 21 Ibid para 32. 22 Benson v SA Mutual Life Assurance Society [1985] ZASCA 114; 1986 (1) SA 776 (A). 23 Ibid at 783C. 24 Ibid at 783 E-G. [32] The appellants contend that Capitec was not entitled to specific performance. It was submitted that in the event of breach of the consent agreement Capitec could rescind the consent agreement or seek damages. They rely on clause 7.4 of the consent agreement (referred to earlier), which they argue caters for the only remedies a party can claim in the event of a breach. [33] Firstly, clause 7.4 expands, rather than restricts, Capitec’s remedies. It specifically provides that the remedies in 7.4 are ‘without prejudice to any other remedies to which Capitec Holdings may be entitled in law’. Secondly, it is not clear what damages Capitec would be able to claim in these circumstances. The appellants were unable to identify any. Thirdly, specific performance in the present matter is possible and is not unprecedented. In Rayden v Hurwitz25 the court granted an order that an action be withdrawn on the basis of a similar provision in an agreement. [34] Capitec has the right to not be sued by the appellants where they use or rely upon the 2017 Petratouch Transaction. The appellants breached the pactum by instituting the 2020 action. Under the circumstances there is no reason why Capitec cannot enforce the pactum by instituting application proceedings aimed at compelling the appellants to comply and withdraw the 2020 action. The only issue is whether the ordering of specific performance in the circumstances of this case would result in an injustice. To answer this question, it is necessary to deal with the appellants’ claim that the high court should not have enforced clause 7.1.6.2 because it would be contrary to public policy. The enforceability of the pactum [35] The appellants made two main submissions: first, that a constitutional right cannot be waived, and second, that the pactum is against public policy. Waiver 25 Rayden v Hurwitz 1932 CPD 336. [36] Section 34 of the Constitution provides that everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum. The issue whether this right can be waived was addressed in Lufuno Mphaphuli & Associates Pty Ltd v Andrews (Lufuno).26 That matter concerned whether parties to arbitration agreements could waive their right to a fair hearing. The majority held that where parties agree to arbitrate, they arguably do not so much as waive their s 34 rights as simply agree not to exercise them. O’Regan ADCJ, speaking for the majority said: ‘If we understand section 34 not to be directly applicable to private arbitration, the effect of a person choosing private arbitration for the resolution of a dispute is not that they have waived their rights under section 34. They have instead chosen not to exercise their right under section 34. I do not think, therefore, that the language of waiver used by both the European Court of Human Rights in Suovaniemi and by the Supreme Court of Appeal in Telcordia is apt. Indeed, it may not be apt in relation to constitutional rights at all, but that is a topic for another day.’27 [37] The high court applied Lufuno and found that the concept of waiver did not arise. It held that the appellants were fully informed of their rights and elected voluntarily to consent to the terms of the subject clause. It then proceeded with an enquiry to establish whether clause 7.1.6.2 was inconsistent with public policy. The high court cannot be faulted in its approach. The proper inquiry in the present matter is to determine whether the subject clause or its enforcement is consistent with public policy.28 Public policy 26 Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another [2009] ZACC 6; 2009 (4) SA 529 (CC). 27 Ibid para 216. See also Schoombee and Another v S [2016] ZACC 50; 2017 (2) SACR 1 (CC); 2017 (5) BCLR 572 (CC) para 25. 28 See Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 CC. [38] In Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others,29 the Constitutional Court held that public policy is the basis on which courts may decline to enforce contractual terms where the term itself or its enforcement would be contrary to public policy.30 Public policy requires in general that parties should comply with contractual obligations that have been freely and voluntarily undertaken. This is neither the only nor the most important principle, but is a factor that gives effect to the central constitutional values of freedom and dignity and is essential to the achievement of the constitutional vision of our society.31 In determining what public policy requires, courts must conduct a careful balancing exercise in which it has to ‘employ [the Constitutional] values to achieve a balance that strikes down the unacceptable excesses of “freedom of contract”, while seeking to permit individuals the dignity and autonomy of regulating their own lives’.32 This includes a consideration of various factors, including, but not limited to, whether the parties negotiated with equal bargaining power and whether they understood what they were agreeing to. This much is accepted by the appellants. [39] Courts should use the power to invalidate a contract or not to enforce it sparingly and only in the clearest of cases.33 This principle of perceptive restraint has been endorsed by the Constitutional Court subject to the caveat that the degree of restraint to be exercised must be balanced against the backdrop of our constitutional rights and values.34 The principle of perceptive restraint flows from the underlying principle that contracts that are freely and voluntarily entered into should be honoured.35 Is Clause 7.1.6.2 consistent with public policy? 29 Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13 (Beadica); 2020 (5) SA 247 CC. 30 Beadica para 80. 31 Ibid paras 57 and 87. 32 Ibid para 71. 33 AB v Pridwin Preparatory School [2018] ZASCA 150; 2019 (1) SA 327 (SCA) para 27. 34 Footnote 28 paras 88-90. 35 Ibid para 89. [40] The appellants submit that clause 7.1.6.2 ousts their right to access to court. In general, with reference to, amongst others, Barkhuizen v Napier36 and Schierhout v Minister of Justice,37 they contend that a litigant will always be entitled, even at common law, to an adequate and fair opportunity to seek judicial redress and that it would be contrary to public policy to enforce a clause that does not afford such an opportunity. [41] The appellants bear the burden of showing that clause 7.1.6.2 or its enforcement would be contrary to public policy.38 The appellants allege that it would be unfair to enforce the clause because Capitec was a central participant in the 2017 Petratouch Transaction and its enforcement will have the effect that the appellants will not be able to exercise their s 34 rights of access to courts. They further contend that their status as BEE shareholders is relevant; that Capitec owed them a duty to protect the value of their shares; and they had no commercial power to prevent Capitec’s alleged abuse of clause 8.3 of the subscription agreement. [42] The following factors are instructive. Firstly, in clause 9 of the consent agreement it was agreed that the parties were ‘free to secure independent legal and other professional advice (including financial and taxation advice) as to the nature and effect of all the provisions of the consent agreement and the other Transaction Agreements’. The appellants did just that. They were legally represented at the time of the negotiation and conclusion of the 2017 Petratouch Transaction. In fact, they obtained substantial independent professional and legal advice spending over R16 million. [43] Secondly, the parties to the consent agreement were all experienced business people who engaged in detailed and complex negotiations over a period 36 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 CC (Barkhuizen). 37 Schierhout v Minister of Justice 1926 AD 99. 38 Barkhuizen para 58 and Pridwin para 27 (iv). of time. They themselves shared Capitec’s belief that its consent for the 2017 Petratouch Transaction was legally required. They specifically agreed in clause 9.3.1 and 9.3.2 that: (a) They had not placed any reliance upon any view expressed by any other party, except those express representations, warranties, covenants, undertakings and agreements set forth in the consent agreement and the other Transaction Agreements to which it is or will become a party; (b) The terms and conditions of the 2017 Petratouch Transaction were fair and reasonable in all the circumstances and were in accordance with the parties’ commercial intentions; and (c) They had the necessary sophistication, knowledge and experience in financial and business matters and were capable of evaluating the merits, risk and suitability of entering into the consent agreement. There is no indication on the facts that the parties did not have equal bargaining power. [44] Thirdly, there are no special rules that apply to contracts designed to promote black economic empowerment. In Beadica the contract under scrutiny was part of an empowerment scheme and enforcing it would lead to the failure of a publicly funded BEE initiative. The Constitutional Court held that carving out special rules for BEE contracts would: ‘. . . increase the risk of contracting with historically disadvantaged persons who benefit from the Fund. If the applicants were to succeed, it would establish the legal principle that enforcement of a contractual term would be inimical to the constitutional value of equality, and therefore contrary to public policy, where enforcement would result in the failure of a black economic empowerment initiative. This could, in turn, deter other parties from electing to contract with beneficiaries of the Fund, or force beneficiaries to offset the increased risk by making concessions on other contractual aspects during contract negotiations. These outcomes would, in effect, undermine the very objects that the Fund and section 9(2) seek to achieve’.39 [45] The fact that the appellants are BEE shareholders of Capitec is therefore irrelevant. They were fully advised, fully informed, believed the terms were 39 Beadica para 101. reasonable and freely relinquished the right not to institute legal proceedings in which they use or rely on the 2017 Petratouch Transaction, in return for Capitec’s consent to the 2017 Petratouch Transaction. [46] Fourthly, the pactum was concluded in a particular context for a specific legitimate reason. Coral required the 2017 Petratouch Transaction to settle a substantial tax liability to SARS and to enable 71,3 per cent of Ash Brook’s shareholders to exit the consortium. Coral chose to sell to Petratouch at the sale price with the result that R975 287 684 was paid out to the existing shareholders. At all material times, Mr Tshepo Mahloele was a director of both Coral and Petratouch. At the time of the 2017 Petratouch Transaction the appellants had already instituted the 2016 action in which they had sued Capitec over the legality of the selling restrictions in the subscription agreement. Capitec was concerned that the appellants intended to use the 2017 Petratouch Transaction to either support that litigation or to institute new litigation in which it sought to escape from the selling restrictions. But it did not want to stand in the way of a deal between the appellants and Petratouch. It therefore proposed the inclusion of the pactum in the consent agreement, to protect its interests, which the appellants agreed to. The appellants determined that the benefit that they would obtain from concluding the 2017 Petratouch Transaction was worth the cost of agreeing not to sue Capitec. Capitec was not a party to the 2017 Petratouch Transaction, it did not initiate the transaction nor did it directly benefit from it. As for the alleged duty owed to the appellants, no basis for such a duty was established by the appellants. [47] Lastly, the clause does not prevent the appellants from suing Capitec for breach of the consent agreement, or for matters unrelated to the 2017 Petratouch Transaction. This is expressly set out in clause 7.2: ‘For the avoidance of doubt, it is recorded that the provisions of clause 7.1.6 do not apply to a cause of action or claim resulting or arising from a breach by Capitec Holdings of any of the provisions of this Agreement, and shall not preclude another Party from instituting legal proceedings against Capitec Holdings in order for that Party to enforce compliance by Capitec Holdings with any of the provisions of this Agreement.’ What they agreed not to do was ‘use or rely upon the 2017 Petratouch Transaction’ to sue Capitec outside such a breach. The pactum went no further than was necessary to prevent very specific litigation. As such it is a limited and reasonable restriction on the appellants’ ability to litigate. [48] Agreements not to litigate are not necessarily unreasonable. Most agreements of compromise, in which one party settles a claim against the other, as a matter of course entails an agreement by one party not to institute or persist with the same proceedings against the other party in the future. Each case must be assessed on its own terms undertaking the enquiry set out in Barkhuizen. On the facts in the present matter the pactum is consistent with public policy. In the premises, the appellants’ counter application was correctly dismissed. [49] The subscription agreement and the consent agreement provide that costs will be recoverable on an attorney and own client scale. There is no reason why such costs, including the costs of two counsel, should not follow the result. [50] In the result the following order is made: The appeal is dismissed with costs on an attorney and client scale, including the costs of two counsel. ________________________ L WINDELL ACTING JUDGE OF APPEAL Appearances For appellants: I V Maleka SC with T Scott Instructed by: Mkhabela Huntley Attorneys Incorporated, Johannesburg McIntyre van der Post, Bloemfontein For respondent: A M Breitenbach SC with M Bishop and P Wainwright Instructed by: Van der Spuy, Cape Town Hill McHardy & Herbst Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 24 October 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Coral Lagoon Investments 194 (Pty) Ltd and Another v Capitec Bank Holdings Limited [2022] ZASCA 144 Today the Supreme Court of Appeal (SCA) dismissed an appeal from the Western Cape Division of the High Court (high court). The high court ordered the appellants, Coral Lagoon Investments 194 (Pty) Ltd (Coral) and its holding company, Ash Brook Investments 15 (Pty) Ltd (Ash Brook) to withdraw an action for damages against the respondent, Capitec Bank Holdings Limited (Capitec), thereby enforcing a clause not to sue, a pactum de non petendo (pactum), contained in a written consent agreement between Capitec and the appellants. Two main issues arose for determination in the appeal. Firstly, the interpretation of the consent agreement and, secondly, whether the pactum, which was a permanent one, was contrary to public policy. Coral, wholly owned by Ash Brook, is a broad based black economic empowerment consortium comprising 13 black shareholders. In 2006 Capitec, Coral, Ash Brook, the shareholders of Ash Brook and the Industrial Development Corporation concluded a linked set of written agreements. Part of the set of agreements was a subscription agreement concluded between Capitec and the appellants on 12 December 2006. Capitec allotted and issued, and Coral subscribed for ten million ordinary shares in Capitec (CPI shares). An important element of the subscription agreement was three sets of selling restrictions, aimed at keeping the CPI shares in black shareholders’ hands. One of these selling restrictions provided that should Coral in any manner endeavour to dispose of any of the CPI shares to any entity or person who, in Capitec’s opinion, does not comply with the B-BBEE Act and transformation practises, Capitec will determine the number of CPI shares sold and may require Coral to acquire an equal number of CPI shares and cause them to be registered in Coral’s name. It was always the parties understanding that Capitec’s consent was required for Coral to trade in the CPI shares. However, in proceedings instituted against Capitec in September 2019, Capitec stated that it had realized that the clause was concerned with the Coral’s consequences of selling any of its CPI shares to an entity or person who Capitec found to be in non-compliance with the B-BBEE Act and transformation practices. The effect of this concession was that Coral did not need Capitec’s consent to sell its CPI shares. From about 2014 there was ongoing dissatisfaction about the selling restrictions by Ash Brook and its shareholders. The appellants instituted proceedings against Capitec in 2016 (the 2016 action) in which the validity of certain provisions of the subscription agreement were challenged. The matter is still pending. In 2017, Coral sought to sell 3 360 830 of its CPI shares to a subsidiary of a 100 per cent black-owned company called Petratouch (Pty) Ltd (the 2017 Petratouch Transaction). Consistent with the practice adopted by the parties in the previous transactions, Coral sought Capitec’s consent for the 2017 Petratouch Transaction. Capitec agreed, subject to certain conditions. Coral accepted the conditions and sold the CPI shares to Petratouch. One of the agreements constituting the 2017 Petratouch Transaction was the consent agreement entered into between Capitec and the appellants, which contained the pactum. The purpose of the consent agreement was for Capitec to waive various rights in connection with the selling restrictions imposed in terms of the subscription agreement so that the 2017 Petratouch Transaction could proceed. Without these waivers, which Capitec was not obliged to make, the 2017 Petratouch Transaction would have breached the selling restrictions. On account of certain concerns, Capitec proposed the inclusion of the pactum in the consent agreement. On 19 June 2020 the appellants instituted action against Capitec and claimed, in broad terms, that, but for Capitec’s conduct, Coral would not have concluded the 2017 Petratouch Transaction at a discount of 52 per cent to the prevailing 30-day weighted average, amounting to a loss of R 1,225 billion. The SCA interpreted the consent agreement and found that the institution of legal proceedings against Capitec was not permitted under two circumstances. Firstly, in terms of clause 7.1.6.1, the appellants were not allowed to use or rely upon the 2017 Petratouch Transaction in the 2016 action. Secondly, in terms of clause 7.1.6.2 the appellants were not permitted to institute any legal proceedings against Capitec where reliance is placed on the 2017 Petratouch Transaction. The context established that Capitec agreed to give its consent to the 2017 Petratouch Transaction only if the appellants agreed not to use or rely on the 2017 Petratouch Transaction or any part thereof against Capitec in the 2016 action or any other legal proceedings which they might institute against Capitec. The SCA found that the two clauses were clearly intended to create obligations and to afford rights and remedies and, as such, they constituted contractual undertakings. The claims against Capitec in the 2020 action were all reliant on the 2017 Petratouch Transaction, and the institution of the 2020 action was clearly in breach of the undertaking not to sue. The appellants submitted that a constitutional right of access to a court cannot be waived and that the pactum is against public policy. This Court confirmed that a pactum is an agreement like any other. There was, therefore, no reason why Capitec could not enforce the pactum. This Court found that the appellants, as experienced businesspersons and negotiators, were fully aware of their rights and obligations, and voluntarily elected to consent to the terms of the pactum. The pactum was concluded in a particular context for a specific, legitimate reason and went no further than was necessary to prevent very specific litigation. As such it is a limited and reasonable restriction on the appellants’ ability to litigate. In light hereof, public policy require that parties should comply with the contractual obligations that have been entered into freely. The SCA emphasised that courts should use the power to invalidate a contract or not to enforce it sparingly and only in the clearest of cases. In addition, agreements not to litigate are not necessarily unreasonable but each case should be determined on its own terms. In the result, the SCA dismissed the appeal. --------oOo--------

3562

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 357/2020 In the matter between SAMANCOR HOLDINGS (PTY) LTD FIRST APPELLANT BHP BILLITON SA LTD SECOND APPELLANT ANGLO SOUTH AFRICA CAPITAL (PTY) LTD THIRD APPELLANT and SAMANCOR CHROME HOLDINGS (PTY) LTD FIRST RESPONDENT SAMANCOR CHROME LTD SECOND RESPONDENT Neutral citation: Samancor Holdings (Pty) Ltd and Others v Samancor Chrome Holdings (Pty) Ltd and Another (357/2020) [2021] ZASCA 60 (24 May 2021) Coram: NAVSA, SALDULKER and MBATHA JJA and LEDWABA and ROGERS AJJA Heard: 6 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 have been at 10:00 on Monday 24 May 2021. Summary: Arbitration – extension of time in terms of s 8 of Arbitration Act – – proper approach and relevant considerations – delay in bringing s 8 application. _____________________________________________________________________ ORDER _____________________________________________________________________ On appeal from: The High Court, Gauteng Division, Johannesburg (Meyer J sitting as court of first instance): judgment reported sub nom Samancor Chrome Holdings (Pty) Ltd and Another v Samancor Holdings (Pty) Ltd and Others [2019] 4 All SA 906 (GJ). The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT _____________________________________________________________________ Rogers AJA (Navsa, Saldulker and Mbatha JJA and Ledwaba AJA concurring) [1] With the leave of this court, the appellants appeal against a decision of the Gauteng Division of the High Court (Meyer J) granting the respondents an extension of time, in terms of s 8 of the Arbitration Act 42 of 1965, to initiate arbitration proceedings against the appellants in order to enforce a tax indemnity contained in the agreement mentioned hereunder. Section 8 provides: ‘Where an arbitration agreement to refer future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitration proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the court, if it is of the opinion that in the circumstances of the case undue hardship would otherwise be caused, may extend the time for such period as it considers proper, whether the time so fixed has expired or not, on such terms and conditions as it may consider just but subject to the provisions of any law limiting the time for commencing arbitration proceedings.’ [2] For convenience I shall, where appropriate, refer to the present respondents as the claimants, and the present appellants as the defendants, as they were in the arbitration proceedings giving rise to this appeal. The sale agreement [3] The arbitration agreement is contained in a sale of shares agreement which the parties concluded in February 2005. Although some of the companies then had different names, I shall use their current names. Before the implementation of the agreement, the second respondent, Samancor Chrome Ltd (Samancor Chrome), was a wholly-owned subsidiary of the first appellant, Samancor Holdings (Pty) Ltd (Samancor Holdings). The second and third appellants, BHP Billiton SA Ltd (BHP) and Anglo South Africa Capital (Pty) Ltd (ASAC), were Samancor Holdings’ shareholders. Samancor Chrome conducted manganese and chrome mining businesses and held certain steel investments. [4] In terms of the sale agreement, the first respondent, Samancor Chrome Holdings (Pty) Ltd (SCH), acquired the chrome business by buying the shares in Samancor Chrome from Samancor Holdings. This required restructuring so as to leave Samancor Chrome as a company owning only the chrome business. The restructuring steps (defined in the agreement as the Restructure) were: a disposal by Samancor Chrome of its manganese business and related immovable properties to a subsidiary of Samancor Chrome and a distribution by the latter of the shares in the subsidiary to Samancor Holdings; a distribution by Samancor Chrome to Samancor Holdings of the stainless steel investments and a defined amount in cash; and a disposal by Samancor Chrome of any non-chrome assets remaining after implementation of the foregoing steps. The agreement defined the chrome business as the Chrome Operations while the non-chrome assets (including the manganese business) were defined as the Excluded Assets. [5] The defined Effective Date of the agreement was 1 June 2005. In terms of the agreement, this was the date on which the parties implemented their agreement economically. It was not possible, however, for the restructuring and transfer of shares to SCH to be completed by this time. Among other things, approval was needed from the competition authorities, and various conversions of mining rights and approvals had to be sought in terms of the Mineral and Petroleum Resources Development Act 28 of 2002. The defined Closing Date would only occur once all conditions precedent were fulfilled and once the restructuring (including the mining conversions and approvals) were obtained. In the event, the Closing Date was 3 April 2006. [6] I shall refer to the period between the Effective Date and Closing Date as the interim period. During the interim period, Samancor Chrome continued in law as the owner of the chrome and manganese businesses and the steel investments, with Samancor Holdings (the seller) as its shareholder. The agreement contained provisions to give SCH (the buyer) de facto control of the chrome business during the interim period. Legal control only occurred on 3 April 2006 when SCH became the owner of the shares in Samancor Chrome with the chrome operations as the latter’s only remaining business. [7] Samancor Chrome was at all material times a registered taxpayer with 30 June as its financial and tax year-end. Until 3 April 2006, its income tax was determined by the combined results of its manganese and chrome businesses and its steel investments. Since economically the parties wanted to achieve a separation from the Effective Date (1 June 2005), the agreement contained the following indemnity in clause 24.1.5 (I quote clause 24.1.1 as well, for reasons that shall appear presently): ‘24.1 Subject to the provisions of clauses 23.3 to 23.9 inclusive, the Seller [Samancor Holdings] indemnifies the Purchaser [SCH] and the Company [Samancor Chrome], with effect from the Effective Date, against all loss, liability, damage or expense which the Purchaser and/or the Company, as the case may be, may suffer as a result of or which may be attributable to: 24.1.1 the conduct of the business and/or the affairs of the Company, other than the Chrome Operations. Without limiting the generality of the foregoing, the business and/or affairs of the Company, other than the Chrome Operations, for the purposes of this clause 24.1.1 shall include (without limitation) the Excluded Assets, or any of them, and the indemnity given by the Seller to respectively the Purchaser and the Company in terms of this clause 24.1 shall include (but not be limited to) all loss, liability, damage or expense which may result from, relate to and/or in any way be associated with the Excluded Assets, or any of them, and/or the condition and/or use by any person for whatsoever purpose of any such asset; . . . 24.1.5 any proved liability of the Company and/or any Subsidiary and/or Associate Company for Taxation in respect of the Excluded Assets, or any of them; and/or in respect of the Chrome Operations, if such liability in respect of the Chrome Operations shall not have been provided for in the Effective Date Financial Statements or disclosed in writing by the Seller to the Purchaser in the Disclosure Letter for all periods prior to the Effective Date . . .’ The clause defined Taxation as including, among other charges, income tax, any taxation arising from new assessments or the reopening of assessments, and any penalties or interest as a result thereof. [8] As appears from the opening words of clause 24.1, its provisions were subject to clauses 23.3 to 23.9. Clause 23.4, which I shall call the threshold clause, provided as follows: ‘Save in respect of any claim, damage, loss or expense which arises from and/or is attributable directly or indirectly to the Restructure and/or the implementation of the Restructure, no liability shall attach to the Seller in respect of any breach of representation, undertaking warranty contained in this Agreement or indemnity contained in clause 24, other than clause 24.1.1, in relation to any established claim for loss sustained by the Company or the Purchaser which is less than US$2 000 000 … and when aggregated with other such claims or losses such aggregate amount is less than US$20 000 000 …’ [9] Clause 23.6 was a time-bar clause reading in relevant part as follows: ‘23.6 Any claim made upon the Seller in respect of any representations, undertakings or warranties contained in this Agreement or indemnities contained in clause 24, other than clause 24.1.1 and 24.1.2, shall be wholly barred and unenforceable unless: … 23.6.3 in respect of any Income Tax payable by or levied on the Company, proceedings in respect thereof shall have been issued and served prior to the sixth anniversary of the Effective Date.’ [10] It follows that a claim for an indemnity concerning income tax made in terms of clause 24.1.5 became barred and unenforceable unless proceedings were issued and served before 1 June 2011. Since clause 43 provided for arbitration, the relevant initiating process was determined by the arbitration rules specified in clause 43. [11] By contrast, a claim for an indemnity in terms of clause 24.1.1 was excluded from the time-bars contained in clause 23.6, so the ordinary rules of prescription applied. The same is true of the indemnities in clauses 25.2 and 25.3 which SHP and Samancor Holdings respectively gave to Samancor Chrome in respect of any claims, damage, loss, expense or costs suffered or incurred during the interim period in respect of the chrome and non-chrome businesses respectively. Samancor Holdings’ indemnity in clause 25.3.1 was as follows: ‘The Seller hereby, mutatis mutandis on the basis described in clause 25.2.1, indemnifies and holds harmless the Company against any claims, damage, loss, expense and/or costs brought against and/or suffered and/or incurred by the Company during the Interim Period, arising from and/or in any way associated with and/or connected to the conduct of the business and/or the affairs of the Company other than the Chrome Operations …’ [12] I shall in due course deal more fully with the appellants’ submissions regarding the interrelationship between clauses 23.6.3 and 24.1.5. At this stage, however, I should mention that the appellants’ argument, in its most extreme form, was that the two clauses read together constituted a temporally limited indemnity in the nature of a voetstoots clause, ie that the indemnity only applied to claims initiated by arbitration proceedings within six years from the Effective Date, and that s 8 was thus wholly inapplicable. [13] I reject that argument. I quoted s 8 in the opening paragraph of this judgment. Clause 23.6.3 is squarely covered by its terms. That clause read with clause 43 of the sale agreement provides that a claim shall be barred unless (in the language of s 8) ‘some step to commence arbitration proceedings is taken within a time fixed by the agreement’, viz the issuing and serving of the initiating arbitral process before the sixth anniversary of the Effective Date. Furthermore, the argument that s 8 does not apply to clause 23.6.3 is diametrically at odds with the appellants’ submissions in the arbitration proceedings, where they contended that the availability of s 8 to ameliorate undue hardship meant that clause 23.6.3 was not contrary to public policy. It was on this very basis that the appellants succeeded before the arbitration appeal panel, as I shall in due course explain. The tax claim [14] The claim at issue in this case arose from an additional assessment raised by the South African Revenue Service (SARS) in September 2012 in respect of Samancor Chrome’s tax year ended 30 June 2005. The assessment was for income tax relating to ‘Excluded Assets’. SARS subsequently levied penalty tax and interest as well. [15] Samancor Chrome, whose tax affairs in respect of its 2005 year were still being administered by Samancor Holdings (the seller), submitted its 2005 tax return on 30 June 2008. Without having raised any intervening queries, SARS on 7 February 2011 issued an original assessment. Although not so stated in the papers, it can be assumed that Samancor Chrome paid the assessed tax of R559 784 349 and that Samancor Holdings reimbursed Samancor Chrome any amounts attributable to the Excluded Assets. [16] The six-year time-bar expired on 1 June 2011. On 16 August 2011 SARS began an investigation into Samancor Chrome’s tax affairs, including its 2005 tax year. Having received requested documentation, SARS on 7 October 2011 drew attention to a note in the company’s 2005 financial statements indicating that an amount of R220 million, representing an impairment on investment, was said to have been included in profit from operations, whereas only R167 million was added back in the tax computation. A note in the tax computation stated that the balance of R53 million ‘went through retained earnings’. The company was asked to show where this figure appeared and why the full amount of R220 million should not be added back in the tax computation. [17] Samancor Chrome (now under the buyer’s control) referred SARS’ queries, to the extent that they related to Excluded Assets, to the seller, Samancor Holdings. The latter’s representatives replied on 14 December 2011. In regard to the 2005 impairment query, they said that they were still investigating the matter. On 15 February 2012 they reverted, stating that the non-inclusion of R53 million in the tax calculation ‘was an oversight and there was no intention to evade the payment of income tax’. Samancor Chrome passed this information on to SARS. [18] On 25 July 2012 SARS issued a letter of audit findings in respect of the tax years 2005 – 2008. Regarding the 2005 impairment issue, SARS stated that impairment on investments is not allowed as a deduction in terms of s 11(a) of the Income Tax Act 58 of 1962 and they would thus be adding back the impairment of R52 575 171. SARS invited Samancor Chrome to advance mitigating circumstances as to why additional tax (which I shall call penalty tax) should not be levied in terms of s 76(1)(c) of the Income Tax Act in respect of this and other tax adjustments. [19] Samancor Chrome forwarded the audit findings to Samancor Holdings so that the latter could address matters pertaining to Excluded Assets. On 10 August 2012 Samancor Holdings’ representatives responded. They agreed that the impairment on investment should be added back but urged that Samancor Chrome request SARS to waive penalty tax and interest ‘on the basis that the omission was not made with the intention to evade taxation’. Samancor Chrome made this request to SARS. [20] On 27 September 2012 SARS raised an additional 2005 assessment which increased the original assessment by taxable income of R52 575 171, and levied tax on this amount of R15 246 800 (I shall refer to the latter as the additional tax). On 11 October 2012 SARS raised penalty tax of R7 623 400 (ie at a rate of 50% of the additional tax) together with interest, in terms of s 89quat(2) of the Income Tax Act, of R17 267 001. [21] As requested by Samancor Holdings, Samancor Chrome in December 2012 lodged an objection against the penalty tax and interest. In January 2013 SARS agreed to reduce the rate of penalty tax from 50% to 20%. Again as requested by Samancor Holdings, Samancor Chrome in February 2013 noted an appeal against the penalty tax and interest. Some months later the matter was settled with SARS on the basis that the rate of penalty tax would be reduced to 15%. No interest was waived. In all, Samancor Chrome, as it was legally obliged to do, ended up paying SARS R27 420 297, comprising the additional tax of R15 246 800 plus R12 173,497 in penalty tax and interest. [22] In the meanwhile, on 24 November 2012 the claimants’ attorneys wrote to Samancor Holdings calling on the latter to pay or admit liability for the additional tax, penalty tax and interest. They also made demand on BHP and ASAC which had provided suretyships for Samancor Holdings’ obligations. These letters did not refer to any particular indemnities. The defendants’ attorneys replied by stating that it did not appear to their clients that they had any liability in respect of the claims and that the claimants’ attorneys had failed to set out the legal basis for the claims. The claimants’ attorneys made further demands on 1 March 2013, placing particular reliance on the indemnity in clause 24.1.1. Once again they were met with a denial of liability. The litigation history [23] The claimants initiated arbitration proceedings in August 2013. In seeking to recover the amount of R27 420 297, they relied on clauses 24.1.1, 24.1.5 and 25.3. The defendants served their statement of defence on 3 February 2014. They disputed the applicability of clauses 24.1.1 and 25.3. In relation to clause 24.1.5, they relied on the threshold clause, contending that the claims did not meet the $2 million threshold. They also pleaded that a claim under that clause was time- barred. [24] In their replication the claimants alleged that enforcement of the time-bar would be contrary to public policy. In the alternative, and if the arbitrator were to find the time-bar enforceable, they prayed that the arbitration be stayed to allow them to seek an extension of time from the high court in terms of s 8. In a rejoinder the defendants denied that enforcing the time-bar was contrary to public policy. They also denied that clause 23.6.3 was a clause falling within the ambit of s 8 or that the claimants would suffer undue hardship if the time-bar were enforced. [25] The arbitrator heard the matter in December 2017. The only evidence was that contained in affidavits submitted on behalf of the claimants by Mr Wessel Erasmus, SCH’s Chief Financial Officer, and Mr Antonie van der Loo, Samancor Chrome’s financial manager. In argument before the arbitrator it was common cause that the claim fell within the scope of clause 24.1.5, the defences to the claim under that clause being confined to the threshold issue and the time-bar. Although on the pleadings the defendants had denied that s 8 was applicable to clause 23.6.3, in argument they accepted that it was applicable. They deployed its applicability by arguing (a) that the existence of s 8 as an antidote to undue hardship meant that enforcement of the time-bar clause was not contrary to public policy; and (b) that the claimants, by having not hitherto brought a s 8 application, had by now foregone the opportunity to do so. [26] The arbitrator issued his award on 5 February 2018. He held (a) that the claim did not fall within the scope of clause 25.3; (b) that although the claim was covered by the language of clause 24.1.1, that clause’s operation as a general provision was excluded by clause 24.5 which was a special provision concerning tax; (c) that the three components of the tax claim (additional tax, penalty tax and interest) constituted a single claim or item of loss for purposes of the threshold clause and that the value thereof exceeded $2 million; and (d) that the enforcement of the time-bar clause would be contrary to public policy. He added that if he had found the time-bar clause to be enforceable, he would have stayed the arbitration to allow the claimants to bring a s 8 application. He thus made an award in favour of the claimants as prayed. [27] The defendants pursued an appeal, which was heard by an appeal panel in July 2018. The defendants abandoned reliance on the threshold clause. The panel issued a preliminary award on 18 October 2018. The panel (a) agreed with the arbitrator that clauses 24.1.1 and 25.3 were inapplicable; (b) found that in view of s 8, enforcement of the time-bar clause was not contrary to public policy; (c) held that the claimants should be afforded an opportunity to apply to the high court for a s 8 extension. The panel thus stayed the appeal proceedings pending the outcome of such an application. In acceding to the claimants’ request for a stay, the panel said: ‘We do however not express any view on the merits of such an application or on the question whether the High Court might, in the exercise of its discretion, deny them relief on the grounds of their delay or on some other basis.’ [28] The claimants launched their s 8 application in November 2018. In October 2019 the high court delivered judgment, granting the claimants an extension ‘until after the applicants’ claim in the arbitration proceedings was initiated on or about 20 August 2013’ and ordering the respondents in the application to pay the applicants’ costs including the costs of two counsel. The nature of the s 8 power [29] Both sides argued the case on the basis that the power exercised by a court in terms of s 8 of the Arbitration Act is a discretion in the strict (true or narrow) sense. Their view accords with the decisions of the English courts on s 27 of the now repealed English Arbitration Act 1950, which served as the model for our s 8 (see, eg, Irish Agricultural Wholesale Society Ltd v Partenreederei MS (The ‘Eurotrader’) [1987] 1 Lloyds Rep 418 (CA) at 421). [30] In order to succeed the appellants must thus satisfy us that the high court (as it has variously been said) exercised its discretion capriciously or unjudicially, or did not bring an unbiased judgment to bear, or acted on a wrong appreciation of the facts or applicable legal principles, or did not act for substantial reasons (Shepstone & Wylie and Others v Geyser NO 1998 (3) SA 1036 (SCA) at 1044J- 1045B; Giddey NO v JC Barnard and Partners [2006] ZACC 13; 2007 (5) SA 525 (CC) para 17). The appellants contended that the trial court had misapprehended the relevant legal principles and misconstrued the facts. Thus it is the reasoning of the high court that calls for particular scrutiny. The applicable legal principles [31] In order to assess whether the high court misapprehended the legal principles, it is necessary to state what they are. Section 8 of our Arbitration Act is, as I have said, modelled on s 27 of the repealed English Arbitration Act 1950, which in turn re-enacted s 16(6) of the English Arbitration Act 1934. In England, the power of extension is currently to be found in s 12 of the Arbitration Act 1996, the provisions of which are materially different to s 27 of the repealed Act. In terms of s 12(3), the court may only grant an extension of time in one of two circumstances: if ‘the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question, and that it would be just to extend the time’; or if ‘the conduct of one party makes it unjust to hold the other party to the terms of the provision in question’. South Africa has not followed suit, and it is unsurprising, in the circumstances, that courts in this country have had regard to English judgments dealing with s 27: see Administrateur, Kaap v Asla Konstruksie (Edms) Bpk 1989 (4) SA 458 (C); Chevron South Africa (Pty) Ltd v Unical Calulo Bunker Services (Pty) Ltd [2011] ZAWCHC 266. In the present case, both sides referred freely to English cases. This is not to say that the two considerations specified in s 12(3) of the current English Act are not relevant in the exercise of a court’s discretion in terms of our s 8. The respondents’ counsel accepted that they were. They are not, however, the only relevant considerations, and the weight to be given to them will depend on the particular circumstances of the case and on the court’s discretionary assessment of all relevant considerations. [32] The language of s 8 is straightforward. The power to extend arises if the court is of the opinion that ‘in the circumstances of the case undue hardship would otherwise be caused’ (my emphasis). The hardship which the section contemplates is hardship to the claimant because its claim is time-barred. Every claimant whose claim is time-barred can be said to suffer hardship through the loss of its claim, but the section requires something more. The court must be of the opinion that the claimant’s hardship will be ‘undue’. The ordinary meaning of that word conveys a hardship which is unwarranted or inappropriate because it is excessive or disproportionate. Whether the hardship is ‘undue’ in this sense must, as the section tells us, be determined with reference to the circumstances of the particular case. [33] There is nothing in s 8 to indicate that the power of extension should only be exercised rarely or in exceptional circumstances. There is no reason to add a gloss to the plain language of the section. A restrictive interpretation would be antithetical to s 34 of the Constitution which guarantees access to courts or other independent and impartial tribunals in order to have justiciable disputes adjudicated. [34] This is the view which the English courts took of s 27 of the 1950 Act following the landmark judgment of the English Court of Appeal in Liberian Shipping Corporation v A King and & Sons Ltd (The ‘Pegasus’) [1967] 1 All ER 934 (CA). In Comdel Commodities Ltd v Siporex Trade SA [1990] 2 All ER 552 (HL) the House of Lords declined to read restrictions into the ordinary meaning of s 27. Lord Bridge of Harwich said the following (557f-h): ‘The mischief which the section sets out to remedy, in my opinion, is simply the undue or unreasonable hardship suffered by a party to an arbitration agreement who is deprived of the opportunity to pursue a contractual claim by the operation of a restrictive contractual time limit in circumstances in which he ought reasonably to be excused for his failure to comply with it.’ [35] Any circumstance rationally bearing on the ‘undue’ question may be taken into account by the court. Those that occur readily to mind are: (a) the terms of the time-bar clause and the broader contractual setting; (b) the extent of the claimant’s delay; (c) the explanation for the claimant’s failure to bring the claim timeously; (d) the extent of the claimant’s fault, if any, in relation to the delay; (e) whether the defendant caused or contributed to the non-compliance and, if so, the extent of the defendant’s fault in that regard; (f) the nature and importance of the claim; (g) the extent of the prejudice, if any, suffered by the defendant in consequence of the delay. Unsurprisingly, considerations of this kind feature in the English cases. In Moscow V/O Exportkhleb v Helmville Ltd (‘The Jocelyne') [1977] 2 Lloyds Rep 121 (CA) Brandon LJ summarised the guidelines laid down in the majority judgments in The Pegasus thus (at 129): ‘(1) The words “undue hardship” in s 27 should not be construed too narrowly. (2) “Undue hardship” means excessive hardship and, where the hardship is due to the fault of the claimant, it means hardship the consequences of which are out of proportion to such fault. (3) In deciding whether to extend time or not, the Court should look at all the relevant circumstances of the particular case. (4) In particular, the following matters should be considered: (a) the length of the delay; (b) the amount at stake; (c) whether the delay was due to the fault of the claimant or to circumstances outside his control; (d) if it was due to the fault of the claimant, the degree of such fault; (e) whether the claimant was misled by the other party; (f) whether the other party has been prejudiced by the delay, and, if so, the degree of such prejudice.’ [36] In Comdel Commodities supra the House of Lords endorsed these principles (558d-f), and they were applied in this country in Asla Konstruksie and Chevron supra. See also M J Mustill and S C Boyd The Law and Practice of Commercial Arbitration in England 2 ed (1989) at 212-214, setting out a somewhat fuller list of factors which have been taken into account by English courts. Libra Shipping and Trading Corporation Limited v Northern Sales Ltd (The ‘Aspen Trader’) [1981] 1 Lloyds Rep 273 (CA) is a good illustration of their application. The Court of Appeal held that the trial court had failed to have regard to relevant considerations, so that the court on appeal was entitled to assess the matter afresh. The delay was two and a half months in relation to a clause which required claims to be brought within three months of final discharge of cargo. The delay was entirely the fault of the claimant. The defendant was in no way responsible for misleading the claimant. As against this, the claim was large and its forfeiture would involve a great degree of hardship. There was no prejudice to the defendant, a factor which Brandon LJ regarded as ‘of the utmost importance in weighing the case as a whole’ (at 280). The Court of Appeal concluded that without an extension of time undue hardship would be caused to the claimant, and the extension was granted. [37] Delay features in two ways. First, there is the delay from when the time-bar expired until the initiation of the arbitration proceedings or the seeking of an extension of time. (This is the delay contemplated in consideration 4(a) mentioned in the passage from The Jocelyne which I quoted earlier.) Second, there is the delay from when the claimant becomes aware of the need to seek an extension until the bringing of proceedings to obtain the extension. In England, it has been said that because of the discretionary nature of the power conferred by provisions such as s 27 of the 1950 Act, a claimant should seek the extension without undue delay after becoming aware of the need for it. [38] Delay in seeking discretionary remedies is likewise recognised in this country as a factor relevant in the exercise of the discretion, in the sense that unreasonable delay may result in the discretionary remedy being refused (see, eg, Beweging vir Christelik-Volkseie Onderwys and Others v Minister of Education and Others [2012] ZASCA 45; [2012] 2 All SA 462 (SCA) para 34; Off-Beat Holiday Club and Another v Sanbonani Holiday Spa Shareblock Limited and Others [2017] ZACC 15; 2017 (5) SA 9 (CC) para 35). However, to the extent that the appellants argued that delay in seeking the s 8 remedy is a threshold requirement which could result in a claimant being non-suited without regard to other factors, I reject the argument. In my view, delay of this kind is simply another factor which the court will take into account in deciding whether or not non-extension will cause the claimant undue hardship. An unreasonable delay may be outweighed by the importance of the claim, the absence of prejudice to the defendant and other relevant circumstances of the case. This is a matter for the trial judge’s opinion. The high court’s decision [39] The high court dealt with the general principles in paras 19-29 of its judgment, referring to the two South African cases (Asla Konstruksie and Chevron) and the leading English authorities. These led the high court to direct itself, on the law, in a manner consistent with the approach I have set out above. The appellants do not say that the high court misdirected itself in regard to these general principles. [40] The factors which led the high court to conclude that undue hardship would be suffered by the claimants if an extension of time were not granted were in summary the following: (a) Although a court exercising its discretion in terms of s 8 is not required to investigate the merits of the claim, the court may take the merits into account where they are manifest. In the present case, and but for the time-bar, the claimants’ claim for a tax indemnity was good, indeed undisputed. (b) The claimants were not at fault in regard to the expiry of the time-bar. They did not know of, and could not have discovered, the existence of the claim on or before 1 June 2011. The time-bar lapsed through circumstances beyond their control. (That this is so will be apparent from my earlier setting out of the facts.) (c) The defendants were at fault because they failed to include the amount of R53 million in Samancor Chrome’s tax return. (d) The defendants were also at fault because they only submitted the tax return at the end of June 2008, whereas by law they should have done so by the end of February 2006 and whereas historically extensions beyond that eight-month window had not exceeded a further 12 months. (e) If an extension were not granted, Samancor Holdings would, by virtue of its own conduct and fault, benefit by being saved a substantial amount of tax properly attributable to it. (f) The claim involved a substantial amount. With mora interest, the claim totalled about R52 million at the time of the proceedings in the high court. (g) The defendants would not be prejudiced by an extension. The only prejudice they advanced was losing the bargain of their time-bar, which was not relevant prejudice. No trial prejudice was claimed. (Indeed, since the claim on its merits was undisputed, no such prejudice was conceivable.) (h) In regard to the claimants’ delay in bringing the s 8 application, this was a relevant factor, indeed one of great importance, in the exercise of the court’s discretion. In the present case, the claimants had promptly raised s 8 in their replication as soon as the defendants pleaded the time-bar. The claimants’ reasons for not applying to the high court at that time were, in the high court’s view, readily apparent from the history of the litigation. Abitral determinations on other issues might have rendered a s 8 application moot. Although the high court considered that the claimants should nevertheless have launched their s 8 application as soon as the defendants placed reliance on the time-bar, the defendants had suffered no prejudice by virtue of the delay, and such delay should not in the circumstances ‘tip the balance’ in favour of the defendants. (i) In regard to the defendants’ reliance on party autonomy and their argument that it appeared from the time-bar clause that the parties appreciated the risk that a tax claim might only arise after expiry of the bar, the high court recognised the importance attached by our law to the maxim pacta servanda sunt. The high court did not consider, however, that there was a logical and principled distinction between a time-bar such as clause 23.6.3, where time runs from a fixed date unrelated to the coming into existence of the claim and a time-bar where time runs from the coming into existence of the claim (the type of contractual time-bar assessed, on public policy grounds, in Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC)). Party autonomy notionally applied to both forms of time-bar, but s 8 of the Arbitration Act is a statutory inroad on contractual autonomy, and to hold that contractual autonomy should prevail is inconsistent with the liberal approach mandated in the application of s 8. The historical pattern of delay in submitting tax returns did not justify the conclusion that the parties in the present case foresaw that the defendants might delay submitting the 2005 tax return as long as they did and that in such tax return they would fail to include the amount subsequently assessed to additional tax. [41] Of the above factors, the only matters with which the appellants take issue are (d), (h) and (i). It is convenient to deal with (h) first. Delay in launching application (factor (h) supra) [42] The appellants invoked authorities to the effect that once a defendant takes the time-bar point, a claimant should not linger in bringing its s 8 application. They cited, in argument to us, the same authorities that the high court mentioned in discussing this point, namely a passage from Mustill and Boyd supra at 214-15 and Irish Agricultural Wholesale Society supra at 423. The appellants submitted that the approach taken by the claimants in this matter was fundamentally inconsistent with the no-delay principle and that there is nothing in South African law to mandate a different approach. They cited Chevron supra as support for the proposition that a claimant may bring a s 8 application prior to completion of arbitration, even though the arbitrator’s decision on other issues might render the extension of time unnecessary. [43] The appellants argued that undesirable consequences would flow from allowing a claimant first to run an arbitration to completion before bringing its s 8 application. A defendant might incur all the time and expense of defending an arbitration on its merits, only to find that a s 8 application is refused, thus rendering the arbitration proceedings irrelevant. A claimant is required, so it was contended, to make an election at the outset whether to approach the high court for an extension or to place its faith in a favourable decision from the arbitrator on other points. Having chosen the latter, the claimant cannot fall back on the former. The fact that a defendant has not suffered prejudice in consequence of the delay is not in principle germane. [44] As I observed earlier, delay in launching proceedings is a relevant factor, but it is not a threshold requirement. It is part of the global assessment of all relevant circumstances influencing the exercise of the court’s discretion. This is the way in which the high court approached the matter in the present case, and it was right to do so. [45] I reject the argument that prejudice is irrelevant. Because one is dealing with the global assessment, the absence of prejudice is a relevant consideration, and indeed a court exercising its discretion might properly afford it great weight. I refer here to both forms of delay previously mentioned, viz delay after the lapsing of the time-bar and delay after becoming aware of the need for a s 8 extension. In assessing whether unreasonable delay should be overlooked in the context of other discretionary remedies (inter alia in pre-constitutional common law review), our courts always had regard to whether the other party had been prejudiced by the delay. And the high court was correct to say that it is not relevant prejudice that a defendant will, if an extension is granted, be faced with a claim which would otherwise be barred; such ‘prejudice’ is inherent in every case of extension. Relevant prejudice is prejudice to the defendant’s ability to resist the claim by virtue of the passage of time. [46] The appellants’ submissions about the undesirable consequences which might flow if a claimant could follow the approach which the claimants did in the present case are hypothetical. It is the facts of the particular case to which regard must be had. Naturally one can suppose cases in which the delay inherent in the approach which the present claimants followed could cause substantial prejudice to a defendant, and such prejudice would then be relevant. In the present case, however, the defendants in the event suffered no relevant prejudice. They did not dispute the clause 24.1.5 claim on its merits. Their threshold argument in relation to clause 24.1 5, and their applicability arguments in relation to clauses 24.1.1 and 25.3, were matters of interpretation, not disputed fact, and there was only a single day of argument before the arbitrator and before the appeal panel. To the extent that any part of the proceedings before the arbitrator or the panel are thought to have been rendered unnecessary by the granting of an extension of time, the panel will be entitled to take this into account in making its final costs award. [47] As I understand the high court’s decision, it did not find that the claimants were right to wait until the panel’s decision before bringing their s 8 application. The high court considered that they should have brought their application promptly after the defendants filed their statement of defence in February 2014, and Chevron indicates that such an application would have been permissible despite the fact that an arbitral decision on other issues might in due course render the extension of time irrelevant. [48] It is unnecessary to decide whether the high court was correct in finding, on the particular facts of this case, that the claimants were at fault in not bringing their s 8 application as soon as the defendants pleaded the time-bar. The high court’s legal approach was one which favoured the appellants and accorded with their submissions on the correct legal position. The high court was nevertheless entitled to have regard to the claimants’ explanation for having adopted the course they did, even if it was misguided. The claimants delayed because both they and the defendants were pursuing contentions before the arbitrator which might render a s 8 application academic: (a) the claimants might succeed on clause 24.1.1 or clause 25.3, neither of which was subject to a time-bar; or (b) the claimants might succeed on clause 24.1.5 by persuading the arbitrator that enforcement of the time-bar was contrary to public policy; or (c) the defendants might persuade the arbitrator that the claim based on clause 24.1.5 should fail on the threshold issue. [49] The claimants succeeded before the arbitrator on issues (b) and (c), hence the award in their favour. If the defendants had not pursued an arbitration appeal, that would have been the end of the matter without the need for a s 8 application. Having obtained success on issues (b) and (c), the claimants understandably defended their success on appeal, but the panel reversed the arbitrator on issue (b), which is when the claimants found it necessary to pursue a s 8 application. The absence of litigation prejudice to the defendants was even more clear-cut by that stage, because all the issues other than an extension of time had already been determined in the arbitration. [50] Counsel for the appellants did not suggest in argument that the appellants had suffered any trial prejudice by virtue of the delay. As I have said, any unnecessary costs incurred in the arbitration by virtue of the failure to bring the s 8 application earlier is a matter which can be addressed by the panel in its costs award. [51] Counsel’s remaining argument as to prejudice was that if the claimants had brought their s 8 application shortly after February 2014 (when the defendants pleaded the time-bar), they would not have been able to tell the court that their claim was undisputed, since the defence based on the threshold clause would not yet have been determined in arbitration proceedings. By only bringing their application after the appeal panel had issued its interim award, the claimants could argue that their claim was uncontested save for the time-bar clause. The fact that their claim was practically undisputed was a factor which the high court took into account. [52] Prejudice in this attenuated form was not alleged in the appellants’ opposing papers nor is there any indication that they relied on it in argument before the high court. It was not even mentioned in the appellants’ heads of argument in this court. On the contrary, the written argument criticised the high court for finding that the absence of prejudice was a relevant factor. It has rightly not been suggested that the claimants deliberately held back their s 8 application in order to secure this supposed advantage. In stating that the claim was practically undisputed, the high court appears to have been making the point that it was undisputed that the additional tax, penalties and interest had been imposed in the amounts alleged, that the levied amounts related to Excluded Assets, and that they fell within the ambit of clause 24.1.5. The high court’s exercise of its discretion would not have been in the least affected if the threshold defence, which turned on a narrow question of interpretation, had still been a live issue. [53] Counsel for the appellants raised the ‘floodgates’ spectre if claimants were permitted to run time-barred arbitrations before bringing s 8 applications. Our decision in the present case does not signal the permissibility of such an approach; it turns on the specific and in some respects peculiar circumstances of this case. The floodgates argument is, moreover, exaggerated. A claimant could only run an arbitration on its merits by alleging and satisfying the arbitrator that the time-bar clause is unenforceable. Absent such a finding, the arbitrator would simply uphold the time-bar defence and dismiss the claim without entering upon the merits. [54] I thus do not consider that the high court was guilty of any legal or factual misdirection in assessing the claimants’ delay in launching their s 8 application. The weight to be attached to this consideration in the globular assessment was a matter for the high court. Appellants’ lateness in submitting the 2005 return (factor (d) supra) [55] The appellants submitted that the high court misdirected itself factually on the following two questions: (a) whether it was reasonably foreseeable, when the sale agreement was concluded in February 2005, that a tax claim might only become known to the buyer after the expiry of the six-year time-bar; (b) whether there was a culpable delay by the seller in submitting Samancor Chrome’s 2005 tax return which caused or contributed to the buyer’s inability to learn of the tax claim until after expiry of the time-bar. These two questions, it may be noted, raise issues which could conceptually be located within the first and second considerations respectively specified in s 12(3) of the current English legislation. As I said previously, considerations of this kind are relevant but not exhaustive when a South African court considers a s 8 application. [56] Under the current heading of this judgment, I shall consider the second of the two criticisms identified in the preceding paragraph. Although the evidence bearing on the two criticisms overlaps to some extent, it is convenient to deal with the other criticism at a later stage, in the context of the appellants’ submissions concerning the nature of the time-bar clause at issue in this case. [57] The appellants contended that the high court misdirected itself factually when it criticised Samancor Holdings for being ‘excessively late’ in submitting the 2005 tax return and in finding that the historical pattern of delay had been 12 months after financial year-end rather than the 28 months which actually occurred. Our attention was drawn to a passage in Mr Erasmus’ founding affidavit where he stated that the due date for the submission of the 2005 tax return was the last day of February 2006 but that ‘[o]ver the subsequent years the timeline for submission of income tax returns has been extended to 12 months after financial year-end’. The appellants’ argument was that the phrase ‘over the subsequent years’ referred to a time later than the conclusion of the sale agreement in February 2005. There was no evidence, they submitted, that the historical position, as at February 2005, was that the delay in submitting tax returns was only 12 months after financial year-end. [58] The question of the historical pattern as at February 2005 is relevant to assessing what the contracting parties might reasonably have foreseen when they concluded the sale agreement in February 2005 (a matter I consider later, under a separate heading). However, the high court’s factor (d) was not concerned with foreseeability but with the appellants’ culpability in causing the claimants only to become aware of their claim after the time-bar expired. If, after February 2005, a 12-month extension became the norm, it would not be unreasonable to criticise the appellants for failing to meet this norm. On the evidence, the due date for the 2005 tax return was either the end of February 2006 or – if the 12-month extension applied – the end of June 2006 or perhaps the end of February 2007. (Mr Erasmus’ replying affidavit suggests that the 12-month extension he had in mind may have been 12 months in addition to the initial eight-month extension, ie a total extension of 20 months, rather than 12 months after year-end, since he postulated that in accordance with the 12-month extension the 2005 return should have been submitted by the end of February 2007.) [59] In regard to the historical pattern as at February 2005, one knows from the founding affidavit that by the time the agreement was concluded the 2003 tax return had been submitted. This means that the 2003 return had been submitted by not later than 20 months after year-end. Neither side provided information as to the delay in submitting earlier tax returns. The appellants, to whom the information would have been known, did not say that their tax returns had routinely been submitted more than 20 months after financial year-end. [60] In regard to culpability, giving the appellants the benefit of the 12-month extension, as the high court did, is to their advantage. Their position would only be worse if they should have submitted the tax return by the end of February 2006. The best case for the appellants is that the 2005 return should have been submitted by the end of February 2007, whereas it was in fact submitted at the end of June 2008, some 16 months later. If all subsequent events had occurred 16 months earlier than they did, the claimants would have known by October 2010 that Samancor Holdings had erroneously omitted R53 million from Samancor Chrome’s 2005 tax return; by March 2011 they would have known of SARS’ audit findings; and by April 2011 they would have known that Samancor Holdings agreed that the amount of R53 million had to be added to Samancor Chrome’s taxable income. This would have left enough time to make the income tax claim before the time-bar expired on 1 June 2011. [61] In my view, therefore, the high court did not misdirect itself by finding that Samancor Holdings was ‘excessively late’ in submitting the 2005 tax return. The appellants were culpable not only in regard to this delay but also in submitting a tax return which omitted the income of R53 million. Both of these matters could legitimately be taken into account by the high court in exercising its discretion. Nature of clause 23.6.3 and foreseeability (factor (i) supra) The nature of clause 23.6.3 [62] The appellants argued that the clause 23.6.3 time-bar is fundamentally different to the time-bar clauses considered in cases such as Barkhuizen, where time starts to run when a claim arises. A time-bar set with reference to a date such as the effective date of an agreement necessarily holds the risk that the time-bar might expire before the claim arises or before it comes to the notice of the claimant. [63] In Barkhuizen the question was whether enforcement of a contractual time- bar was contrary to public policy. In the present matter, that was a question for the arbitrator and the appeal panel. The high court, and we, are concerned with a different question, namely an extension of time in terms of s 8. In this context, it is not unusual for extensions of time to be sought in relation to time-bar clauses set with reference to dates unrelated to the arising of claims. Indeed, all the English cases to which we were referred are cases of this kind, where time typically ran from the discharge of cargo. [64] In such cases it is possible, as occurred in the present matter, that a claimant will only become aware of the existence of a claim after the time-limit has expired, and indeed there are English cases where this was the position. The English courts did not say that s 27 did not apply in such situations or that party autonomy should make extensions of time in such cases rare or exceptional (see, eg, Sparta Navigation Co v Transocean America Inc (The ‘Stephanos’) [1989] 1 Lloyds Rep 506 (QB) at 509). On the contrary, the circumstance that time expired before the claimant could reasonably have become aware of the claim was regarded as a strong factor in favour of granting an extension. (See, eg, Eastern Counties Farmers Ltd v J & J Cunningham Ltd; Grimsdale & Sons Ltd (Third Party); Holland Colombo Trading Society Ltd (Fourth Party) [1962] 1 Lloyds Rep 261 (CA) at 263; Atlantic Shipping Co Ltd v Tradax Internacional SA (The ‘Bratislava’) [1977] 2 Lloyds Rep 269 (QB) at 271; Establissments Soules & Cie v International Trade Development Co Ltd [1979] 2 Lloyds Rep 122 at 137-138.) [65] The appellants’ argument comes close to postulating that a time-bar such as clause 23.6.3 does not fall within the scope of s 8 at all because the parties must be taken to have contemplated the very hardship which occurs when the ‘guillotine falls’ before the claimant could reasonably have been aware of the claim. The high court was correct to reject this argument as unprincipled. Clause 23.6 is plainly a time-bar clause falling squarely within the ambit of s 8. [66] There is a distinction between a time-bar clause and a temporally limited indemnity. An insurer’s obligation to indemnify is usually limited, temporally, to events occurring during a specified period. This temporal limit on the insurer’s indemnity obligation is quite different from any time-limits which the policy may impose in regard to the institution of legal proceedings. Clauses 25.2 and 25.3 of the sale agreement were temporally limited indemnities. They covered events occurring between the Effective Date and the Closing Date. They were not time- bar clauses requiring arbitration to be initiated within a specified time, and s 8 could thus not have been invoked to extend the temporal span of those indemnities. Clause 24.1.5, by contrast, was formulated in a temporally unlimited way and made subject to a separate time-bar clause requiring the claimant to take a step to commence arbitration within a specified period of time. This inevitably brought s 8 into play. [67] As with all time-bar clauses, the purpose of clause 23.6 was to give the parties finality. See Sparta Navigation supra at 509 where Saville J said the following in rejecting an argument that the well-known Centrocon time-bar clause did not apply to a claim which only arose after the time-bar expired: ‘On this construction [the one preferred by the judge], whether or not the claimant has a valid or sustainable claim (ie a cause of action) during the stipulated period and whether or not he knew or ought to have known during that period that he had or might have a claim of any nature are quite immaterial considerations. The commercial sense of such a construction is to my mind obvious – at the end of the stipulated period the parties will know where they stand in the sense of knowing what claims (if any) are outstanding against each other: and the difficulties and uncertainties often inherent in trying to deal with claims only long after the event would be largely, if not wholly, averted.’ [68] But all time-bar clauses, where arbitration is concerned, are subject to s 8, so the contractual purpose of finality cannot override an assessment of undue hardship. In Sparta Navigation Saville J, despite having formulated the purpose of the time-bar clause as quoted in the preceding paragraph, granted an extension on an application brought about 20 months after the time-bar lapsed. Foreseeability [69] Earlier in this judgment I foreshadowed the appellants’ criticism of the high court’s treatment of the question whether it was reasonably foreseeable, when the sale agreement was concluded in February 2005, that a tax claim might only become known to the buyer after the expiry of the six-year time-bar Although clause 23.6.3 is subject to s 8, I accept that a court exercising its discretion under that section may take into account (a) the extent to which the parties could have foreseen that a claimant might only learn of claims after the expiry of the time-bar and (b) the likelihood of claims only arising or coming to the notice of a claimant after the expiry of the time-bar. This may bear upon the question whether enforcing the time-bar would cause ‘undue hardship’. [70] In the present case, the circumstances affecting the date on which the claimants could reasonably acquire knowledge of tax claims would be (a) the date of submission of the relevant tax return; (b) the date of the issuing of the original assessment; (c) the accuracy of the tax return and thus the risk of additional assessments. [71] I have already dealt with the evidence bearing on the submission of tax returns. There is evidence as to the practice which came into existence at some unspecified time after 2005, and evidence that the 2003 tax return was submitted by not later than February 2005. There is also evidence that the due date for the submission of tax returns as at February 2005 was eight months after year-end. There is no evidence of any historical pattern of the submission of tax returns later than 20 months after year-end. [72] In regard to dates of assessments, when the agreement was concluded Samancor Chrome’s most recent tax assessment was for its 1998 year. This means that if the company’s 1999 tax return was submitted by February 2001 (20 months after year-end), there was still no assessment four years later. There is no evidence that those representing the claimant were aware of these facts when the agreement was concluded, but if they were, it might have suggested that a 2005 tax return submitted in February 2007 might only become the subject of an assessment during the course of 2011. If the assessment were issued after 1 June 2011, an income tax indemnity would be time-barred, but s 8 would still have been available in case of undue hardship. Mr Erasmus, with hindsight, thought that six years was optimistic. However, he was not involved in negotiating the agreement. The appellants in their opposing papers disputed the admissibility of his opinions on this score. They did not supply evidence of their own as to the information available to the contracting parties about the historical pattern of submission and assessment. [73] Ultimately, I do not think that very much turns on these extrapolations. A lengthy time-bar was provided. In the event, it was not long enough to enable the claimants timeously to pursue a large claim for an otherwise undisputed tax indemnity. One does not need evidence to know that a time-bar clause of this kind holds the potential to bar a claim of which the claimant might only learn after the time-bar has expired. That is equally true of the time-bar clauses considered in the English cases. I do not think that the evidence justifies the conclusion that the parties foresaw it as likely that the six-year time-bar would prove to be inadequate, though I accept that they could have foreseen this as a possibility. For that possibility, s 8 was available to ameliorate undue hardship. [74] In the event, SARS’ original assessment on the 2005 return was issued in February 2011, about two years and seven months after filing. But for Samancor Holdings’ failure to include the sum of R53 million in the tax computation, matters would have been adjusted between the parties in terms of clause 24.1.5 before the time-bar expired. The claimants were not at fault. The defendants were at fault, both in submitting the tax return late and more importantly in failing to ensure that all income attributable to Excluded Assets was included in the return. They suffered no prejudice by virtue of the delay beyond 1 June 2011 or beyond the date on which the claimants became aware that an extension of time might be needed. The high court was clearly entitled to reach the conclusion which it did. [75] I make the following order: The appeal is dismissed with costs, including the costs of two counsel. ______________________ O L ROGERS ACTING JUDGE OF APPEAL APPEARANCES For Appellants F Snyckers SC (with him J Wilson SC) Instructed by Mervyn Tabacks Inc, Johannesburg Webbers Attorneys, Bloemfontein For Respondents A Subel SC (with him B M Gilbert) Instructed by Brian Kahn Inc, Johannesburg Claude Reid 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 24 May 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. Samancor Holdings (Pty) Ltd and Others v Samancor Chrome Holdings (Pty) Ltd and Another (357/2020) 2021 ZASCA 60 (24 May 2021) ___________________________________________________________ The Supreme Court of Appeal (SCA) today dismissed an appeal against a judgment of the Gauteng Division of the High Court granting the respondents an extension of time to institute arbitration proceedings against the appellants. In February 2005 the first respondent, Samancor Chrome Holdings (Pty) Ltd (SCH), bought the shares in the second respondent, Samancor Chrome Ltd (Samancor Chrome), from the first appellant, Samancor Holdings (Pty) Ltd (Samancor Holdings). In terms of the sale agreement, Samancor Holdings gave SCH and Samancor Chrome certain indemnities, including an indemnity in respect of Samancor Chrome’s income tax up to the Closing Date (3 April 2006). The sale agreement contained an arbitration clause. There was also a time-bar clause which required proceedings in respect of the income tax indemnity to be issued and served before the sixth anniversary of the Effective Date. On a date subsequent to the sixth anniversary, the South African Revenue Service (SARS) conducted an audit of Samancor Chrome’s tax affairs. This culminated in an additional assessment in respect of the period prior to the Closing Date. The amount of additional tax levied, together with penalties and interest, formed the subject of the claim which SCH and Samancor Chrome (the claimants) wished to pursue against Samancor Holdings and against the latter’s sureties, the second and third appellants (the defendants). In the arbitration proceedings, the claimants and the defendants advanced various contentions which, if resolved in their favour, would have rendered the time-bar clause inapplicable. Although the claimants succeeded before the arbitrator, this was reversed by an arbitration appeal panel. This meant that in order to succeed the claimants needed to have the period for initiating the arbitration proceedings extended in terms of s 8 of the Arbitration Act 42 of 1965. The appeal panel adjourned the proceedings in order to allow the claimants to launch an application in the high court for such an extension. The high court granted the extension. In dismissing the appeal, the SCA found that there was no basis for interfering in the high court’s exercise of its discretion. The high court had correctly identified the legal principles governing the exercise of the discretion. The question was whether ‘undue hardship’ would be caused to the claimants if an extension were not granted. Hardship was ‘undue’ if the time-barring of a claim was in all the circumstances a disproportionate penalty for the claimant to suffer. Any circumstance rationally bearing on this question could be taken into account. It was a relevant consideration, in the present case, that the claimants could not have been aware of the claim until after the time-bar expired. The trial court had not erred in finding (a) fault on Samancor Holdings’ part in bringing about this state of affairs, given that the tax return was submitted late and that a significant item of income had been omitted due to an error on Samancor Holdings’ part; and (b) that this was a relevant consideration which the court could take into account in exercising its discretion. The trial court had likewise committed no material misdirection in finding that the claimants’ delay in launching their s 8 application should not non-suit them on the particular facts of this case. Although ordinarily such relief should be sought as soon as a claimant becomes aware of the need for it, the fact that the arbitration might have been resolved without the need for a s 8 application had caused the claimants to defer seeking such relief. Even if this was misguided, the high court had been entitled to have regard to these reasons in weighing all relevant considerations. Because the delay had not caused the defendants any litigation prejudice, and in view of all the circumstances of the case, the high court had not misdirected itself in overlooking the delay. Finally, the SCA rejected an argument that the high court had erred in treating the time-bar clause in the present case as a provision falling within the ambit of s 8. The clause fell squarely within the terms of the section. The SCA accepted, as the high court had done, that a court exercising its discretion in terms of s 8 may permissibly take into account the extent to which the parties, at the time of concluding their contract, could reasonably have foreseen that claims might only arise or become known to a claimant after the expiry of the time-bar. In the present case, the parties may have foreseen that such claims might possibly only arise or become known after the expiry of the time-bar, but the evidence did not show that that this would have been foreseen as likely. The foreseeability of such a possibility did not, in the present case, compel the high court to refuse the extension. ~~ ends~~

3137

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case No 138/06 In the matter between: FREDERICK WILLEM WYPKEMA Appellant and TOBIAS JOHANNES LUBBE Respondent Coram: Harms ADP, Brand, Lewis, JJA and Snyders, Theron AJJA Heard: 12 MARCH 2007 Delivered: 28 MARCH 2007 Summary: Attorney – drawing of cheque on trust account – acts as principal and not in a representative capacity. Neutral Citation: This judgment may be referred to as Wypkema v Lubbe [2007] SCA 36 (RSA). SNYDERS AJA/ SNYDERS AJA: [1] The appellant was refused provisional sentence in proceedings against the respondent by Van Rooyen AJ in the Pretoria High Court. He appeals against that decision with leave of this court. The respondent is not opposing the appeal. [2] The respondent, a practising attorney, approached the appellant on behalf of a client, Rooihak Eiendomme (Edms) Bpk (Rooihak), for a loan as bridging finance for the acquisition of an immovable property pending the registration of a mortgage bond over the property. The appellant agreed to extend a loan of R1 850 000 at a fee of R350 000. Prior to the money being advanced in terms of the loan agreement the respondent, under cover of a letter dated 13 September 2004, furnished the appellant with a cheque dated 14 September 2004 drawn by him on his firm’s trust account in favour of the appellant in the agreed amount of R2 200 000, the total amount of the loan and the fee of R350 000. This cheque was duly presented for payment by the appellant on 30 September 2004 when it was dishonoured by non- payment and returned to the appellant marked ‘effects not cleared’. [3] The court a quo upheld all the defences raised by the respondent in his answering affidavit and found: ‘. . . that in terms of the nature of an attorney’s trust account, the attorney at all times acts as agent on behalf of other entities in respect of such trust account and the funds in a trust account of an attorney never vests in the attorney.’ Flowing from that finding the court concluded that the respondent issued the cheque in a representative capacity as agent for Rooihak and therefore was not personally liable. On the facts the court found that the respondent had not bound himself or his firm as surety and co-principal debtor for the obligation of Rooihak and that the agreement to repay the loan with this cheque was subject to the registration of the mortgage bond on or before 29 September 2004. All of these findings are attacked by the appellant. [4] Section 78(1) of the Attorneys Act 53 of 1979 compels a practising attorney to keep a separate trust banking account. It reads: ‘(1) Any practising practitioner1 shall open and keep a separate trust banking account at a banking institution in the Republic and shall deposit therein the money held or received by him on account of any person.’ The money deposited into that account generally does not form part of the assets of the relevant attorney, as s 78(7) provides: ‘(7) No amount standing to the credit of any practitioners’s trust account shall be regarded as forming part of the assets of the practitioner, or may be attached on behalf of any creditor of such practitioner: Provided that any excess remaining after payment of all claims of persons whose money has, or should have, been deposited or invested in such trust account, and all claims in respect of interest on money so invested, shall be deemed to form part of the assets of such practitioner.’ [5] The nature of an attorney’s trust account and the relationships between bank, attorney and the latter’s client were summarised in Fuhri v Geyser NO 1979 (1) SA 747 (N)2 at 749C-E as follows by Hefer J: ‘. . . despite the separation of trust moneys from an attorney’s assets thus affected by s 33 (7), it is clear that trust creditors have no control over the trust account: ownership in the money in the account vests in the bank or other institution in which it has been deposited (S v Kotze 1965 (1) SA 118 (A) at 124), and it is the attorney who is entitled to operate on the account and to make withdrawals from it 1 ‘Practitioner’ is defined in s 1 as meaning ‘any attorney, notary or conveyancer’. 2 The principles were approved on appeal by the full court in Fuhri v Geyser NO 1980 (1) SA 598 (N). The matter related to an attorney’s trust account in terms of s 33(3) of the Attorneys Act 23 of 1934 the predecessor to the current Act which section was worded in essentially the same terms as s 78(7). (De Villiers NO v Kaplan 1960 (4) SA 476 (C)). The only right that trust creditors have, is the right to payment by the attorney of whatever is due to them, and it is to that extent that they are the attorney’s creditors. This right to payment plainly arises from the relationship between the parties and has nothing whatsoever to do with the way in which the attorney handles the money in his trust account.’ [6] In De Villiers NO v Kaplan 1960 (4) SA 476 (C), referred to and approved of by Hefer J, the court stated at 479A-C that the section:3 ‘. . . left unimpaired the right of the attorney to direct the bank at which the trust account is kept to dispose of the amount standing to the credit of that trust account in a manner as directed by him. Katz [the attorney] retained the right to direct the bank to pay the money in his trust account to his trust creditors or to persons to whom such creditors had instructed him to make payment. He similarly retained the right if there was a sum in such account in excess of that required to meet his trust obligations, to direct the bank to pay such excess to his personal creditors or to him personally. Indeed as between himself and the bank, unaware of the fact that he was acting in conflict with his trust obligations, he could direct the bank to pay the amount standing to the credit of his trust account to his personal creditors or to himself. Should the bank, acting on any such directions, pay out the amount standing to the credit on his trust account, such amount would, as indicated above, cease to be amenable to the terms of sec. 33(3). In effect, therefore, even although the amount in the trust account was not, while it was still in such account, an asset belonging to Katz, he had a right of disposal over such amount . . .’ [7] The court a quo failed to have regard to these basic principles and consequently erred in its conclusion. When an attorney draws a cheque on his trust account, he exercises his right to dispose of the amount standing to the credit of that account and does so as principal and not in a representative capacity. 3 Again a reference to s 33(3) of Act 23 of 1934 and the comments made in fn 2 above are applicable. See also Crowther & Pretorius v Warda Butchery BK t/a R S Butchery 1999 (1) 847 (N) at 852A; Cameron et al Honore, SA Law of Trusts pp 293, 336 para 209 and 569 para 352. [8] Flowing from that incorrect premise the court a quo found that the respondent issued the cheque on behalf of Rooihak. That conclusion is contrary to the Bills of Exchange Act 34 of 1964 that provides in s 24(1): ‘. . . if a person signs a bill as drawer . . . and adds words to his signature indicating that he signs for or on behalf of a principal, or in a representative capacity, or if he signs as drawer and the name of the principal appears with his signature, he is not personally liable thereon . . .’ The respondent’s signature on the cheque is unqualified and appears below the printed words ‘TOBIAS LUBBE ATTORNEY TRUST ACCOUNT ACT 53/1979 SECTION 78(1)’ in the space provided for the drawer to sign. These words do not qualify the signature of the drawer but merely identify the bank account on which the cheque is drawn. There are no facts that bring the respondent’s signature as drawer within the ambit of s 24(1): thus the conclusion follows that he signed the cheque in his personal capacity. [9] The finding that the respondent did not undertake liability as surety and co- principal debtor does not relate to any of the facts and issues in the case and is inconsequential in view of the conclusions reached. [10] The letter of 13 September 2004 that accompanied the respondent’s cheque to the appellant formed the basis of the conclusion by the court a quo that the agreement underlying the cheque was subject to the registration of a mortgage bond. The relevant portions from the body of that letter reads: ‘Soos u bewus is sien ons toe tot die registrasie van ‘n eerste verband ten gunste van Standard Bank oor die eiendom en is ons in besit van die brief van onderneming vir betaling van die gemelde bedrag teen registrasie van die gemelde verband. Ons onderneem onherroeplik dat registrasie van die verband sal plaasvind en dat registrasie sal plaasvind nie later nie as 28 September 2004, ten einde u terug te betaal nie later nie as 29 September 2004. Vind dan hierby aangeheg die volgende: 1. Afskrif van waarborg van Standard Bank vir betaling van R2 200 000.00; 2. Ons trusttjek in die bedrag van R2 200 000.00 met die uitdruklike verstandhouding dat u die tjek slegs sal aanbied vir betaling op 29 September 2004 en verlang weer u onderneming in die verband. Ons vertrou dat u voormelde in orde vind en bevestig dat u met ontvangs van die dokumentasie ons sal voorsien van u tjek in die bedrag R 1 850 000.00, alternatiewelik elektroniese oorplasing na ons rekening . . . .’ [11] Nothing in this letter suggests the suspensive condition found by the court a quo. The only term apparent from the letter is that the cheque was delivered subject to it not being presented for payment before 29 September 2004. [12] None of the grounds upon which provisional sentence was refused can be upheld. However, a question arose during the hearing of the appeal whether the agreement to take a trust cheque as security for repayment of a loan when the funds from which that cheque was meant to be paid were not yet in the trust account was not contra bonos mores and therefore unenforceable. [13] It is a fundamental principle of our law that an agreement to commit an unlawful act or serve an unlawful purpose is invalid. The maxim ex turpi causa non oritur actio operates against any attempt to enforce an unlawful agreement.4 [14] The question of unlawfulness has arisen primarily because of the following allegations in the appellant’s replying affidavit: 4 Jajbhay v Cassim 1939 AD 537; Visser v Rousseau en andere NNO 1990 (1) SA 139 (A). ‘4.3 At all relevant times I was induced to enter into the loan agreement by the defendant’s proposal that he provide me with his trust account cheque for the sum of R2 200 000,00, subject to the condition only that it be deposited by me on the 29th September 2004. By this act the defendant guaranteed to me that I would receive full payment of the sum of R2 200 000 on the 29th September 2004.’ ‘8.1 I submit that the mere fact that the defendant placed me in possession of a cheque drawn on his trust account, an utterly irregular act, the unlawfulness and consequences whereof the defendant was undoubtedly aware, refutes any suggestion of a suspensive condition.’ [15] If there were sufficient funds which were held on account of other parties – excluding Rooihak – to meet the cheque, it would have been proper to deduce that the underlying agreement had been entered into with an unlawful aim. This is because the bank would have honoured the cheque using funds destined for third parties and the Fidelity Fund would then, ultimately, have had to finance any shortfall. On the other hand, if there were insufficient funds in the trust account to meet the cheque, irrespective of whether they were held on account of others presentation thereof would simply have resulted in the cheque being dishonoured, as did happen, with no real disturbance to the funds in the trust account because it would not have been possible to execute against the trust account. [16] The only facts before us that reflect on the state of the respondent’s trust account at the time that the cheque was presented are that it did not contain sufficient funds to meet the cheque and the expected proceeds from the mortgage bond were never deposited. It is not known what the state of the trust account was at the time that the agreement was entered into, nor the extent of the trust creditors at that time or at the time that the cheque was presented. It is therefore not possible to conclude that an agreement was entered into with an unlawful aim or purpose. [17] Aside from establishing the nature of the agreement it is relevant to establish whether either of the parties intended to perform the agreement in an unlawful way.5 There exists a presumption in law that parties intend to perform agreements in a lawful manner. In Claasen v African Batignolles Construction (Pty) Ltd 1954 (1) SA (O) at 556H-557A that presumption was expressed as follows: ‘. . . a contract perfectly valid on the face of it may stipulate for the performance of an act which is illegal at the time the contract is entered into and then it is void ab initio. A contract, however, is not necessarily illegal merely because it may be performed in a manner contrary to law. There is a presumption that the parties intend to act lawfully, and a contract which may be performed in two ways, one lawful, the other unlawful, will not be void except on proof that it was intended to perform it in the illegal way.’6 [18] The appellant was assured, in language which was clear in its intent, in the letter of 13 September 2004 that registration of the mortgage bond that was to provide the proceeds from which the cheque was to be paid, was to have been registered no later than 28 September 2004. He was also told that the respondent was mandated to register the mortgage bond and was in possession of a letter of undertaking from the prospective mortgagee, a bank, to pay the money into the respondent’s trust account upon registration of the mortgage bond. [19] On the strength of these assurances there is no reason why the appellant was not entitled to accept that the respondent was issuing and delivering the cheque with no risk to any of his trust creditors or the Fidelity Fund. In fact, as a general 5 In Archbolds (Freightage) Ltd v S Spanglett Ltd (Randall Third Party) [1961] 1 All ER 417 (CA) one of the effects of illegality on an agreement was summarised as follows: ‘If at the time of making the contract there is an intent to perform it in an unlawful way, the contract, although it remains alive, is unenforceable at the suit of the party having that intent; if the intent is held in common, it is not enforceable at all.’ This was quoted with approval in Essop v Abdullah 1986 (4) SA 11 (C) at 15F. 6 See also Kirsten v Bankorp Ltd 1993 (4) SA 649 (C) at 661I-J; Karstein v Moribe 1982 (2) SA 282 (T) at 291C-F; Juglal NO v Shoprite Checkers (Pty) Ltd 2004 (5) SA 248 (SCA) para 12. proposition one would be entitled to accept, in the absence of knowledge to the contrary, that when an attorney issues a trust cheque, he acts lawfully and in accordance with the rules of his profession. To be given a trust cheque by an attorney is therefore an added assurance that the cheque is likely to be met. [20] The events that followed on the delivery of the cheque suggest that there was no unlawful agreement: (a) the cheque was dishonoured; (b) the respondent wrote a letter to the appellant after the cheque was dishonoured that the payment of the funds by the mortgagee into his trust account was imminent;7 and (c) the respondent never raised the defence that the appellant intended an unlawful consequence when he took a trust cheque as security for payment of the loan. [21] There is one outstanding aspect. The respondent issued a cheque that was dishonoured, he made promises of the imminent availability of funds which implied the registration of a mortgage bond when that had never taken place. This conduct and the propriety of issuing what was in effect a post-dated cheque on a trust account, should be investigated. [22] For these reasons: (a) The appeal is upheld with costs. (b) The order of the court a quo is set aside and replaced with an order for provisional sentence in the following terms: i. Payment of the amount of R2 200 000; ii. Interest on the amount of R2 200 000 at the rate of 15,5% per annum from 1 October 2004 until date of final payment; 7 This letter implies that the mortgage bond was registered, but in contrast, the respondent in his answering affidavit alleges, rather vaguely, that the ‘. . . transaction, in terms whereof the funds would have been received to be paid from the trust account was cancelled/alternatively did not proceed. . . .’ iii. Costs of suit. (c) The Registrar is requested to refer this judgment to the Law Society of the Northern Provinces. __________________________ S SNYDERS ACTING JUDGE OF APPEAL CONCUR: HARMS ADP BRAND JA LEWIS JA THERON AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL In the matter between: FREDERICK WILLEM WYPKEMA APPELLANT and TOBIAS JOHANNES LUBBE RESPONDENT From: The Registrar, Supreme Court of Appeal Date: 28 March 2007 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The SCA today delivered judgment against an attorney on a cheque that he drew on his trust account that was dishonoured. The respondent negotiated a loan with the appellant as bridging finance on behalf of one of his clients. The client was in the process of acquiring an immovable property and needed the money prior to the proceeds of a mortgage bond, which was to be registered over the property, becoming available. The respondent was instructed to effect registration of the mortgage bond and the proceeds of the bond would have been paid into his trust account according to the instructions of his client. The appellant agreed to extend a loan at an agreed fee against receipt of a trust cheque from the respondent for the full amount of the loan and the fee, which cheque was to be presented for payment after the date on which the proceeds of the mortgage bond was to be received in the respondent’s trust account. The respondent sent his trust cheque to the appellant under cover of a letter in which he assured him of the imminent registration of the mortgage bond and receipt of the proceeds thereof in his trust account. The appellant presented the cheque for payment as per their agreement, but the cheque was dishonoured. The mortgage bond was never registered. The SCA overturned the decision of the Pretoria High Court that the attorney was not personally liable and found that when an attorney draws a cheque on his trust account, he acts as a principal and not in a representative capacity and is therefor personally liable on such a cheque to the payee thereof. The judgment in the matter was referred to the Law Society of the Northern Provinces. --ends--

2427

non-electoral

2013

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 043/2013 Not Reportable In the matter between: BOISILE AMOS PLAATJIES APPELLANT and DIRECTOR OF PUBLIC PROSECUTIONS, TRANSVAAL RESPONDENT Neutral citation: Plaatjies v DPP, Transvaal (043/ 2013 [2013] ZASCA 66 (27 May 2013) Coram: Mthiyane DP, Shongwe, Majiedt JJA, Van der Merwe and Meyer AJJA Heard: 7 May 2013 Delivered: 27 May 2013 Summary: The effect of s 35(3)(m) of the Constitution ─ whether the legal position on the application of autrefois convict or autrefois acquit has been changed by the provisions of s 35(3)(m) and whether the common law should be developed to reflect this. _____________________________________________________________________ ORDER On appeal from: North Gauteng High Court, Pretoria (Prinsloo and Makgoba JJ sitting as court of appeal): The appeal is dismissed. ___________________________________________________________ JUDGMENT MTHIYANE DP (SHONGWE, MAJIEDT JJA, VAN DER MERWE AND MEYER AJJA CONCURRING) [1] This appeal brings into focus yet again the rule that an accused person has the right not to be tried for an offence in respect of any act or omission for which that person has previously been acquitted or convicted,1 sometimes referred to as the double jeopardy rule. This case has its origin in the regional court, Potchefstroom, where the appellant, Mr Boisile Amos Plaatjies, stood trial on charges of murder, assault with intent to do grievous bodily harm and unlawful possession of a firearm, in contravention of s 2 read with ss 39(2) and 40 of the Firearms and Ammunition Act 75 of 1969. The appellant was convicted on all counts and was sentenced to 7 years’ imprisonment on count 1, 1 year’s imprisonment on count 2 and 3 years’ imprisonment on count 3. [2] The appellant appealed to the then Transvaal Provincial Division of the High Court against both convictions and sentences. The appeal was 1 The common law right is expressed in the maxim ─ ‘nemo debet bis vexari pro una et eadem causa’ ─ See Director of Public Prosecutions, Transvaal v Mtshweni 2007 (2) SACR 217 SCA para 28. upheld and the convictions and sentences were set aside. The court (Van Rooyen AJ with Van Zyl AJ concurring) found that the trial magistrate had committed a fatal irregularity when he sat without assessors. He had done so without first obtaining the appellant’s consent as required by s 93 ter (1) of the Magistrate’s Court Act 32 of 1944. The requirement is expressed in the section as follows: ‘(1) The judicial officer presiding at any trial may, if he deems it expedient for the administration of justice─ (a) before any evidence has been led, or (b) in considering a community-based punishment in respect of any person who has been convicted of any offence, summon to his assistance any one or two persons who, in his opinion, may be of assistance at the trial of the case or in the determination of a proper sentence, as the case may be, to sit with him as assessor or assessors: Provided that if an accused is standing trial in the court of a regional division on a charge of murder, whether together with other charges or accused or not, the judicial officer shall at that trial be assisted by two assessors unless such an accused requests that the trial be proceeded with without assessors, whereupon the judicial officer may in his discretion summon one or two assessors to assist him.’ [3] The court held that because the proviso to the section2 was not followed by the trial magistrate, the court was not properly constituted and its judgment was therefore invalid. Consequently, the convictions and sentences imposed on the appellant were set aside. The judgment was handed down on 22 February 2005. [4] The respondent reinstituted criminal proceedings against the appellant on the same charges mentioned above in the regional court, Potchefstroom, but before a different regional magistrate. At this trial on 2 Quoted in para 2 above. 4 December 2007 the appellant successfully entered a plea of autrefois acquit. [5] The Director of Public Prosecutions lodged an appeal to the then Transvaal Provincial Division of the High Court against the acquittal. On appeal the respondent submitted that it was entitled to recharge the appellant on the ground that he had not been acquitted on the merits but on a technicality arising from the trial magistrate’s failure to sit with assessors or to dispense with that requirement in compliance with s 93 ter (1) of Act 32 of 1944. The appeal court (Prinsloo J with Magkoba J concurring) found that when the appeal was decided by the learned judges, Van Rooyen AJ and Van Zyl AJ in the earlier appeal, the merits of the convictions were never considered. The learned judges in the court a quo held that the appellant could be recharged on the same counts on which he had been acquitted and relied for that conclusion on s 324 read with s 313 of the Criminal Procedure Act 51 of 1977 as well as on S v Moodie 1962 (1) SA 587 (A) and S v Naidoo 1962 (4) SA 348 (A). The judges also held that s 35(3)(m) of the Constitution, which provides that an accused person has a right to a fair trial and which includes the right ‘not to be tried for an offence in respect of any act or omission for which that person has previously been acquitted or convicted’, had not changed the legal position, and the reinstitution of the charges was permitted as the appellant had not been acquitted on the merits. [6] The judges however granted leave to the appellant to appeal to this court on four main grounds namely─ ‘1. Another court may find that the legal position as to the subject of autrefois acquit or convict may have been changed by the provisions of section 35(3)(m) of the Constitution. 2. Another court may find that the first order by Magistrate Mabile is appealable and not an interlocutory order because of the provisions and implications of section 35(3)(m) of the Constitution. 3. Another court could find that it would be fair and just to stop the prosecution of the respondent in view of the long history and many delays with the case and in view of the provisions of section 35(3)(d) of the Constitution read with section 38 of the Constitution. 4. This court erred in not making reference to the merits of the three charges in respect of which the respondent was convicted in the first trial.’ [7] In the appeal before us, the above grounds were not split but consolidated by counsel for the appellant into one primary issue. He submitted that the effect of s 35(3)(m) of the Constitution was to extend the scope and ambit of the double jeopardy rule so as to cover cases where merits were never considered in the earlier proceedings. Counsel argued that, in the light of the provisions of s 35(3)(m), this court should develop the common law in the exercise of its powers under s 39(2) of the Constitution so as to extend the ambit and scope of the rule of autrefois convict and autrefois acquit to cover cases where the court in the first appeal has not examined the merits. [8] The above submission on the appellant’s behalf overlooks the fact that the Constitutional Court has already expressed itself on the point, albeit in a slightly different context, in the two Basson3 cases. I will return to the two cases later in the judgment and demonstrate that there is no need to develop the common law in this regard. I think the dicta in the two Basson cases are sufficiently dispositive of the point. But before dealing with the argument, it is necessary to set out the current legal 3 Reported as S v Basson 2004 (1) SACR 285 (CC) paras 64 and 65, and S v Basson 2007 (1) SACR 566 (CC) paras 255 and 256. position as regards the application of the principle of autrefois convict and autrefois acquit. [9] Sections 106(1)(c) and (d) of Act 51 of 1977 provide that when an accused pleads to a charge he or she may plead that he or she has already been convicted of an offence of which he or she is charged or has already been acquitted of the said offence. In the present matter the appellant raised a plea in terms of s 106(1)(c) and (d), averring that he has already been convicted at the first trial and already been acquitted on appeal before Van Rooyen AJ and Van Zyl AJ. [10] Section 324 of Act 51 of 1977 however permits the reinstitution of the criminal proceedings on the same charge when a conviction is set aside on the grounds that: ‘(a) that the court which convicted the accused person was not competent to do so; or (b) the indictment on which the accused was convicted was invalid or defective in any respect; or (c) that there has been any other technical irregularity or defect in the procedure.’ The section goes on to state that this occurs as if the accused person had not been previously arraigned, tried or convicted, provided ‘that no judge or assessor before whom the original trial took place shall take part in such proceedings’. Although the word judge is used here, this is equally applicable to a magistrate. [11] In S v Moodie it was held that if an irregularity in the procedure which justifies the setting aside of a conviction by a court of appeal was technical under s 370(c) of Act 56 of 1955 (now s 324(c) of Act 51 of 1977 and similarly worded) it precludes a valid consideration of the merits, in other words if it makes it impossible for the court to give a valid verdict on the merits. [12] In S v Naidoo it was held that the section empowers a retrial where a conviction and sentence have been set aside on appeal on the ground of a technical irregularity or defect in the procedure (as was the case with the previous s 370(c) of Act 56 of 1955). The court in Moodie held that an irregularity is technical within the meaning of the sub-section if it is of such a nature as to preclude a valid consideration of the merits of the appeal; in other words if it is impossible for the court of appeal to give a valid verdict on the merits (Moodie at 597 and Naidoo at 353H-354A). In the case of Naidoo, Holmes JA explained why Moodie could be retried, but not Naidoo. The judge pointed out that in each case there was an irregularity in the first trial. Holmes JA held that irregularities vary in nature and degree. According to him they fall into two categories. There are irregularities, he continued, which are so gross in nature as to vitiate a trial. In such a case the court of appeal must set aside the conviction without reference to the merits. There remains, said the judge, neither a conviction nor an acquittal on the merits and the accused person can be retried in terms of s 370(c) of the Criminal Procedure Act 56 of 1955. That was the position in Moodie’s case in which the irregularity of the Deputy Sheriff remaining closeted with a jury throughout their two hour deliberations was regarded as so gross as to vitiate the whole trial (at 354D-F). On the other hand, continued the judge, there are irregularities of a lesser nature, in which the court of appeal is able to separate the bad from the good and to consider the merits of the case, including any finding as to the credibility of witnesses. If in the result, he comes to the conclusion that a reasonable trial court properly directing itself would inevitably have convicted, the appeal stands to be dismissed and the conviction stands as one on the merits. But if on the merits, it cannot come to that conclusion, it should set aside the conviction and this amounts to an acquittal on the merits. In such a case s 370(c) of the code does not permit a retrial. That was the position in Naidoo’s case, in which failure to swear an interpreter at one stage resulted in certain evidence being regarded as inadmissible (354F-H). [13] Turning to the question whether the legal position may have been changed by s 35(3)(m) of the Constitution , the point is misconceived and without merit, as the question has already been authoritatively settled in S v Basson 2007 (1) SACR 566 (CC) para 255, which reads as follows: ‘The requirement that the previous acquittal must have been on the merits, or to put it differently, that the accused must have been in jeopardy of conviction, means that, if the previous prosecution was vitiated by irregularity, then it cannot found a plea of autrefois acquit in a subsequent prosecution. That is because the accused was not acquitted on the merits and was never in jeopardy of conviction because the proceedings were vitiated by irregularity’. See also S v Basson 2004 (1) SACR 285 (CC) paras 64 and 65. [14] To the extent that it is necessary to decide the second, third and fourth ground on which leave was granted by the court below, seeing that they have not been abandoned, I deal with them briefly in what follows. I deal first with the question of whether the first order made by magistrate Mabile was interlocutory and therefore not appealable. The record of the proceedings before magistrate Mabile was so poorly transcribed that it is difficult to make out what transpired. From what one is able to glean from the record it seems that the magistrate Mabile rejected the plea of autrefois acquit and ruled that the matter be referred to another magistrate for retrial. The matter then came before another magistrate, Ms Juries who upheld the plea of autrefois acquit. This led to the appeal which came before Prinsloo J and Makgoba J. The proceedings before the magistrate Mabile are therefore not relevant for purposes of this judgment. The same applies to the question whether the order she made is appealable or not. [15] Turning to the question whether it would be fair and just to stop the prosecution of the respondent, in view of the long history and many delays in the case and in view of the provisions of s 35(3)(d) of the Constitution read with s 38 of the Constitution, the point was not pressed in an argument before us. The legal position is that an accused person who seeks to bring an application for a permanent stay of the proceedings is required to bring a substantive application before the court, alleging that his or her right under s 35(d) have been infringed. (See S v Naidoo 2012 (2) SACR 126 (WCC)). In the present matter we do not have such application. No evidence has been placed before us as to who is to blame for the delay. It seems as if the appellant was to a large extent to blame for the delay in finalising this matter. In my view the appellant must also fail on this point. [16] The final point on which leave was granted is that the court failed to make reference to the merits of the three charges in respect of which the appellant was convicted in the first trial. The point is difficult to understand. At the first trial the merits were dealt with by the magistrate and that was not the problem that led ultimately to the appellant being recharged. The problem was that the magistrate in the first trial had sat without assessors and the court was therefore not properly constituted. The point made under this head is also without merit and falls to be rejected. [17] In the result the appeal must fail and the following order is made. The appeal is dismissed. ______________________ K K MTHIYANE DEPUTY PRESIDENT APPEARANCES For Appellant: HL Alberts Instructed by: Pretoria Justice Centre (Legal Aid SA), Pretoria Legal Aid Board, Bloemfontein For Respondent: L Pienaar (heads of argument prepared by FC Roberts) Instructed by: Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 27 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. PLAATJIES v DPP, TRANSVAAL (043/2013) [2013] ZASCA 66 (27 MAY 2013) The SCA today dismissed an appeal by Mr Boisile Amos Plaatjies against a decision to recharge and try him for murder, assault with intent to do grievous bodily harm and unlawful possession of a firearm in contravention of s 2 of the Firearm and Ammunition Act 75 of 1969. Mr Plaatjies had been convicted by a regional magistrate in Potchefstroom and sentenced to 7 years for murder, 1 year for assault with intent to do grievous bodily harm and 3 years imprisonment for unlawful possession of a firearm. The magistrate had unfortunately sat without assessors as required by s 93 ter (1) of the Magistrate’s Court Act 32 of 1944. Mr Plaatjies successfully appealed the convictions and sentences on the ground that the magistrate had sat without assessors in the adjudication of his case. When he was recharged for the above same offences he pleaded that he had already been convicted and acquitted on appeal. Another magistrate before whom he stood trial upon being recharged acquitted him. The state appealed against this ruling. The appeal court (Prinsloo J and Makgoba J) of the Pretoria High Court upheld the appeal and determined that the appellant could be retried as he had not been acquitted on the merits. The learned judges (Prinsloo J and Makgoba J) rejected the argument that if he is recharged his fair trial rights under s 3(3)(m) of the constitution would be violated. The SCA agreed with the decision of the learned judges of the Pretoria High Court and dismissed the appeal.

2409

non-electoral

2013

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 297/2011 Not Reportable In the matter between: IRWING 514 CC APPELLANT and MNGANI PROPERTY 4 (PTY) LTD RESPONDENT Neutral citation: Irwing 514 CC v Mngani Property 4 (Pty) Ltd (297/11) [2013] ZASCA 48 (28 March 2013). Coram: Cachalia, Leach, Tshiqi, Majiedt et Pillay JJA Heard: 26 February 2013 Delivered: 28 March 2013 Summary: Appeal – purchase and sale of shopping centre – default on payment schedule –cancellation of sale – claim for return of moneys already paid – counterclaim for damages – counterclaim referred to trial and postponed in terms of Uniform rule 22(4) – order in terms of that rule for payment into trust account pending determination of counterclaim impermissible – appeal upheld. Cross appeal - notice of default containing sufficient detail – letter of cancellation therefore proper – cross-appeal dismissed. ORDER On appeal from: South Gauteng High Court, Johannesburg (Spilg J sitting as court of first instance): 1. The appeal is allowed with costs and the order of the court a quo is set aside and substituted with the following: ‘(a) The cancellation of the agreement by the respondent on 7 November 2008 is declared valid; (b) The cancellation of the agreement by the applicant on 10 November 2008 is declared invalid; (c) Judgment in respect of the applicant’s claim of R5.375 million and interest thereon is postponed until the determination of whether the respondent is entitled to judgment in respect of its counterclaim provided that the respondent proceeds in terms of the order set out in paragraph (d) below; (d) The respondent’s counterclaim is referred to trial and the respondent is to deliver a declaration within 20 days of this order; (e) Should the respondent fail to comply with sub-paragraph (d) of this order, the applicant shall be entitled to apply for judgment in respect of its claim of R5.375 million plus interest together with costs; (f) Costs, including costs of the application are to be costs in the cause of the hearing of the counterclaim, subject to sub-paragraph (e) hereof.’ 2. The cross-appeal is dismissed with costs. JUDGMENT PILLAY JA (CACHALIA, LEACH, TSHIQI ET MAJIET JJA CONCURRING) [1] On 5 March 2008, the appellant (Irwing) and respondent, Mngani (Mngani) concluded a written agreement of sale (‘the agreement’) in terms of which Irwing sold to Mngani, as a going concern, a shopping centre (‘the property’) situated in Westonaria, Gauteng for an amount of R41 million. Irwing subsequently cancelled the agreement. Mngani disputed that the cancellation was valid. [2] Mngani then applied to the South Gauteng High Court for an order declaring (a) Irwing’s cancellation invalid; (b) its own cancellation of the agreement to be valid; (c) payment of R5.375 million. If Irwing’s cancellation was invalid the further question that arose was whether Irwing’s purported cancellation amounted to a repudiation of the agreement entitling Mngani itself to cancel the agreement, which it purported to do three days later, and recover the moneys it had paid towards the purchase price, ie R5.375 million. Irwing, in turn, counterclaimed that its cancellation was valid and that it was entitled to judgment in its favour for payment for damages in amount of R6.587 million arising from Mngani’s breach of contract. [3] The high court (Spilg J) held that Irwing’s cancellation was good and dismissed Mngani’s claim.1 It also held that whilst Mngani was entitled to recover the moneys it had paid towards the purchase price of the property, Irwing had demonstrated prima facie that it had suffered damages in an amount of R6.587 million, after it had resold the property to a third party for some R8.5 million less than the price agreed upon in its contract with Mngani. [4] The high court thus referred Irwing’s counterclaim for trial and postponed judgment in respect of Mngani’s claim for repayment of the moneys (R5.375 million) it 1 In the court’s order, the dismissal of the declarators was erroneously omitted. However the learned judge clearly dealt with them in the body of the judgment and dismissed both. It would be prudent to correct this omission later in this judgment. had paid towards the purchase price of the property pending adjudication of Irwing’s counterclaim; it also ordered Irwing to pay this amount into a trust account of an attorney in the interim. [5] Irwing now appeals against the order requiring it to pay R5.375 million into an attorney’s trust account on the ground that there was no factual or legal basis for it. Mngani cross-appeals the order dismissing its claim that Irwing’s cancellation was invalid. Both the appeal and the cross-appeal come before us with leave of the high court. [6] It seems to me that it would be convenient to first consider Mngani’s cross-appeal because if Irwing’s cancellation of the agreement was invalid it would dispose of its appeal. This follows inevitably from the fact that Irwing would in that event have to repay Mngani the sum it had paid towards the purchase price of the property and there would therefore have been no basis for the court below to have ordered that this amount be paid into the trust account of an attorney. I revert to the facts. [7] In terms of Clause 1.2 of the agreement, Mngani had to pay the purchase price in specified instalments on specified dates. The relevant portions of clause 1.2 read as follows: ‘1.2.1 R500 000.00 on 27 February 2008; 1.2.2 R500 000.00 on 28 February 2008; 1.2.3 R1 million on 5 March 2008; 1.2.4 R2 million on 12 March 2008; 1.2.5 On date of registration of transfer, a sum of R32 million, for which sum, the Purchaser shall issue or cause to be issued and delivered to the Seller, accepted bank guarantees for the amount of R32 million, payable against registration of transfer of the property into the name of the Purchaser. Such guarantee shall be issued within 30 days after undersigning of this agreement. 1.2.6 . . . 1.2.7 . . . 1.2.8 . . . 1.2.9 . . .’ [8] In clause 3.12, Irwing, as seller, warranted that ‘the letting enterprise produces an annual income yield of a minimum of 9.50% defined as the annual net income before interest, finance charges and company taxation, expressed as a percentage of the purchase price of R41 million (Forty One Million Rand)’. By 14 March 2008, Mngani had complied with the aforementioned payment schedule – and had paid Irwing R4 million as agreed. [9] Pursuant to clause 1.2.5 of the agreement, Mngani negotiated with Nedbank Limited (‘the bank’) a bank guarantee for R32 million. On 23 April 2008, the bank provided Mngani with a ‘letter of grant’ for R32 million. On 10 July 2008, it issued two guarantees totaling R32 million. [10] It is common cause that prior to the registration of transfer, the bank cancelled the guarantees. Mngani was consequently in default of its obligation under clause 1.2.5. [11] The parties thereafter entered into protracted negotiations to structure a suitable alternative payment regime in an endeavour to salvage the agreement. During the course of these negotiations, Mngani made further payments amounting to R1.375 million. So together with the R4 million that Mngani had paid earlier the total paid amounted to R5.375 million. [12] Mngani remained in default of the agreement and on 31 October 2008, Irwing addressed a letter to it and put it on terms to remedy the default within 2 days in terms of clause 5.1 of the agreement. The letter reads as follows: ‘NOTICE OF DEFAULT IN TERMS OF OFFER TO PURCHASE BETWEEN MNGANI PROPERTY 4 (PTY) LTD & IRWING 514CC FOR THE LETTING ENTERPRISE KNOWN AS PICK ‘n PAY SHOPPING COMPLEX, WESTONARIA We remind you that you are in default with regard to your obligations in terms of clause 1.2 of the agreement. Your attention is also drawn to clause 5.1 of the agreement with regard to remedy of default. Please advise as to how you will remedy this default.’ [13] Clause 5.1 of the agreement to which the letter refers, reads: ‘5.1 Should either party default with the due performance of its obligations in terms of this offer and persist in such default for a period of 2 (two) days after it will have received a notice calling upon it to remedy such default, then notwithstanding any prior waiver, and without prejudice to any other claim which the aggrieved party may have, either in terms of this offer or at law, it shall be entitled to either: - 5.1.1 claim specific performance; or 5.1.2 be restored to its position status quo ante; or 5.1.3 declare this offer cancelled and to recover all damages it may have suffered or sustained by reason of such default.’ [14] Despite this, Mngani failed to respond and on 7 November 2008, Irwing wrote to Mngani a letter reading as follows: ‘NOTICE OF CANCELLATION OF OFFER TO PURCHASE BETWEEN MNGANI PROPERTY 4 (PTY) LTD & IRWING 514CC FOR THE LETTING ENTERPRISE KNOWN AS PICK ‘N PAY SHOPPING COMPLEX, WESTONARIA I refer to the notification served on you on 31 October 2008 in which you have been requested to remedy your default in terms of the above agreement. As you have not remedied your default to date, the abovementioned agreement is hereby cancelled with immediate effect.’ [15] In response thereto, Mngani caused a letter dated 10 November 2008 to be delivered to Irwing. Therein Mngani alleged first, that Irwing’s cancellation of the agreement was premature in that the period of seven days allowed for the default to be remedied had by the date of cancellation not lapsed. (It is common cause that Mngani was mistaken that the mora period was seven days. In terms of clause 5.1 the mora period was two days). Secondly, it stated that it regarded the premature cancellation of the agreement as a repudiation of the sale agreement which it accepted and in turn, was itself cancelling the said agreement. Mngani, inter alia, further sought a refund of all moneys paid towards the purchase price amounting to R5.3 million, failing which it would sue for the recovery thereof. Irwing responded on 12 November 2008, by pointing out that contractually, the period to remedy any breach was 48 hours (2 days) and not seven days as alleged by Mngani and that it had not prematurely cancelled the agreement of sale. [16] Mngani’s case is that the high court erred in finding that Irwing’s notice of cancellation on 7 November 2008 was valid. More specifically, it contends that the letter dated 31 October 2008 did not constitute proper notice of default so as to place it in mora as it omitted particulars of the alleged default, did not set out the steps to be taken to remedy the default and did not indicate the consequences should the unspecified default not be remedied. [17] It is true that as a general proposition, a notice of default must be unambiguous and indicate a fixed date for performance. But Mngani could not have been under any illusion as to what the default was, since quite apart from the reference to clauses 1.2 and 5.1 of the agreement, the parties had been in negotiations over this issue, namely the provision of guarantees for R32 million. And the reference to these clauses in the agreement made this clear. What is more is that in its letter of 10 November 2008 Mngani’s complaint was not that the cancellation letter was unclear, but that it was premature because of its belief that the mora period was two days and not seven days. This argument must consequently fail, as must the cross-appeal. [18] I turn now to the Irwing’s appeal against the order that it pay R5.375 million into an attorney’s trust account pending the institution of an action for damages against Mngani. In making this order the high court purported to act in terms of Uniform rule 22(4). It reads as follows: ‘(4) If by reason of any claim in reconvention, the defendant claims that on the giving of judgment on such claim, the plaintiff’s claim will be extinguished either in whole or in part, the defendant may in his plea refer to the fact of such claim in reconvention and request that judgment in respect of the claim or any portion thereof which would be extinguished by such claim in reconvention, be postponed until judgment on the claim in reconvention. Judgment on the claim shall, either in whole or in part, thereupon be so postponed unless the court, upon the application of any person interested, otherwise orders, but the court, if no other defence has been raised, may give judgment for such part of the claim as would not be extinguished, as if the defendant were in default of filing a plea in respect thereof, or may, on the application of either party, make such order as to it seems meet.’ [19] It is clear that rule 22(4) grants the right to a defendant, who has filed a counterclaim, to apply for a postponement of such part of a claim as admitted by him or her pending the determination of his or her counterclaim. In exercising this right, the defendant must demonstrate to the court that the counterclaim, if successful, will wholly or at least partially extinguish the plaintiff’s claim. Generally the claim and counterclaim must sound in money.2 In granting such an application for postponement, the court has a discretion which must be judicially exercised.3 Normally the court will not give judgment on a claim before the counterclaim has been determined because ‘if conflicting claims are made the subject of judicial order piecemeal, one party may suffer grave prejudice’.4 [20] Having found that Irwing had indeed properly cancelled the agreement, it follows that it conceivably has a claim for damages against Mngani. Its proposed claim is for R6.587 million – considerably more than the amount Mngani is claiming. So the court below was correct in referring Irwing’s counterclaim to trial and in postponing judgment of Mngani’s claim pending the outcome of the counterclaim. [21] However rule 22(4) does not make provision for the court to order that any amount in favour of either of the parties be held in trust together with instructions to the trustee(s) as to how to deal with such money. The only basis upon which the court below could have considered granting such an order, was, if there appeared from the papers some factual basis to do so. There was no evidence to justify granting the order in question nor did Mngani seek it. In the circumstances the order falls to be set aside and substituted with the order set out below. As far as costs of the appeal are concerned, these should follow the outcome. [22] There is one other aspect which bears mentioning. On 20 February 2013, before the hearing of the appeal scheduled for 26 February 2013, a notice of withdrawal of attorneys of record for Mngani was served on the office of the registrar, the attorneys for Irwing and the business address of Mngani. The cross-appeal was however not 2 Amavuba (Pty) Ltd v Pro Nobis Landgoed (Edms) Bpk 1984 (3) SA 760 (N) at 766H – I. 3 NTC Steel Services (Pty) Ltd v Jamor (Pty) Ltd (t/a Steel King) 1984 (2) SA 629 (T) at 631H. 4 Van den Bergh & Partners Ltd v Robinson 1952 (3) SA 747(SR) at 748. See also: Consol Ltd t/a Consol Glass v Twee Jongegezellen (Pty) Ltd 2002 (2) SA 580 (C) at 584E–587C. withdrawn. This is the second time that Mngani’s representatives have withdrawn from the appeal. The appeal was first set down for 30 April 2012. A notice of withdrawal by Mngani’s attorneys was filed on or about 27 April 2012. As a result, the appeal was postponed sine die. [23] At this hearing we were informed that the attorney for Irwing had in fact contacted Ms Nkosi, the chief executive officer of Mngani. She had indicated in writing that her legal representative had become unavailable and that she had not requested the date for the appeal on 26 February 2013. This was confirmed in an affidavit by Ms Erica Noelle Meerholz, a partner in the firm of attorneys representing Irwing. The appeal thus proceeded without Mngani being represented, In preparing this judgment cognizance was however taken of the submissions made by counsel in his heads of argument that were lodged before the hearing. [24] In the result it is ordered as follows: 1. The appeal is allowed with costs and the order of the court a quo is set aside and is substituted with the following: ‘(a) The cancellation of the agreement by the respondent on 7 November 2008 is declared valid; (b) The cancellation of the agreement by the applicant on 10 November 2008 is declared invalid; (c) Judgment in respect of the applicant’s claim of R5.375 million and interest thereon is postponed until the determination of whether the respondent is entitled to judgment in respect of its counterclaim provided that the respondent proceeds in terms of the order set out in (d)below; (d) The respondent’s counterclaim is referred to trial and the respondent is to deliver a declaration within 20 days of this order; (e) Should the respondent fail to comply with sub-paragraph (d) of this order, the applicant shall be entitled to apply for judgment in respect of its claim of R5.375 million plus interest together with costs; (f) Costs, including costs of the application are to be costs in the cause of the hearing of the counterclaim, subject to sub-paragraph (e) hereof.’ 2. The cross-appeal is dismissed with costs. R PILLAY JUDGE OF APPEAL APPEARANCES: FOR APPELLANTS: ADV NORMAN DAVIS S C Instructed by: Tintingers Inc., Johannesburg; Symington & De Kok, Bloemfontein FOR RESPONDENT: NO APPEARANCE

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 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. Irwing 514 CC v Mngani Property 4 (Pty) Ltd The Supreme Court of Appeal (SCA) today upheld with costs the appeal of Irwing 514 CC and set aside the order of the South Gauteng High Court, Johannesburg. The appeal relates to an agreement between the parties for the purchase and sale of a shopping centre, in Westonaria, Gauteng. The appellant cancelled the agreement as a result of the respondent defaulting on payments. The respondent, Mngani Property 4 (Pty) Ltd, disputed that cancellation arguing that it was premature and thereupon itself cancelled the agreement. The respondent applied to the high court to have the appellant’s cancellation declared invalid and its own valid as well as a claim for the refund of moneys already paid. The appellant opposed and counterclaimed for damages. The high court declared the appellant’s cancellation of the agreement valid and that of the respondent invalid. It postponed judgment in respect of the claim for the refund pending the outcome of the appellant’s counterclaim which it referred to trial. The high court further ordered the appellant to pay R5.3 million, being the amount respondent had already paid to the appellant prior to the cancellation, into the trust account of an attorney with direction to the attorneys as to how to deal with that money. The appellant appealed against this part of the order while the respondent cross-appealed against the order declaring the appellant’s cancellation valid. The SCA set aside the order, confirmed the validity of appellant’s cancellation of the agreement, that the respondent’s cancellation was therefore invalid and that judgment in respect of the refund be postponed pending the outcome of the counterclaim which was referred to trial. The cross-appeal was accordingly dismissed with costs.

2494

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case No: 903/2012 In the matter between: GB MINING AND EXPLORATION SA (PTY) LTD APPELLANT and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE RESPONDENT Neutral citation: GB Mining v Commissioner: SARS (903/2012) [2014] ZASCA 29 (28 March 2014) Coram: Navsa, Shongwe, Theron and Wallis JJA and Swain AJA Heard: 6 March 2014 Delivered: 28 March 2014 Summary: Revised tax assessments issued by respondent – appellant lodging objection – objection disallowed – appeal to Pretoria Tax Court dismissed – on appeal held: – Payments as part of an attempted financial rescue offer not deductible. – Disposal of rights to a mineral tailings dump by appellant resulted in a capital gain. – Travel expenditure partially deductible. – Disposal of an asset to a joint venture resulted in a capital gain. – Disposal of an interest in a joint venture resulted in a capital gain. – Partial remission of additional tax granted. Assessments based on tax returns and financial statements by appellant – appellant failing to prove incorrect – effect thereof – assessments upheld. ORDER On appeal from the Tax Court, Pretoria, (Mokgoatlheng P sitting as court of first instance): 1 The appeal is dismissed save in the respects set out in paragraphs 2 and 3 below. 2 The penalties raised by the respondent in respect of the OTR amount and the travelling expenses are remitted in their entirety. 3 The order directing the appellant to pay the respondent‟s costs in the court a quo is set aside. 4 The respondent is ordered to pay 10 per cent of the appellant‟s costs in the appeal. JUDGMENT _______________________________________________________________ Swain AJA (Navsa, Shongwe, Theron and Wallis JJA concurring): [1] The appellant GB Mining and Exploration SA (Pty) Ltd (GB Mining) was the subject of revised assessments for the tax years 2003 – 2006 issued by the respondent, the Commissioner for the South African Revenue Service (the Commissioner). [2] GB Mining objected to the assessments. The Commissioner disallowed the objection in respect of the 2003 tax year and partially disallowed the objection in respect of the remaining tax years. GB Mining appealed to the Pretoria Tax Court which dismissed the appeal save in respect of the issue of management fees, which does not form part of the appeal to this court. The present appeal is with the leave of the President of the tax court.1 [3] In order to place the contested assessments of the Commissioner in context, it is necessary to set out the background concerning the history and activities of GB Mining. [4] Mr Ken Barnard, a geologist, developed what he considered to be a unique process for the extraction of platinum from chrome mining tailings. Together with Mr Ricky Gardner he decided to exploit his concept, but in order to do so a source of chrome tailings, as well as finance to construct a plant to process the tailings had to be found. [5] The project was designated as „RK1‟ and a shelf company was acquired by Mr Gardner and Mr Barnard and renamed GB Mining. This is the taxpayer in the appeal. [6] Having formed the vehicle to develop the project a source of chrome tailings was identified on the farm Kroondal 34 (the Kroondal dump). As regards finance, capital was to be raised from the public via OTR Mining Ltd (OTR) a company which was listed on the Johannesburg Stock Exchange (JSE), of which Gardner had previously been the managing director. The intention was that GB Mining would transfer its business to and become the principal shareholder in OTR and thereby secure for itself the advantages of access to the JSE. [7] OTR was in dire financial straits and in order to prevent its demise and its delisting GB Mining mounted a rescue operation. In terms of a formal rescue offer, subject to approval by the JSE and Securities Regulation Panel (SRP), GB Mining would provide loan capital for payment of creditors and employees in 1 Section 86(A)(2)(b)(i) of the Income Tax Act 58 of 1962. (This section has been repealed. Section 133(2)(b)(i) of the Tax Administration Act 28 of 2011 is now the applicable provision). return for shares in proportion to the amount of the loan. The listing of OTR‟s options shares on the JSE was terminated on 22 August 2003 which effectively brought an end to the rescue operation. In the interim GB Mining had expended funds in the amount of R2 638 070 on the payment of salaries for staff and office expenses. GB Mining contended that these employees were employed by it and that this expenditure was incurred in the production of income and qualified as a deduction in terms of s 11(a) read with s 23(g) of the Income Tax Act 58 of 1962 (the Act). The Commissioner, however, determined that the amount had been advanced by GB Mining to OTR as a loan and its deduction was disallowed as being capital in nature. This determination was upheld by the court a quo and is challenged by GB Mining in this appeal. [8] In order to secure the chrome tailings in the Kroondal dump, GB Mining concluded a notarial prospecting contract on 7 March 2001 with the farmers who owned the mineral rights to the Kroondal dump. GB Mining was granted the right to prospect for minerals in the tailings, with the option to purchase the mineral rights, within a period of six months. This option was duly exercised within the specified period and the mineral rights to the dump were purchased. The purchase price was the sum of R2 400 000, together with 1 250 000 OTR shares and 625 000 OTR options. At this stage the final rescue offer in respect of OTR had not yet failed and it was still envisaged that the mineral rights to the Kroondal dump would be transferred to OTR in terms of the rescue offer. [9] Soon however, it became clear that the Kroondal dump did not contain sufficient material for the project and additional chrome tailings would have to be obtained from chrome mining companies operating in the area of the Kroondal dump, namely Xstrata SA (Pty) Ltd (Xstrata) and Bayer (Pty) Ltd (Bayer). [10] GB Mining required further capital while the OTR rescue offer was being considered and approached Aquarius Platinum (South Africa) (Pty) Ltd (Aquarius) as a source of capital and to be a suitable partner in exploiting the RK1 concept. According to Mr Gardner‟s evidence, which in this case as in others was not reconcilable with the documents, it was agreed that GB Mining and Aquarius would jointly exploit the Kroondal dump on a 50:50 basis and would use the plant of Kroondal Platinum Mines Ltd, a wholly owned subsidiary of Aquarius, to process the material. He said Aquarius was to contribute R14 million for its 50 per cent share, GB Mining would receive a 25 per cent share in the consortium and „another 25 per cent for cash at the cost of the plant‟ and GB Mining would be paid R3,5 million. That amount was paid and it is this payment of R3,5 million which gives rise to the next area of dispute between GB Mining and the Commissioner. The Commissioner contends that in return for payment of this amount Aquarius acquired 50 per cent of the mineral rights in the Kroondal dump. GB Mining, however, contends that it did not dispose of these rights to Aquarius, as they remained ceded to GB Mining, which in turn made them available to the joint venture as its capital contribution. The Commissioner, however, determined that GB Mining disposed of an asset comprising a Kroondal right/interest to Aquarius for R3,5 million. This determination was upheld by the court a quo and is also challenged by GB Mining in this appeal. [11] GB Mining successfully raised further capital from foreign investors and as a result, Gardner and Barnard (UK) Limited (GBUK) was registered as a company in the United Kingdom, and then became GB Mining‟s holding company. Investors, Mr Samuel Sher and others were allotted 32 per cent of the shares with Mr Gardner and Mr Barnard holding the remaining 68 per cent. Shortly thereafter Mr Gardner and Mr Barnard resigned from GB Mining to become shareholders of GBUK. [12] In order to secure the additional source of chrome tailings, GB Mining concluded agreements with Xstrata and Bayer in terms of which GB Mining acquired the right „to remove and beneficiate the feedstock‟ being the material and by-products supplied by Xstrata and Bayer, including chrome tailings. Both of these agreements provided that GB Mining would „cede and assign all its rights and obligations in terms of this agreement to RK1‟. The reference to RK1 is a reference to the RK1 joint venture referred to below. [13] During this period of intense activity Mr Gardner and other representatives of GB Mining travelled overseas on behalf of GB Mining and expenses were incurred. GB Mining claimed these expenses as deductions in terms of s 11(a) of the Act on the ground they were incurred in the production of income. The Commissioner disallowed 50 per cent of the expenses holding that GB Mining incurred the travel expenditure partly for the purpose of creating or acquiring an income producing structure, or a source of profit, and 50 per cent of the travel expenditure was attributable to that purpose. The Commissioner contends that 50 per cent of the travel expenditure in an amount of R412 339 was of a „capital nature‟ in terms of s 11(a) of the Act and was not deductible. The court a quo upheld the Commissioner‟s determination which is the subject of a further challenge by GB Mining in this appeal. [14] On 20 October 2003 GB Mining, Aquarius and Victoria Global Holdings Ltd (Victoria) concluded a Notarial Consortium Agreement in terms of which they would jointly produce platinum group metal concentrate at a consortium plant to be erected in the Xstrata mining area. The concentrate would be sold to Impala Refining Services Ltd and Rustenburg Platinum Mines Ltd. The „participating interests‟ of the parties would be Aquarius 50 per cent and GB Mining and Victoria 25 per cent each. The joint venture was styled RK1JV. [15] Profits from the joint venture would be shared in the same ratio as the respective shareholding. The contribution to be made by the parties was that Aquarius and Victoria would make capital cost contributions of R16 million and the Rand equivalent of £615 000 respectively. GB Mining would contribute the difference between the Rand equivalent of the Victoria contribution and R8 million. In the event that the Victoria contribution was less than R6 765 000 the difference between the Victoria contribution and R6 765 000 would be contributed by Victoria and GB Mining in equal shares. It was recorded that GB Mining had „contributed to the consortium certain mineral rights and intellectual property‟. The Commissioner determined that GB Mining had thereby disposed of an asset to RK1JV, the proceeds of which were R8 million. The base cost was nil and the disposal consequently resulted in a „capital gain‟ of R8 million for GB Mining. GB Mining contends there was no disposal of an asset as GB Mining acquired the Xstrata and Bayer minerals for and on behalf of the RK1JV. The court a quo upheld the Commissioner‟s determination which is challenged by GB Mining in this appeal. [16] Mr Barnard died during October 2003 which resulted in a change in the shareholding in GBUK with Mr Gardner acquiring effective control over GBUK through the shareholders‟ agreement. Mr Gardner accordingly held 62 per cent of the shares and Mr Sher and others held the remaining 38 per cent. As at 28 February 2004 GBUK had acquired another subsidiary in South Africa, RK Mining SA (RKMSA) and a company RKR Mining UK Ltd (RKUK). Both groups held shares in the same ratio in RKUK which held all the shares in RKMSA which was involved in the RK2 project. This was similar to the RK1 project but related to the processing of feedstock obtained from a different area. Early in 2005 it was then decided to terminate their joint shareholding in GBUK and RKUK so that each of these companies would become wholly owned by one of these two groups of shareholders. Their entitlement to their previous profit share in the RK1 and RK2 projects needed however to remain unchanged. In February 2005, Mr Gardner accordingly acquired the majority interest in GBUK, in exchange for his majority interest in RKUK. After some inconclusive efforts to transfer between the two groups a proportionate stake in each joint venture, it was agreed in November 2005 that GB Mining, which held the interest in the RK1 project, would hold 38 per cent of that stake on behalf of RKMSA and would pay over that proportion of net income to RKMSA. There was a reciprocal undertaking by RKMSA in respect of a 62 per cent stake in the RK2 project. [17] The Commissioner determined that the 38 per cent interest which GB Mining held in terms of this arrangement on behalf of RKMSA, was an asset which it disposed of during the 2005 tax year. The proceeds from the disposal were determined as being R23 277 530 and the base cost of the asset was determined as being R8 284 506. The figure for the base cost comprised an amount of R3 629 000 (being 38 per cent of R9 550 000 being the contribution made by GB Mining to the consortium) and an amount of R4 655 506 (being donations tax on the amount of R23 277 530). The court a quo, however, decided that donations tax was not payable and this finding is not the subject of the present appeal. The Commissioner accordingly contends on appeal that the capital gain of GB Mining should be increased from R14 993 024 to R19 648 530 to account for the reduction in the base cost. [18] GB Mining contends that the transaction was in the form of a multiparty agreement between two groups of shareholders and their companies, which entailed the exchange of assets of equal value and therefore did not result in any capital gain. Having held that no donations tax was payable, the court a quo then held that GB Mining had disposed of the 38 per cent joint venture interest in RK1 for a consideration, being the right to 62 per cent of the interest held by RKMSA in the joint venture interest RK2 and that the value of the rights given up by each party was similar to the rights received. The Commissioner submits that these findings are not in issue in this appeal, as the effect of these findings is that the proceeds from the disposal by GBSA of the 38 per cent interest in RK1, is an amount equal to the relevant value being R23 277 530. The determination by the Commissioner is challenged by GB Mining in this appeal. [19] The Commissioner assessed GB Mining for additional tax in terms of s 76(1) of the Act in respect of the tax assessed under each of the disputed items. The Commissioner submits that the penalties assessed were appropriate. GB Mining contends that the grounds for imposing penalties were not present and no penalties should have been imposed. The court a quo upheld the Commissioner‟s determination of the penalties which is challenged by GB Mining in this appeal. [20] The objections raised by GB Mining to the determinations made by the Commissioner concerning the OTR payments, the disposal of the Kroondal dump and the disposal of an asset to the RK1 joint venture, were based upon what GB Mining contended was incorrect information supplied to the Commissioner in GB Mining‟s tax returns. Was it permissible for it to do this by way of objection and appeal rather than by asking for a reduction in the assessments? [21] Section 79A of the Act deals with the reduction of an assessment by the Commissioner: „Reduced assessments (1) The Commissioner may, notwithstanding the fact that no objection has been lodged or appeal noted in terms of the provisions of Part III of Chapter III of this Act, reduce an assessment - (a) . . . (b) where it is proved to the satisfaction of the Commissioner that in issuing that assessment any amount which – (i) was taken into account by the Commissioner in determining the taxpayer‟s liability for tax, should not have been taken into account; or (ii) should have been taken into account in determining the taxpayer‟s liability for tax, was not taken into account by the Commissioner: Provided that such assessment, wherein the amount was so taken into account or not taken into account, as contemplated in subparagraph (i) or (ii), as the case may be, was issued by the Commissioner based on information provided in the taxpayer‟s return for the current or any previous year of assessment.‟ [22] A taxpayer may seek a reduction in the Commissioner‟s assessment in terms of s 79A without objecting to the assessment in terms of s 81.2 The Commissioner‟s power to reduce the assessment exists „notwithstanding the fact that no objection has been lodged or appeal noted‟. In addition, the power of the Commissioner is not restricted to its mero motu exercise, because the error in the assessment has to be „proved to the satisfaction of the Commissioner‟. To discharge this burden of proof the taxpayer must place information before the Commissioner to substantiate the error relied upon. In doing so it may rely upon an error that it made in its return. 2 Section 81 of the Act provides that: „(1) Objections to any assessment made under this Act shall be made in the manner and under the terms and within the period prescribed by this Act and the rules promulgated in terms of section 107A by any taxpayer who is aggrieved by any assessment in which that taxpayer has an interest.‟ [23] The Commissioner may therefore act in terms of s 79A to reduce an assessment in the absence of an objection in terms of s 81 of the Act and may do so even where it flows from incorrect information provided in the taxpayer‟s return. Can the taxpayer who has been the cause of the incorrect assessment by the Commissioner instead claim to be „aggrieved‟ thereby and object to an assessment in terms of s 81? [24] The statement that the powers of the Commissioner under s 79A can be exercised „notwithstanding the fact that no objection has been made‟, suggests that an alternative route for the taxpayer to follow is by way of objection and, if necessary, appeal. That was the conclusion of Hurt J in ITC 1785 67 SATC 98, where he said; „ . . . the fundamental object of tax legislation is to exact from each citizen his due. What is “due” is, in each case (questions of penalty aside), strictly prescribed by statute and the amount of the taxpayer‟s taxable income must, in the process of assessment, be accurately determined preparatory to the calculation of the amount which he (or she) is required to hand over to the fiscus. In that light, it is clear that a taxpayer whose taxable income has been determined on an erroneous basis, is always “aggrieved” even if the source of error is entirely attributable to him.‟ [25] I agree with Hurt J, notwithstanding the oddity of a taxpayer being aggrieved by an assessment based on the erroneous information it provided in its return. Accordingly it was permissible for GB Mining to follow the course that it did.3 [26] In the Tax Court‟s judgment reliance was placed on the provisions of s 82 of the Act which provided that the burden of proof rested upon any person claiming an exception, non-liability, deduction, abatement, or set-off in terms of the Act. Before us, GB Mining contended in its heads of argument a point not 3 Section 93(1)(d) of the Tax Administration Act 28 of 2011 now provides that SARS may make a reduced assessment if satisfied there is an error in the assessment as a result of an undisputed error by SARS or by the taxpayer in a return. taken in the court below, that the provisions of s 82 of the Act were unconstitutional and invalid. [27] It is clearly undesirable for courts to make orders declaring statutory provisions invalid without providing the relevant organs of state with the opportunity to intervene in the proceedings.4 Rule 10A of the Uniform Rules of Court provides: „10A. If any proceedings before the court, the validity of a law is challenged, whether in whole or in part and whether on constitutional grounds or otherwise, the party challenging the validity of the law shall join the provincial or national executive authorities responsible for the administration of the law in the proceedings and shall in the case of a challenge to a rule made in terms of the Rules Board for Courts of Law Act, 1985 (Act No. 107 of 1985), cause a notice to be served on the Rules Board for Courts of Law, informing the Rules Board for Courts of Law thereof.‟ The Minister of Finance had not been joined in these proceedings and had a direct interest in the challenge raised by GB Mining. Counsel for GB Mining when faced with this obstacle abandoned the point. [28] The taxpayer accordingly bears the onus of satisfying the Commissioner that the information furnished is incorrect and that a reduction in the assessment is justified. In order to do this, additional evidence would have to be placed before the Commissioner. The nature of this evidence will depend upon the facts of each case and particularly the nature of the erroneous information supplied to the Commissioner. So for example, the fiscus might rightly ask how it can be expected to alter or reduce an assessment when information supplied by a taxpayer is not withdrawn or substituted so as to enable the reduction or alteration contended for. This problem arises in the present case as shown below. 4 See Jooste v Score Supermarket Trading (Pty) Ltd (Minister of Labour intervening) 1999 (2) SA 1 (CC) and Parbhoo and others v Getz NO and another 1997 (4) SA 1095 (CC). [29] In terms of regulation A2 of the Regulations issued under s 107 of the Act (Government Notice R105 – in Government Gazette Extraordinary No 1011 of 22 January 1965) any return must „be accompanied by all such balance sheets, trading accounts, profit and loss accounts and other accounts of whatever nature, as are necessary to support the information contained in the return‟. The evidence to „support‟ the information in the return must accordingly „corroborate‟ it (Concise Oxford English Dictionary, 12 ed). Balance sheets and accounts perform a vital and formal role in corroborating the information in the return. The Commissioner must be able to rely upon the veracity and accuracy of this evidence which forms the basis for the assessment. The Commissioner is entirely dependent upon the taxpayer to furnish this evidence. In the event of incorrect information being included in the balance sheets or accounts, evidence would have to be furnished to explain the precise nature and extent of the incorrect information and how it was included. All relevant supporting documentation to verify the correct information would have to be submitted. An amended balance sheet or account may have to be submitted to the Commissioner, together with a full explanatory note to clarify the amendment. [30] Each of the contested determinations made by the Commissioner must be approached on the basis that GB Mining bears the onus of proving that the Commissioner was wrong. In addition, where GB Mining contends that the determination was based upon incorrect information supplied to the Commissioner by GB Mining, whether in the form of balance sheets and accounts or otherwise, GB Mining must show that it has provided credible and reliable evidence to explain the error and substantiate what it maintains is the true position. In any event, even if the Commissioner had borne the onus of establishing the correctness of the determinations made, as will become apparent, the outcome of this appeal would have been the same. I shall in successive paragraphs deal in turn with each of the six issues in this appeal. The OTR payments [31] The amount claimed was described in GB Mining‟s financial statements for the year ending 29 February 2004 as „OTR loan‟. The financial statements were signed by GB Mining‟s director Mr Van Zanten, as well as its auditors KPMG Inc and accompanied GB Mining‟s tax return for that year. Mr Van Zanten was GB Mining‟s sole director and public officer at the relevant time. When giving evidence before the court a quo he was asked „at that stage did you know that the loan actually consisted of the expenditure incurred in respect of salaries and other office expenditure of GB itself?‟ to which he replied „Yes‟. However, he later stated „the mechanism was such that the expenditure that was incurred by GB on behalf of OTR would be repaid in terms of the shares‟. In addition, in a letter dated 12 June 2009 written by Mr Van Zanten on behalf of GB Mining to the Commissioner it is stated that „the rescue operation, envisaged for OTR at the time, was to inject loan capital and to transfer business assets to the company . . .‟. In a memorandum dated 7 March 2002 written by Mr Gardner on behalf of GB Mining addressed to representatives of OTR and GB Mining the following appears: „1. . . In the meantime GB is operating under a clause that has been recommended by OTR‟s legal advisors which amounts to “curatorship management” and therefore GB can only make management decisions on behalf of OTR and cannot offer full time employment until GB is granted full management control by the JSE / shareholders. In the interim GB will do its utmost to protect the current staff of OTR. The knock back for current OTR staff means in simple terms that the delay in GB being able to offer immediate employment means that the bonus system that GB offers will only kick in later. As stated, these delays were totally unforeseen and in no ways can it reflect on any members of the OTR board. 2. In the meantime any costs incurred will be borne by the relevant companies.‟ [My emphasis.] [32] A press release by OTR dated 17 January 2003 announcing the agreement with GB Mining, referred to „the conversion of R2 466 000 of debt owing by OTR to GB Mining to be converted to equity‟. When giving evidence Mr Gardner was referred to this passage in the announcement and he explained „that is the salaries and the offices etcetera etcetera that we had been paying for. Because we were not allowed by the auditors, KPMG to claim the money we had spent on the nomads, because they had nothing to do, apparently they had nothing to do with running GB Mining at the time‟. Counsel for GB Mining submitted that Mr Gardner was referring here to „nomads‟ and not employees generally, but there is no explanation as to which employees would qualify as „nomads‟ and how such a large sum of money could be spent on them. [33] Consequently, GB Mining did not provide credible and reliable evidence to explain the alleged error in describing the amount in question as an „OTR loan‟ in its financial statements and why its auditors KPMG had done so. Indeed, all the information at hand points emphatically in the opposite direction. The Commissioner‟s view, endorsed by the Tax Court, that this was a loan that was written off when the OTR rescue failed, is plainly correct. [34] Thus the amount of R2 638 070 did not qualify as a deduction in terms of s 11(a) of the Act. The appeal against this determination by the Commissioner must accordingly fail. The disposal of the Kroondal dump [35] The schedule to GB Mining‟s tax return for the 2003 tax year stated „calculation of capital gain / (loss) GB Dump – sold to Aquarius‟. The note to this entry stated „sold 50 per cent to Aquarius at R1 300 000‟. Mr Van Zanten signed the tax return as the director of GB Mining and declared that the particulars contained therein were „true and correct in every respect‟. He confirmed when giving evidence that this related to a sale of the dump for R1,3 million. [36] Mr Van Zanten, in response to a query by the Commissioner stated in a letter dated 10 June 2008, that Aquarius was to acquire 50 per cent of the dump and mineral rights and the amount of R1,3 million paid by Aquarius to GB Mining „was their portion of the purchase price‟. He reiterated this in a letter dated 23 June 2008 stating „In February 2002 GB Mining sold 50 per cent of the dump to Aquarius for R3,5 million. The deal was done on the basis that Aquarius would pay the farmers the R2,2 million owed to them by GBSA and pay the balance of R1,3 million directly to GB Mining‟. [37] Mr Van Zanten said that his initial idea that there was a sale of 50 per cent „was the original plan as . . . explained to me by Mr Gardner‟, but added that when SARS became involved Mr Gardner clarified „that it had actually not been sold‟. However, in a letter dated 21 February 2002 written by Mr Gardner to Mr Murray of Aquarius he states „As agreed with your good self your 50/50 upfront cost for the procurement of the GB dump is R3 500 000‟. Mr Gardner stated that at the time he wrote the letter he was under the impression there would be a sale of 50 per cent of the dump to Aquarius. [38] Mr Gardner said that GB Mining had originally tried to sell the Kroondal dump to OTR, but not to Aquarius. He reiterated „I was under the impression that Aquarius Platinum were going to buy this dump in fact all the way up [to] 3 June 2003‟. Mr Gardner confirmed there was a draft sale agreement in terms of which the dump was sold to Aquarius, but sought to explain its terms on the basis that there was a misunderstanding on his part of what Aquarius was prepared to do. An agreement was reached with Aquarius dated 3 June 2003. Clause 14.2 of the agreement provides as follows: „It is recorded that prior to the signature date, the parties contributed an aggregate amount of R7 000 000 to facilitate the implementation of the tailings project and the RK1 project, which start-up contribution was 14.2.1 in the instance of GB Mining contributed by way of time expenditure and services rendered in establishing the RK1 project and the tailings project, to a value of R3 500 000.‟ Mr Gardner said that this clause was agreed upon as early as August 2001. Mr Murray of Aquarius asked how much he should invest, what it would cost and they agreed on a figure of R7 million. According to Mr Gardner, because it was a 50/50 share Aquarius was to pay R3,5 million for the project to continue, plus the past expenses GB Mining had incurred, and the technology GB Mining possessed to extract platinum from the chrome tailings. [39] Counsel for GB Mining submitted that this clause clearly sets out the reason for the payment of R3,5 million to GB Mining. Counsel for the Commissioner, however, pointed out that if this description is correct, contrary to the determination of the Commissioner, the R3,5 million would fall within GB Mining‟s „gross income‟ and would give rise to an income tax liability for GB Mining, greater than the capital gains tax liability contended for by the Commissioner. This amount was not included by GB Mining in its gross income in its tax returns, which indicated that GB Mining did not believe the amount to be consideration for „time expenditure and services rendered‟ by it. [40] If the provisions of clause 14.2 had been agreed upon between Mr Gardner and Mr Murray as long ago as August 2001, it is inexplicable why he would have written to Mr Murray on 21 February 2002 recording their agreement that the „50/50 upfront cost for the procurement of the GB dump is R3 500 000‟. It is also inexplicable why he would believe up until 3 June 2003 that Aquarius was going to buy the dump. There is no evidence tendered by GB Mining to explain how an amount of R3,5 million which Mr Gardner believed was the amount Aquarius was to pay to purchase the dump, was then transformed into payment for „time expenditure and services rendered in establishing the RK1 project and the tailings project‟ to the same value. [41] It is significant that it was contended by GB Mining for the first time before the court a quo, by amendment to its grounds of appeal dated 12 June 2009, that „there was no sales transaction or disposal of the dump concerned, which could trigger application of the CGT provisions of the Eighth Schedule‟. [42] An „asset‟ as defined in para 1 of the Eighth Schedule to the Act includes property (corporeal and incorporeal) and „a right or interest of whatever nature to or in such property‟. To have disposed of an „asset‟, GB Mining need not have disposed of the Kroondal dump. If GB Mining disposed of any Kroondal right or interest, it disposed of an asset. [43] No credible and reliable evidence was tendered by GB Mining to explain the alleged error in its tax return describing the transactions as a sale of the dump to Aquarius. The contradictions and inconsistencies in the evidence of Mr Gardner considered together with the conflict between his evidence and the financial statements, the tax return and other documents, point ineluctably to the conclusion that the amount in question should not be excluded in terms of the Eighth Schedule to the Act. [44] The Commissioner correctly determined that GB Mining disposed of an asset comprising a Kroondal right or interest to Aquarius for „proceeds‟ of R3,5 million. The base cost of the asset, being the amount paid by GB Mining in acquiring the asset from the farmers was R1 780 771. The capital gain for GB Mining in its 2003 tax year was therefore R1 719 229. The appeal against this determination by the Commissioner accordingly fails. The travel expenditure claim [45] GB Mining in a schedule annexed to its tax return set out details of overseas travel and the costs associated therewith, undertaken by its representatives, which it claimed as a deduction in terms of s 11(a) of the Act. [46] A deduction was claimed by GB Mining on the basis that the expenses were incurred in the production of income and were consequently not capital in nature. [47] In New State Areas Ltd v Commissioner for Inland Revenue 1946 AD 610 at 620-1 Watermeyer CJ stated: „The problem which arises when deductions are claimed is, therefore usually whether the expenditure in question should properly be regarded as part of the cost of performing the income earning operations or as part of the cost of establishing or improving or adding to the income earning plant or machinery.‟ [48] As to the formulation of a test to assist in the determination of whether expenditure is of a capital or revenue nature, Streicher JA had the following to say in Commissioner SARS v BP South Africa (Pty) Ltd 2006 (5) SA 559 (SCA) at para 23: „A test that has been adopted to assist in the determination whether expenditure is of a capital or revenue nature is to ask whether the expenditure is more akin to the income- producing operations of the taxpayer or whether it is more akin to the income-earning structure of the taxpayer, or to ask, “Is it expenditure required to carry on a business or is it required to establish a business?” Money spent in creating an income-producing concern is capital expenditure; it is invested to yield future profit‟. [49] If the purpose of the overseas travel was partially to produce income for GB Mining and partially to improve the income-earning structure of GB Mining, an apportionment of the expenses incurred can be made on the basis of „what would be fair and reasonable in all the circumstances of the case‟. See CIR v Nemojim (Pty) Ltd 1983 (4) SA 935 (A) at 951 C-E. [50] The Commissioner contends that the expenditure in question was used partially for the purpose of improving the income-earning structure of GB Mining and was therefore of a capital nature and not deductible in terms of s 11(a) of the Act. Because of the lack of clear evidence of GB Mining as to the purpose of each of the trips the Commissioner apportioned the expenditure on a 50:50 basis. As a consequence 50 per cent of the amount claimed was determined not to be deductible. It should be noted that GB Mining and the Commissioner had originally reached a settlement in terms of which 50 per cent of the expenses would be disallowed. However, when the Commissioner imposed additional tax on the claims that were disallowed, GB Mining adopted the view that it was no longer bound by the settlement and claimed all of the expenditure incurred. [51] One would have expected Mr Gardner to explain the purpose of each trip. Although he conceded that the expenses of certain trips were not deductible, when asked by his counsel whether the remaining trips were undertaken „mainly in order to raise capital, working capital for GBSA‟ he replied „that is correct‟ and added „everything . . . is about raising money‟. His answer does not address the issue of whether the money was raised to enhance the income-producing operations, or the income-earning structure of GB Mining. His concession was justified as the purpose of some of the trips was to explore a stock exchange listing in either the UK or Spain and others were directed at exploring potential new business opportunities. It is clear from the Schedule provided by GB Mining that the 50:50 apportionment was justified. [52] The apportionment by the Commissioner of the expenses claimed for overseas travel on a 50:50 basis, so that 50 per cent was deemed to be of a capital nature and not deductible in terms of s 11(a) of the Act in the amount of R412 339, was fair and reasonable in all the circumstances. [53] The appeal against this determination by the Commissioner must accordingly fail. The disposal of an asset to the RK1 joint venture [54] The accounts of the RK1 consortium in the form of the trial balance for the period 1 July 2004 – 30 June 2005 record a capital contribution by GB Mining of R8 million. This accords with the consortium agreement which, as pointed out above, records that GB Mining has contributed to the consortium „certain mineral rights and intellectual property‟. [55] Mr Gardner confirmed that Aquarius had contributed R16 million and Victoria had contributed R8 million to the joint venture. He said that GB Mining was not obliged to make any cash contribution and that its contribution was „in kind‟ and added „I do not think you can put a price to that, I mean it is a huge amount of money we spent developing RK1, but I saw a value on the consortium balance sheet. But the consortium balance sheets have nothing to do with us, it is not anything, to do with us‟. When he was asked whether he could explain why GB Mining‟s capital contribution was shown in the consortium accounts as R8 million, he replied „I have no idea. I just think it is to match up the other 25 per cent shareholders‟ funds, they put in R8 million and that is the best conclusion that I can come to. I do not know why it‟s put in there, no. It has got nothing to do with us as such. We are not responsible for their bookkeeping or the way they present accounts, GB Mining is not, sorry‟. [56] The entry in the accounts of the joint venture that GB Mining had contributed an amount of R8 million required an explanation other than Mr Gardner simply saying it was wrong and he had no idea why it was reflected in this manner. This contradiction required evidence to explain the error, if there was one, which may have been clarified by a representative of Aquarius. There is again a contradiction between documentary evidence and the evidence of Mr Gardner. [57] This is particularly relevant in the context of the provision in the consortium agreement that GB Mining has contributed „certain mineral rights and intellectual property to the consortium‟. In terms of the agreements concluded by GB Mining with Xstrata and Bayer it was recorded that „GB will as soon as practically possible after the effective date cede and assign all its rights and obligations in terms of this agreement to RK1. . .‟. [58] Despite these provisions, counsel for GB Mining submitted in his heads of argument that „appellant did not acquire any mineral rights from Bayer / Xstrata but merely their consent for the construction of the relevant pipeline and for the “off-take” of their chromite waste material, against payment of royalties‟. [59] It was also submitted that the crux of GB Mining‟s case was that these rights were acquired on behalf of the consortium as part of GB Mining‟s initial cash contribution and not for GB Mining‟s own account. [60] GB Mining‟s ipse dixit in the form of the trial balance which was never withdrawn and never properly explained is fatal to its case. I agree with the submission made by counsel for the Commissioner, that the probabilities are that GB Mining disposed of an asset, being the Xstrata and Bayer rights to the other members of the consortium for a consideration of R8 million. The appeal against the Commissioner‟s determination must accordingly fail. The disposal of a 38 per cent joint venture interest [61] As pointed out above, the Commissioner determined that the 38 per cent interest in 25 per cent of the RK1 joint venture which GB Mining held on behalf of RKMSA was an asset which it disposed of, attracting capital gains tax. GB Mining contends that there was an exchange of assets of equal value, which did not result in any capital gain. [62] GB Mining and RKMSA agreed on 28 October 2005 that GB Mining would pay to RKMSA 38 per cent of the net income received by GB Mining from Aquarius in terms of the consortium agreement. In terms of clause 3.1 it was provided that RKMSA „will be deemed to have acquired a 38 per cent share in the “participation share”‟ which was defined as the 25 per cent participation share which GB Mining held in RK1. Clause 3.2 of this agreement provided that „in as much as the consortium agreement provides for a pre-emptive right in favour of the consortium participants and the consortium participants were not prepared to waive their pre-emptive rights, GBMSA acknowledges that for all purposes of the relationship between them, RKM will be regarded by GBMSA as a 38 per cent owner of the participation share‟. Mr Gardner said this was caused by Aquarius not allowing RKMSA into the consortium. [63] In terms of clause 4.1 of the agreement it was provided that RKMSA would be entitled to 38 per cent of the net income derived by GB Mining from the participation share (25 per cent) in the consortium. The effective date of the agreement was 1 February 2005. [64] On 30 June 2006 Ivanhoe Nickel and Platinum Ltd (Ivanhoe) purchased all the shares of RKUK. The only asset of RKUK was 100 per cent of the issued shares in RKMSA. In clause 7.2.10.1 of this agreement it is recorded „RKSA owns as its sole asset, its 38 per cent interest in the 25 per cent interest held by GBSA in the RK1 consortium‟. The purchase price as provided for in clause 5.2 was the Sterling equivalent of R26 847 000. At the same time Ivanhoe purchased all the shares in GBSA thereby effectively acquiring the remaining 62 per cent of the entire 25 per cent stake in the RK1 joint venture. A reading of the agreements shows that the price was a global price in respect of both transactions divided between them in the proportion of their respective effective interests in the joint venture. [65] As regards GB Mining‟s contention that there was an exchange of assets of equal value, namely that GB Mining gave up its 38 per cent interest in the joint venture and in turn RKMSA gave up its 62 per cent interest in the joint venture to the group of companies in which Mr Gardner held the majority shares, the court a quo held that GB Mining had disposed of the 38 per cent JV interest for a consideration being the right to 62 per cent of the interest held by RKMSA in the joint venture RK2. The court a quo then concluded „the inference of the interlinking of the transactions between the parties was that the value of the rights given up by each party was similar to the value of the rights received, although no evidence was led on this point‟. Counsel for the Commissioner stated that this finding of the court a quo is not in dispute in this appeal. [66] In terms of the agreement concluded between GB Mining and RKMSA, RKMSA would be regarded as a 38 per cent owner of the participation share. GB Mining accordingly ceded these rights to RKMSA. In terms of paragraph 11 of Part III of the Eighth Schedule a „disposal‟ includes the cession of an „asset‟ and the definition of an „asset‟ in Part I „includes a right or interest of whatever nature to or in such property‟. [67] In terms of paragraph 38 of the Eighth Schedule, where a person disposes of an asset for a consideration not measurable in money, the person must be treated as having disposed of that asset for proceeds equal to the market value of the asset, as at the date of disposal. The finding of the court a quo that the value of the rights that were exchanged were similar, or according to GB Mining of equal value, does not alter the fact that the 38 per cent share ceded by GB Mining to RKMSA, was disposed of for „a consideration not measurable in money‟. [68] The Commissioner determined that the value of the 38 per cent JV interest thus disposed of was the amount of R26 847 000 paid by Ivanhoe on the basis that this was an arm‟s length transaction. The present value of this amount as at 1 February 2005, being the effective date when GB Mining sold the 38 per cent JV interest to RKMSA calculated at the SARS rate at the time of 10.5 per cent, produced an amount of R23 277 530 which constituted the „proceeds‟ of the disposal. The base cost of the asset in terms of paragraph 20(1)(a) of the Eighth Schedule to the Act is the expenditure actually incurred in respect of the cost of acquisition of the asset. This is 38 per cent of R9 550 000 (being the contribution made to the consortium) which produces an amount of R3 629 000. As will be recalled, the Commissioner originally determined that the base cost of the asset included donations tax of 20 per cent on the amount of R23 277 530, producing an amount of R4 655 506. The court a quo, however, decided that there was no donations tax payable and there is no appeal against this finding. The base cost accordingly falls to be reduced from R8 284 506 to R3 629 000 with a consequent increase in the capital gain from R14 993 024 to R19 648 530 (the latter being the difference between the proceeds of R23 277 530 and the amended base cost of R3 629 000) for GB Mining in its 2005 tax year. The assessment was accordingly raised on a lower amount than could be justified by the Commissioner. That cannot be a cause for complaint by the taxpayer. [69] The appeal against the Commissioner‟s determination must accordingly fail. The assessment of additional tax in terms of s 76 of the Act [70] The Commissioner submits that in relation to each of the contested assessments there was an omission in terms of s 76(1)(b) of the Act, or an „incorrect statement‟ in terms of s 76(1)(c), in respect of the relevant tax return. These sections provide that the additional tax payable is an amount equal to twice the amount of the tax chargeable. The Commissioner, however, has a discretion in terms of s 76(2)(a) to remit the additional tax „or any part thereof as he may deem fit‟. Should the Commissioner decide not to remit the whole of the tax imposed, this decision is subject to objection and appeal. [71] The Commissioner exercised his discretion to remit the penalties imposed as follows: (a) Travel expenditure – originally 180 per cent reduced to 20 per cent penalties assessed. (b) OTR amount – originally 160 per cent reduced to 40 per cent penalties assessed. (c) Disposal of asset to Aquarius with the resultant capital gain – originally more than 150 per cent reduced to less than 50 per cent penalties assessed. (d) Disposal of an asset to RK1JV with the resultant capital gain – originally assessed at 160 per cent reduced to 40 per cent penalties assessed. (e) Disposal of 38 per cent JV interest with the resultant capital gain – originally assessed at 180 per cent reduced to 20 per cent penalties assessed. [72] The Commissioner submitted that relevant facts in the assessment of the additional tax payable were: (a) The circumstances giving rise to the assessments did not come to the attention of the Commissioner as a result of any voluntary disclosure by GB Mining. (b) There were inconsistencies in the information furnished to the Commissioner which made it difficult to establish the true facts. (c) The views of GB Mining could not reasonably have been held. [73] Although there is some substance to these submissions, in my view the Commissioner erred in imposing the additional tax that he did in respect of the travel expenditure and the OTR amount. [74] There was no omission or incorrect statement in respect of the travel expenditure. The details of the trips were disclosed and GB Mining then entered into negotiations with the Commissioner. As pointed out GB Mining abandoned the expenses claimed in respect of certain of the trips and a settlement was reached in terms of which 50 per cent of the expenses would be disallowed. When the Commissioner imposed additional tax on the claims that were disallowed, GB Mining adopted the view that it was no longer bound by the settlement and claimed all of the expenditure incurred. Counsel for the Commissioner submitted that GB Mining had furnished insufficient information and on this basis the additional tax was justified. In my view, this does not amount to an omission or furnishing incorrect information and the imposition of the additional tax was not justified. [75] In the case of the OTR amount GB Mining originally declared that the amount in question was a loan to OTR. It was only at a later stage that it sought to retract this and submit that the amount involved was expenditure incurred by GB Mining in the production of income. No omission or incorrect statement was made in the tax return. When this proposition was put to counsel for the Commissioner, he fairly conceded that the additional tax should not have been raised. [76] As regards the remaining instances where additional tax was imposed, I am satisfied that it was correctly imposed at an appropriate rate. In each instance it is clear that there was an omission or incorrect statement concerning the relevant facts. [77] The appeal against the additional tax raised in respect of the travelling expenses and OTR amount accordingly succeeds, but fails in respect of the additional tax raised in respect of the remaining categories. [78] The court a quo ordered GB Mining to pay the Commissioner‟s costs. It was only entitled to make this order if the Commissioner applied for it in terms of s 83(17) of the Act. Counsel for the Commissioner conceded that no application had been made by the Commissioner and the costs order should be set aside. He did, however, ask for the costs of the appeal including the costs of two counsel. However, when regard is had to the fact that the appellant has in this appeal succeeded in having the additional tax in respect of the OTR amount and the travelling expenses entirely remitted, which constitutes a total saving of R352 911.44, a suitable order, having regard to the significance of this in the context of the case as a whole, is that the Commissioner should be ordered to pay 10 per cent of GB Mining‟s costs in this appeal. [79] The following order is made: 1 The appeal is dismissed save in the respects set out in paragraphs 2 and 3 below. 2 The penalties raised by the respondent in respect of the OTR amount and the travelling expenses are remitted in their entirety. 3 The order directing the appellant to pay the respondent‟s costs in the court a quo is set aside. 4 The respondent is ordered to pay 10 per cent of the appellant‟s costs in the appeal. K G B SWAIN ACTING JUDGE OF APPEAL Appearances: For the Appellant: E M Du Toit SC Instructed by: Manong Badenhorst Abbot Van Tonder, Johannesburg Phatsoane Henney Attorneys, Bloemfontein For the Respondent: A Subel SC (with him J Boltar) Instructed by: The Commissioner for the South African Revenue Service, 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 28 March 2014 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. GB Mining v Commissioner: SARS (903/2012) [2014] ZASCA 29 (28 March 2014) Media Statement The SCA dismissed an appeal in which GB Mining (appellant) sought to challenge revised assessments for the payment of tax as determined by the Commissioner: SARS (respondent). One of the main grounds relied upon was that certain of the assessments were based upon incorrect facts supplied by GB Mining to the Commissioner: SARS. It was held that GB Mining bore the onus of proving by credible and reliable evidence, what it alleged were the correct facts, which it failed to do. --- Ends ---

4144

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 1067/2022 In the matter between: DANNY JOSEPH SIBIYA FIRST APPELLANT DU TOIT-SMUTS ATTORNEYS SECOND APPELLANT REUBEN JADO KRIGE THIRD APPELLANT and ROAD ACCIDENT FUND RESPONDENT Neutral citation: Danny Joseph Sibiya and Others v Road Accident Fund (1067/2022) [2023] ZASCA 171 (05 December 2023) Coram: MBATHA, CARELSE and HUGHES JJA and KOEN and CHETTY AJJA Heard: 06 November 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 05 December 2023 Summary: Practice and procedure – Contingency Fees Act 66 of 1997 – whether the high court ruling met the benchmark of fairness, rationality and reasonableness – whether the high court acted in a procedurally fair manner. ORDER On appeal from: Mpumalanga Division of the High Court, Mbombela (Legodi JP sitting as a court of first instance): In the result the following order is granted: The appeal is upheld with no order as to costs. The order of the high court is set aside and replaced with the following: ‘The referral by the taxing master in terms of rule 70(5A)(d)(ii) is dismissed.’ JUDGMENT Mbatha JA (Carelse and Hughes JJA and Koen and Chetty AJJA concurring): [1] This is an appeal against the judgment and order of the Mpumalanga Division of the High Court, Mbombela (the high court), per Legodi JP, granted in chambers on 2 June 2022 against two plaintiffs, one of whom is the first appellant, Mr Danny Joseph Sibiya (Mr Sibiya). Mr Sibiya sought leave to appeal against the judgment and order of the high court.1 The second appellant, Du Toit- Smuts Attorneys (D-S Attorneys) and the third appellant, Reuben Jado Krige (Mr Krige), were granted leave to intervene and join in the proceedings. They also sought leave to appeal against the judgment of the court a quo. The applications for leave to appeal were consolidated and heard on 7 July 2022. On 20 July 2022 the applications for leave to appeal by Mr Sibiya, D-S Attorneys and Mr Krige were dismissed with no order as to costs. 1 The judgment of the court a quo was in respect of two plaintiffs. D Sibiya and A E Chiaw. The high court consolidated both matters as they involved what Legodi JP termed “contingency fee agreements which in their form and substance, are both null and void for non-compliance with the provisions of the Act”. [2] Dissatisfied with the outcome of the application for leave to appeal from the high court, Mr Sibiya, D-S Attorneys and Mr Krige petitioned this Court for leave to appeal against the judgment and order of the high court. On 28 September 2022, they were granted leave to appeal to this Court. The Road Accident Fund (RAF), cited as the respondent, does not oppose this appeal. It abides by the decision of this Court. [3] The common cause facts are that on 4 March 2014, Mr Sibiya, appointed D-S Attorneys to lodge a claim against the RAF for damages arising from a motor vehicle accident which occurred on 16 February 2014. He signed an attorney and client fee agreement with D-S Attorneys for their services. On 8 October 2021 the RAF conceded the merits of Mr Sibiya’s claim and tendered payment of his costs on a party and party scale. The party and party bill of costs was subsequently set down for taxation on 3 February 2022. As early as 24 January 2022, Mr Krige had already filed an affidavit with the taxing master to the effect that no contingency fee agreement existed between Mr Sibiya and D-S Attorneys. [4] On the date of the taxation, the taxing master adjourned the proceedings and furnished Mr Krige with a letter of even date. The letter acknowledged that Mr Krige had attached an affidavit to the bill of costs to the effect that no contingency fee agreement existed between D-S Attorneys and Mr Sibiya. In addition, the taxing master in paragraph 5 of the letter posed the following questions to D-S Attorneys: ‘5. However as a follow-up on our conversation, I have the following questions to ask, as a follow-up to the issue of “no contingency”. a) My question was whether the client paid cash or not? b) When was the fee agreed upon? c) When was such a fee paid in total? d) What is the amount of the fee agreed upon? e) If no fee was paid or was paid in part, when was such a fee or remaining part thereof supposed to be paid? f) If no fee was paid, what is the basis upon which it is alleged that no contingency fee agreement was concluded?’ It was conveyed to Mr Krige that the information required by the taxing master was for the purposes of approaching one of the judges in chambers in terms of rule 70(5A)(d)(ii) of the Uniform Rules of Court (the Rules) for directions regarding bringing the taxation of the bill of costs to finality. Mr Krige was directed to furnish his response by way of an affidavit to be filed by no later than 10 February 2022. [5] By way of a letter dated 8 February 2022, Mr Krige furnished his response in writing to the taxing master. On the very same day, it was communicated to Mr Krige that the matter had been referred to the Judge President for directions in terms of rule 70(5A)(d)(ii) of the Rules. It was pointed out to Mr Krige that he should respond by way of an affidavit to be filed by no later than 11 March 2022, as previously requested by the taxing master. He was specifically requested to respond to the questions posed in paragraph 5 of the taxing master’s letter quoted above. On 16 March 2022 Mr Krige submitted his affidavit as directed by the Judge President. [6] In summary, Mr Krige’s response was that Mr Sibiya did not pay cash for their services as the matter had not yet been finalised, save for the merits which had been settled; that Mr Sibiya would only be required to settle their fees once the matter had been finalised in toto; that no fees had been agreed upon hence the taxation was required; that the costs to be paid by the RAF after taxation of the bill of costs would be taken into account once the matter had been finalised; that no fees had been paid by Mr Sibiya and that he would be debited for professional services rendered as per attorney and client fee in terms of the agreement signed by him once the issue of quantum had been dealt with. As regards the reference to rule 70(5A)(d)(ii) Mr Krige confirmed that he was ‘unaware of any misbehaviour’. Mr Krige did not receive any further communication from the Judge President. [7] On 2 June 2022, the high court delivered an extensive joint judgment under case number 557/2016, in Danny J Sibiya v RAF and Anita Ernesto Chiau v The RAF, case number 1150/20.2 The high court in respect of Mr Sibiya’s matter granted the following orders: ‘84.6 The fee agreement concluded between the plaintiff and his attorney of record is hereby reviewed and set aside due to its illegality as set out in this judgment and the plaintiff is not obliged to pay any fee or costs to his or her attorneys of record. 84.7 Settlement on the matter on merits between the plaintiff and defendant is hereby noted and taxation thereof to be stayed over until finalisation of the case in its entirety. 84.8 The Legal Practice Council to consider whether the conduct of attorney Krige in concluding the fee agreement as he did which has now been found to be illegal, constituted unprofessional conduct and if so to take such steps as it might deem appropriate. 84.9 The Legal Practice Council is hereby directed to advise the plaintiff to consider instructing another attorney to proceed with his matter to its finality and the plaintiff should also be advised that he is not obliged to pay anything to the attorneys of record due to the illegality of the fee agreement. 84.10 The plaintiff’s attorneys are hereby directed to bring this Judgment to the attention of the plaintiff and explain the contents thereof to the plaintiff and confirm in an affidavit to be filed by not later than Friday 10 June 2022 that the order in this paragraph has been complied with.’ [8] Before us, the three appellants challenge the aforementioned orders on procedural and substantive grounds: first, that the court a quo formulated a judgment in chambers in the absence of the appellants and without affording them an opportunity to be heard in regard to the specific relief granted; secondly, that the orders had the effect of depriving D-S Attorneys and Mr Krige of their earned fee for services rendered to Mr Sibiya; third, that the court was wrong in finding 2 Sibiya v Road Accident Fund: In the matter of Chiau v Road Accident Fund [2022] ZAMPMBHC 40. that the fee agreement with Mr Sibiya was illegal and therefore unenforceable; and lastly, that the court findings were premised on a misdirection of fact and law. [9] The referral by the taxing master to a judge in chambers was in terms of rule 70(5A)(d)(ii) of the Rules. The rule reads as follows: ‘Where a party or his or her attorney or both misbehave at a taxation, the taxing master may — (ii) adjourn the taxation and refer it to a judge in chambers for directions with regard to the finalisation of the taxation’. It is trite that a statutory provision needs to be interpreted purposively, consideration must be given to language used in the light of the ordinary rules of grammar and syntax and contextually.3 [10] It is clear from the language of the provision that rule 70(5A)(d)(ii) is not a referral for consideration of a contingency fee, or attorney and client fee agreements. Its purpose is to deal with misbehaviour of a party and his or her legal representative, or both, before a taxing master and nothing else. It is not a mechanism for bringing the fee agreement before a court, for determination of whether it is a contingency fee agreement or not. There was furthermore no evidence of any misbehaviour. The approach adopted by the Judge President’s office was procedurally flawed and irregular. [11] A fundamental rule of our law is that a wrong process vitiates the proceedings. Astoundingly, the high court proceeded with the irregular process of using rule 70(5A)(d)(ii) even though Mr Krige had pointed this out in his affidavit. The high court consciously disregarded what Mr Krige had pointed out. A proper consideration of all the documents indicates that nothing required the 3 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 25. intervention of the Judge President at that stage, as the bill of costs to be taxed was on a party and party scale between the RAF and Mr Sibiya, following a capitulation on the merits of Mr Sibiya’s claim against the RAF. I point out that the approach adopted by the courts should only advance the interest of justice. The doctrine of legality demands that no one, not even a court of law, should exercise powers they do not have, this is sometimes referred to as judicial restraint. Judge Richard S Arnold quoted with approval in Estate Late Stransham- Ford and Others 2017 (3) BCLR 364 (SCA) para 24 stated that: ‘[Courts] do not, or should not, sally forth each day looking for wrongs to right. We wait for cases to come to us, and when they do we normally decide only questions presented by the parties. Counsel almost always know a great deal more about their cases than we do.’4 The consequences of the breach of such doctrine of law are that a court of law would find itself making irreversible orders which will have a detrimental impact on the litigants as well as their legal representatives. [12] The high court did not inform nor invite the parties, including the RAF, to make representations regarding the fee agreement and its legality. The rules of court require the parties to file their affidavits and heads of argument before the matter serves before a Judge for a hearing. The rules serve to regulate the conduct of proceedings in civil and criminal matters and govern how a case may be commenced, the service of processes and setting down of matters for hearing in an open court. In that regard, no court may mero motu in chambers deal with matters that are not properly placed before it.5 The handling of the matter by the court in chambers was irregular, a hearing by ambush and a breach of one of the fundamental principles of our law, the right to be heard. 4 Minister of Justice and Correctional Services and Others v Estate Late Stransham-Ford and Others 2017 (3) BCLR 364 (SCA) para 24. 5 Fisher and Another v Ramahlele and Others 2014 (4) SA 614 (SCA) para 13-14. [13] Although the Constitutional Court, Supreme Court of Appeal and the High Courts have in terms of Section 173 of the Constitution of the Republic of South Africa, an inherent power to protect and regulate their own processes, a hearing needs to be in an open court. Kriegler J in Botha v Minister van Wet en Orde en Andere,6 pronouncing on undesirable possible results of secret or non-public court proceedings, quoted the following words of Justice Brennan in the United States Supreme Court: 'Secrecy is profoundly inimical to this demonstrative purpose of the trial process. Open trials assure the public that procedural rights are respected and that justice is afforded equally. Closed trials breed suspicion of prejudice and arbitrariness which in turn spawns disrespect for law. Public access is essential, therefore, if trial adjudication is to achieve the objective of maintaining public confidence in the administration of justice.'7 The right of access to courts is generally guaranteed to safeguard equal protection of the law and to ensure that no person will be deprived of due process of the law. The failure to hear a litigant impacts on s 34 of the Constitution which provides that ‘[e]veryone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum’. [14] Equally so, the audi alteram partem rule is a fundamental principle of our law enshrined in the Constitution. Every litigant is entitled to be afforded a hearing before a court of law. The high court had a duty to act procedurally fair to the three appellants as its decision had an adverse impact on their rights. By inviting the appellants to participate in the proceedings would have contributed to the accuracy of the decision of the court. I do not need to traverse the substantive challenges made by the appellants as the issues which I have dealt with are dispositive of the appeal. 6 Botha v Minister Van Wet en Orde en Andere [1990] 4 All SA 461 (W); 1990 (3) SA (937) (W). 7 Ibid at 464. [15] A further reason why the audi alteram partem was imperative is that the orders which followed cast aspersions on Mr Krige’s professional competence and ethical behaviour, and resulted in a referral of the matter to the professional regulatory authority without him being afforded the opportunity to defend the findings. For these reasons alone the appeal should also be upheld. In addition, the Judge President failed to have sight of the fee agreement. There was no attempt to engage with its contents, although inferences were drawn from it albeit not a document before the court. These in themselves represent an egregious breach of fundamental rules of judicial etiquette. [16] In the result the appeal must succeed. A procedural defect is an absolute bar to the court’s jurisdiction. When the court lacks jurisdiction the appeal must be upheld. I therefore find that the orders were erroneously granted in light of the procedural irregularities aforesaid. [17] This Court raised the issue whether the appellants were entitled to costs and who should bear the cost of appeal, as the RAF was not a party to the proceedings. Though the high court went off on a tangent and decided the matter without the benefit of the views of the parties, it cannot be mulcted with costs. Counsel for the appellants proposed that costs should be costs in the cause. I do not agree with that proposition as it means that eventually the cost will have to be borne by RAF and the RAF cannot be burdened with costs in a litigation relating to an event to which it was not a party. Counsel for the appellants offered to waive his fees in the interest of justice, which is commendable. It is unfortunate that it has been a costly exercise for the appellants. Having regard to the aforementioned and for all the reasons given, it follows that the appeal must succeed with no order as to costs. [18] In the result, the following order is granted: The appeal is upheld with no order as to costs. The order of the high court is set aside and replaced with the following: ‘The referral by the taxing master in terms of rule 70(5A)(d)(ii) is dismissed.’ Y T MBATHA JUDGE OF APPEAL Appearances For the appellants B P Geach SC Instructed by: Du Toit-Smuts Attorneys, Johannesburg Pieter Skein Attorneys, Bloemfontein For the respondent: C Bernman Instructed by: Road Accident Fund, Pretoria. State attorney, Mpumalanga, Mbombela (on a noting or watching brief)

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: 05 December 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Danny Joseph Sibiya and Others v Road Accident Fund (1067/2022) [2023] ZASCA 171 (05 December 2023) Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against the decision of the Mpumalanga Division of the High Court, Mbombela (the high court), with no order as to costs and replaced it with the following order: ‘The referral by the taxing master in terms of rule 70(5A)(d)(ii) has been dismissed’ The common cause facts were that on 4 March 2014, Mr Sibiya, appointed D-S Attorneys to lodge a claim against the RAF for damages which arouse from a motor vehicle accident which occurred on 16 February 2014. He signed an attorney and client fee agreement with D-S Attorneys for their services. On 8 October 2021 the RAF conceded the merits of Mr Sibiya’s claim and tendered payment of his costs on a party and party scale. The party and party bill of costs was subsequently set down for taxation on 3 February 2022. As early as 24 January 2022, Mr Krige had already filed an affidavit with the taxing master to the effect that no contingency fee agreement existed between Mr Sibiya and D-S Attorneys. On the date of the taxation, the taxing master adjourned the proceedings and furnished Mr Krige with a letter of even date. The letter acknowledged that the Mr Krige had attached an affidavit to the bill of costs to the effect that no contingency fee agreement existed between D-S Attorneys and Mr Sibiya. In addition, the taxing master posed several follow-up questions to D-S Attorneys relating to issues of contingency fees. It was further conveyed to Mr Krige that the information required by the taxing master was for the purposes of approaching one of the judges in chambers in terms of rule 70(5A)(d)(ii) of the Uniform Rules of Court (the Rules) for directions regarding bringing the taxation of the bill of costs to finality. Mr Krige was directed to furnish his response by way of an affidavit to be filed by no later than 10 February 2022. In summary, Mr Krige’s response was that Mr Sibiya did not pay cash for their services as the matter had not yet been finalised, save for the merits which had been settled; that Mr Sibiya would only be required to settle their fees once the matter had been finalised in toto; that no fees had been agreed upon hence the taxation was required; that the costs to be paid by the RAF after taxation of the bill of costs would be taken into account once the matter had been finalised; that no fees had been paid by Mr Sibiya and that he would be debited for professional services rendered as per attorney and client fee in terms of the agreement signed by him once the issue of quantum had been dealt with. As regards the reference to rule 70(5A)(d)(ii) Mr Krige confirmed that he was unaware of any misbehaviour. Mr Krige did not receive any further communication from the Judge President. On 2 June 2022, the high court delivered an extensive joint judgment under case number 557/2016, in Danny J Sibiya v RAF and Anita Ernesto Chiau v The RAF, case number 1150/20 and ordered that the fee agreement entered between D-S Attorneys and Mr Sibiya be reviewed and set aside due to its illegality and that Mr Sibiya was not obliged to pay any fee or costs to his or her attorneys of record; that taxation thereof to be stayed over until finalisation of the case in its entirety; that the Legal Practice Council (LPC) to consider whether the conduct of Mr Krige in concluding the fee agreement as he did which has now been found to be illegal, constituted unprofessional conduct and if so to take such steps as it might deem appropriate; that the LPC advise the plaintiff to consider instructing another attorney to proceed with his matter to its finality and the plaintiff should also be advised that he was not obliged to pay anything to the attorneys of record due to the illegality of the fee agreement. The appellants applied for leave to appeal the high court’s judgment and order, however, such application was dismissed. Dissatisfied with the outcome of the application for leave to appeal from the high court, they petitioned this Court for leave to appeal against the judgment and order of the high court. On 28 September 2022, they were granted leave to appeal to this Court. The RAF, cited as the respondent, did not oppose this appeal. It abided by the decision of this Court. Before this Court, the three appellants challenged the aforementioned orders on procedural and substantive grounds: first, that the court a quo formulated a judgment in chambers in the absence of the appellants and without affording them an opportunity to be heard in regard to the specific relief granted; secondly, that the orders had the effect of depriving D-S Attorneys and Mr Krige of their earned fee for services rendered to Mr Sibiya; third, that the court was wrong in finding that the fee agreement with Mr Sibiya was illegal and therefore unenforceable; and lastly, that the court findings were premised on a misdirection of fact and law. The SCA held that it was clear from the language of the provision that rule 70(5A)(d)(ii) was not a referral for consideration of a contingency fee, or attorney and client fee agreements. Its purpose was to deal with misbehaviour of a party and his or her legal representative, or both, before a taxing master and nothing else. It was not, according to the SCA, a mechanism for bringing the fee agreement before a court, for determination of whether it was a contingency fee agreement or not. There was furthermore, no evidence of any misbehaviour. The approach adopted by the Judge President’s office was procedurally flawed and irregular. The SCA further held that the high court erred in not informing nor inviting the parties, including the RAF, to make representations regarding the fee agreement and its legality. The rules of court required the parties to file their affidavits and heads of argument before the matter was served before a Judge for a hearing. The rules serves to regulate the conduct of proceedings in civil and criminal matters and govern how a case may be commenced, the service of processes and setting down of matters for hearing in an open court. In that regard, no court could mero motu in chambers deal with matters that were not properly placed before it. The handling of the matter by the court in chambers was irregular, a hearing by ambush and a breach of one of the fundamental principles of our law, the right to be heard. The SCA pointed out that the audi alteram partem rule was a fundamental principle of our law enshrined in the Constitution. Every litigant was entitled to be afforded a hearing before a court of law. It further held that the high court had a duty to act procedurally fair to the three appellants as its decision had an adverse impact on their rights. By inviting the appellants to participate in the proceedings would have contributed to the accuracy of the decision of the court. In addition, according to the SCA, the Judge President failed to have sight of the fee agreement. There was no attempt to engage with its contents, although inferences were drawn from it albeit not a document before the court. These in themselves represented an egregious breach of fundamental rules of judicial etiquette. In the result the appeal must succeed. ~~~~ends~~~~

3919

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 869/2021 In the matter between: SOUTH AFRICAN HEALTH PRODUCTS REGULATORY AUTHORITY First Appellant MINISTER OF HEALTH Second Appellant and AFRICAN CHRISTIAN DEMOCRATIC PARTY Respondent Neutral citation: South African Health Products Regulatory Authority and Another v African Christian Democratic Party (869/2021) [2022] ZASCA 158 (21 November 2022) Coram: Petse AP, Makgoka and Plasket JJA and Windell and Mali AJJA Heard: 14 November 2022 Delivered: 21 November 2022 Summary: Civil procedure – supervisory order – affected parties not heard before order made – order not applied for by any party – no evidence to justify making of order – order set aside. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Sardiwalla J sitting as court of first instance): 1. The appeal is upheld. 2. Paragraphs 1 and 2 of the high court’s order are set aside. JUDGMENT Plasket JA (Petse AP, Makgoka JA and Windell and Mali AJJA concurring): [1] The respondent, the African Christian Democratic Party (the ACDP), applied to the Gauteng Division of the High Court, Pretoria (the high court) for an order directing the first appellant, the South African Health Products Regulatory Authority (the SAHPRA) to remove restrictions on the use of a drug called Ivermectin, an animal remedy, for the treatment of Covid-19 in humans, including doing ‘all things necessary to regulate and ensure the manufacture’ of Ivermectin. The orders sought by the ACDP were, in terms of paragraph 3 of the notice of motion, to ‘operate until such time as clinical evidence demonstrates Ivermectin to not be effective in the treatment of Covid- 19’. [2] In due course, the ACDP, as well as the applicants in three similar matters, on the one hand, and the SAHPRA and the second appellant, the Minister of Health (the Minister), on the other, settled the four matters. They agreed to the terms of an order. The high court made two additional orders, however, that the ACDP and the other applicants had not sought, that the parties had not agreed to and to which the SAHPRA and the Minister had registered their objections. Paragraphs 1 and 2 of the order read as follows: ‘1 SAHPRA is ordered to report back to the Court, by way of affidavit, every three months following the date of the granting of this order, until otherwise ordered on inter alia: -- 1.1 adjustments made to the Programme and why such adjustments were necessary, for the prevention and/or treatment of COVID-19; 1.2 newly approved unregistered Ivermectin products; 1.3 newly authorized importers; 1.4 the number of Ivermectin products made available for named patients under the Programme; and 1.5 the particulars of healthcare facilities (including hospitals, pharmacies, compounding pharmacies and licensed dispensing doctors) that have been authorized to hold stock of unregistered and/or compounded Ivermectin products. Any party to this application may approach the Court by way of Notice of Motion and Supplementary Affidavits, after having given reasonable notice in the circumstances to all relevant parties, for relief pertaining to: 2.1 the insufficiency or the impracticality of the Programme, or any amendments affected thereto by SAHPRA; 2.2 any party’s failure to give effect to the content of the Court order; and 2.3 any further aspects relating to the administration and allowance of the use of Ivermectin as a treatment against COVID-19, which is in the public interest and necessary to be considered by the Court.’ [3] After the order was made, the SAHPRA and the Minister made an application for the rescission of the two paragraphs. In the alternative, they sought leave to appeal. Sardiwalla J granted the alternative relief with the result that this appeal is before us with his leave. [4] Only the ACDP opposed the appeal. Shortly before it was to be heard, the ACDP withdrew its opposition following an undertaking by the SAHPRA and the Minister that they would not seek a costs order against it. With the consent of both appellants, the matter was dealt with in terms of s 19(a) of the Superior Courts Act 10 of 2013. This section provides that this court may ‘dispose of an appeal without the hearing of oral argument’. Background [5] The four applications brought against the SAHPRA and the Minister were due to be argued together, from 29 to 31 March 2021, before Sardiwalla J. The parties settled the matters before the hearing and draft orders in each matter were prepared. [6] On 29 March 2021, the parties met with Sardiwalla J. He requested them to consolidate the four settlement agreements into one order. He also said that he thought a supervisory order should be included requiring the SAHPRA to report to him every three months. He stated, according to the deponent to the founding affidavit in the rescission/leave to appeal application, that he ‘regarded himself as “seized” of all matters involving Ivermectin’. [7] On 1 April 2021, the SAHPRA’s attorney sent Sardiwalla J a letter attaching a consolidated draft order that the parties agreed to, plus one compiled by the four applicants that contained the supervisory order as well. They had drafted this document to meet the direction issued by Sardiwalla J. In the letter, Sardiwalla J was informed that the SAHPRA and the Minister objected to the supervisory order being made and requested an opportunity to present oral argument. Both the SAHPRA and the Minister filed heads of argument. [8] Counsel for the ACDP then wrote to Sardiwalla J to inform him that his client wished to file heads of argument concerning the supervisory order, while another of the applicants advised Sardiwalla J that he was taking instructions from his client on the issue. He suggested that the order by agreement be granted and that argument on the supervisory order be heard on a date to be arranged. This was supported by another of the applicants. [9] Later that day the parties were advised that Sardiwalla J had decided to hear the parties at 10h00 on 6 April 2021. On that morning, the SAHPRA filed supplementary heads of argument. Apart from the SAHPRA and the Minister, none of the other parties filed heads of argument. When the SAHPRA’s attorney telephoned Sardiwalla J’s registrar to obtain the link for a virtual hearing, he was told that Sardiwalla J would no longer be hearing the parties as he had made a decision, and that his order would be sent to the parties shortly. [10] A short while later, the SAHPRA’s attorney was asked by Sardiwalla J’s registrar to send her the agreed draft order as well as the draft order containing the supervisory order in Microsoft Word format. He did so. Two hours later, Sardiwalla J issued an order that included the supervisory order. [11] As no reasons accompanied the order, the SAHPRA’s attorney requested reasons from Sardiwalla J. In his letter, the attorney stated that the SAHPRA intended appealing against the supervisory order and that, to facilitate doing so, it requested that the parties be ‘provided with written reasons for paragraphs 1 and 2 of the court order’. He said that this request was made because the supervisory order was ‘explicitly not the subject of agreement between the parties’; that the SAHPRA had informed the court in writing of this fact; and that both the SAHPRA and the Minister had filed heads of argument opposing the grant of the order. He concluded by saying that ‘[d]espite having delivered written submissions and having been asked to appear in court on 6 April 2021, the hearing did not take place’. [12] On 25 June 2021, Sardiwalla J furnished reasons. They made no mention of the supervisory order or why he had granted it. The issues [13] In addressing the legal issues that arise in this appeal, it is necessary to commence with a first, fundamental, principle. It is that judicial power has limits. In S v Mabena and Another1 Nugent JA said: ‘The Constitution proclaims the existence of a state that is founded on the rule of law. Under such a regime legitimate state authority exists only within the confines of the law, as it is embodied in the Constitution that created it, and the purported exercise of such authority other than in accordance with law is a nullity. That is the cardinal tenet of the rule of law. It admits of no exception in relation to the judicial authority of the state. Far from conferring authority to disregard the law the Constitution is the imperative for justice to be done in accordance with law. As in the case of other state authority, the exercise of judicial authority otherwise than according to law is simply invalid.’ 1 S v Mabena and Another [2006] ZASCA 178; 2007 (1) SACR 482 (SCA) para 2. [14] And, in National Director of Public Prosecutions v Zuma,2 Harms JA made the point that ‘in exercising the judicial function, judges are themselves constrained by the law’. He then explained that ‘[t]he independence of the Judiciary depends on the Judiciary's respect for the limits of its powers’ and that ‘its function is to adjudicate the issues between the parties to the litigation and not extraneous issues’. [15] The first difficulty that arises in respect of the supervisory order is that Sardiwalla J failed to afford the SAHPRA and the Minister a hearing despite knowing that they had not agreed to the supervisory order and opposed it being made. He had agreed to a hearing but inexplicably changed his mind and made the order, including the supervisory order, in the absence of the parties and without hearing argument. In these circumstances, an oral hearing was, without doubt, essential. Courts decide matters, particularly opposed matters, in open court, and the exceptions to this rule are limited. Indeed, the idea that all judicial proceedings must be conducted in open court is over two centuries old in this country, dating back to 1813.3 Section 32 of the Superior Courts Act 10 of 2013 now provides that except where otherwise provided for in the Act or in another law, ‘all proceedings in any Superior Court must, except in so far as any such court may in special cases otherwise direct, be carried on in open court’.4 Determining justiciable disputes in open court, where the parties are heard, is the default position in our legal system. [16] Section 34 of the Constitution gives effect to the founding value of the rule of law. It 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.’ 2 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 15. 3 See the historical survey of the rule from Roman-Dutch times to 1959, when the Supreme Court Act 59 of 1959 was passed, in Financial Mail (Pty) Ltd v Registrar of Insurance and Others 1966 (2) SA 219 (W) at 220E-221G. 4 As to the importance of open justice, see South African Broadcasting Corporation Ltd v National Director of Public Prosecutions and Others [2006] ZACC 15; 2007 (1) SA 523 (CC); 2007 (2) BCLR 167 (CC) paras 29-30. [17] The rule of law consists of both substantive and procedural elements.5 One of its most fundamental procedural elements is that when a person may be adversely affected by an exercise of public power, they are entitled to be heard.6 In De Beer NO v North-Central Local Council and South-Central Local Council and Others (Umhlatuzana Civic Association intervening)7 Yacoob J held: ‘This s 34 fair hearing right affirms the rule of law, which is a founding value of our Constitution. The right to a fair hearing before a court lies at the heart of the rule of law. 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. Courts in our country are obliged to ensure that the proceedings before them are always fair. Since procedures that would render the hearing unfair are inconsistent with the Constitution courts must interpret legislation and Rules of Court, where it is reasonably possible to do so, in a way that would render the proceedings fair. It is a crucial aspect of the rule of law that court orders should not be made without affording the other side a reasonable opportunity to state their case.’ [18] In Knoop NO and Another v Gupta and Another8 in which, as in this case, an order had been granted that none of the parties had applied for and without hearing the parties on the issue, Wallis JA held that the order was invalid. This was so because when ‘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’. In this matter, the order must be set aside for the same reason. [19] Secondly, the fact that the supervisory order had not been applied for by any of the parties and was not an issue in the pleadings requires that it be set aside. In Fischer and Another v Ramahlele and Others9 this court dealt with a situation in which an application and counter-application had been referred to oral evidence on an issue that, one way or the other, would have been dispositive of both. The judge had, 5 Pharmaceutical Manufacturers Association of SA and Another; In re ex parte President of the Republic of South Africa and Others [2000] ZACC 1; 2000 (2) SA 674 (CC); 2000 (3) BCLR 241 (CC) para 37. 6 De Lange v Smuts NO and Others [1998] ZACC 6; 1998 (3) SA 785 (CC); 1998 (7) BCLR 779 (CC) paras 46 and 131. See too A S Mathews Freedom, State Security and the Rule of Law (1988) at 20. 7 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); 2001 (11) BCLR 1109 (CC) para 11. 8 Knoop NO and Another v Gupta and Another [2020] ZASCA 149; 2021 (3) SA 135 (SCA) para 28. 9 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA). however, required the parties to address him on two other issues that he had identified, and which were not canvassed in the papers. He decided the matter on the basis of one of his own points without, it would appear, the necessary evidence. [20] In upholding the appeal against the order made in those circumstances, Theron and Wallis JJA said the following:10 ‘[13] Turning then to the nature of civil litigation in our adversarial system, it is for the parties, either in the pleadings or affidavits (which serve the function of both pleadings and evidence), to set out and define the nature of their dispute, and it is for the court to adjudicate upon those issues. That is so even where the dispute involves an issue pertaining to the basic human rights guaranteed by our Constitution, for “(i)t is impermissible for a party to rely on a constitutional complaint that was not pleaded”. There are cases where the parties may expand those issues by the way in which they conduct the proceedings. There may also be instances where the court may mero motu raise a question of law that emerges fully from the evidence and is necessary for the decision of the case. That is subject to the proviso that no prejudice will be caused to any party by its being decided. Beyond that it is for the parties to identify the dispute and for the court to determine that dispute and that dispute alone. [14] It is not for the court to raise new issues not traversed in the pleadings or affidavits, however interesting or important they may seem to it, and to insist that the parties deal with them. The parties may have their own reasons for not raising those issues. A court may sometimes suggest a line of argument or an approach to a case that has not previously occurred to the parties. However, it is then for the parties to determine whether they wish to adopt the new point. They may choose not to do so because of its implications for the further conduct of the proceedings, such as an adjournment or the need to amend pleadings or call additional evidence. They may feel that their case is sufficiently strong as it stands to require no supplementation. They may simply wish the issues already identified to be determined because they are relevant to future matters and the relationship between the parties. That is for them to decide and not the court. If they wish to stand by the issues they have formulated, the court may not raise new ones or compel them to deal with matters other than those they have formulated in the pleadings or affidavits.’ It was, Theron and Wallis JJA concluded, ‘impermissible’ for the court to decide the matter as it had.11 So too in this matter. 10 Paras 13-14. 11 Para 24. [21] Thirdly, the supervisory order was granted despite the complete absence of evidence to justify it. In Minister of Health and Others v Treatment Action Campaign and Others (No. 2)12 the court held that the remedial powers of our courts to grant mandatory relief against the government ‘includes the power where it is appropriate to exercise some sort of supervisory jurisdiction to ensure that the order is implemented’. How these powers are exercised ‘depends on the circumstances of each particular case’13 but ultimately a supervisory order may be made ‘if it is necessary to secure compliance with a court order’.14 Important as a supervisory order may be in appropriate cases, the granting of this type of relief must be carefully considered – and justified on the facts – particularly because of its separation of powers implications.15 [22] In this case, not only was there no evidence as to the necessity of a supervisory order but the fact that the SAHPRA and the Minister had settled the matter and agreed to an order suggests that there was probably no necessity for one. Furthermore, had Sardiwalla J allowed the parties to argue the matter, he would have been informed of the separation of powers problems that the grant of the supervisory order would create, and the possible consequence of it purporting to by-passing the obligation, imposed by s 7(2) of the Promotion of Administrative Justice Act 3 of 2000, to exhaust the internal remedy created by s 24A of the Medicines and Related Substances Act 101 of 1965. Finally, it strikes me as telling that the reasons that Sardiwalla J furnished made no mention of the supervisory order and consequently gave no reason at all for it being granted. And this despite being pertinently asked to furnish reasons on this very issue – the only issue that was not agreed to and was in dispute. For this reason too, the order cannot stand. Conclusion [23] The appeal must succeed for the three inter-related reasons of a failure to hear the SAHPRA and the Minister before making the supervisory order; the fact that it was 12 Minister of Health and Others v Treatment Action Campaign and Others (No. 2) [2002] ZACC 15; 2002 (5) SA 721 (CC); 2002 (10) BCLR 1033 (CC) para 104. 13 Para 113. 14 Para 129. 15 Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, amici curiae); President of the Republic of South Africa and Others v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, amici curiae) [2004] ZASCA 47; 2004 (6) SA 40 (SCA) para 39. not an issue on the pleadings and was not applied for by any party; and that it was granted in the absence of any evidence to establish that it was necessary. As the SAHPRA and the Minister undertook not to seek any costs order against the ACDP, no order of costs will be made. [24] I make the following order: The appeal is upheld. Paragraphs 1 and 2 of the high court’s order are set aside. ________________________ C Plasket Judge of Appeal APPEARANCES For the first appellant: G Marcus SC (with A Hassim SC) Instructed by: Hahn & Hahn Attorneys, Pretoria Symington & De Kok, Bloemfontein For the second appellant: T Skosana SC (with T Lupuwana and M S Manganye) 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 21 November 2022 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. South African Health Products Regulatory Authority and Another v African Christian Democratic Party (869/2021) [2022] ZASCA 158 (21 November 2022) MEDIA STATEMENT The Supreme Court of Appeal (SCA) today upheld the appeal of the South African Health Products Regulatory Authority (the SAHPRA) and the Minister of Health (the Minister) against a supervisory order issued by the Gauteng Division of the High Court, Pretoria (the high court). The appeal was unopposed, although the African Christian Democratic Party (the ACDP) had initially opposed it. Four applicants, including the ACDP, had brought separate applications against the SAHPRA and the Minister to compel them to make available for the treatment of Covid-19 in humans, an animal remedy called Ivermectin. The applications were to be heard together, but all were settled. The judge hearing the matters requested the parties to draft one settlement agreement which would be made an order. He added that he wanted a supervisory order to be added to the settlement. The SAHPRA and the Minister registered their objection and submitted heads of argument to oppose such an order being granted. Despite that, the judge, shortly before the matter was to be heard, made the settlement and the supervisory order an order of court. He did so without hearing the parties and without furnishing reasons. When asked for his reasons for making the supervisory order, he gave reasons that made no mention of it. On appeal, the SCA held that the supervisory order had to be set aside for three reasons. First, it was made without the SAHPRA and the Minister being heard. Secondly, it was not an issue before the court, never having been raised in the papers and not being relief that had been applied for by any of the parties. Thirdly, there was no evidence before the judge to justify granting the order.

2631

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 924/2013 Reportable In the matter between: MEC FOR THE DEPARTMENT OF HEALTH, FREE STATE PROVINCE Appellant and DR ELIZABETH JOHANNA DE NECKER Respondent Neutral Citation: MEC for the Department of Health v De Necker (924/2013) [2014] ZASCA 167 (8 October 2014). Coram: Navsa ADP, Brand, Pillay & Mbha JJA and Schoeman AJA Heard: 29 August 2014 Delivered: 8 October 2014 Summary: Whether claim for damages by a doctor against the hospital where she was employed based on her being raped whilst on duty was excluded by the provisions of s 35(1) of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 – whether rape arose out of her employment – held that the rape bore no relation to her employment – was not incidental to such employment – egregious nature of rape discussed – policy of Act restated. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: The Free State High Court, Bloemfontein (Mocumie J sitting as court of first instance). The following order is made: The appeal is dismissed with costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Navsa ADP (Brand, Pillay & Mbha JJA and Schoeman AJA concurring): [1] The question in this appeal is whether the Department of Health, Free State Province, represented by the appellant, the responsible Member of the Executive Council of the Free State Government (the MEC), is notionally liable to the respondent, a female medical doctor, for damages sustained as a result of her being raped, at approximately 02h00 on 30 October 2010, by an intruder who had gained access to the hospital premises. Put differently, the question is whether the respondent‟s claim is precluded by s 35(1) of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA). The incident occurred at a time when the respondent was discharging her duties as a Registrar in order to specialise as a paediatrician. I shall for convenience refer to the respondent as „the doctor‟. [2] In 2012 the doctor instituted an action in the Free State High Court against the MEC in his representative capacity to recover damages she alleged she sustained as a result of the incident referred to in the preceding paragraph. The MEC filed a special plea in which he asserted that the doctor‟s claim was barred by s 35(1) of COIDA. I shall, in due course, deal with the provisions of the legislation. It is common cause that the doctor did not submit a claim for compensation under COIDA. [3] The judgment in terms of which the special plea was decided records the following as having been agreed by the parties for the purposes of the adjudication of the special plea: „1. Plaintiff was employed by defendant as a paediatric registrar. 2. Plaintiff was on duty from 07:30 on 29 October 2010 until 13:00 on 30 October 2010 at the Pelonomi Hospital. 3. Plaintiff was the only paediatric registrar on night duty on 30 October 2010. 4. She was on duty with two interns who were doctors doing house jobs. 5. Plaintiff was responsible for paediatric patients in the Paediatric ICU, Paediatric Isolation Ward, Neonatal High-Care unit, Ward 3A and 3B and Ward 4A. 6. The Neonatal High Care Unit and Ward 3A are in different buildings, but the buildings were connected by a walkway. 7. After treating a patient in the Neonatal High Care Unit, plaintiff took the most direct route to Ward 3A which is on the third floor, to treat other patients at about 02:00 on 30 October 2010. 8. While on her way back to Ward 3A, plaintiff was attacked by being struck with a brick, rendered unconscious and raped on the first floor of the same building in which Ward 3A is situated. 9. Plaintiff‟s assailant – 9.1 was a 16/17 year old man; 9.2 was not a patient or employee at the Pelonomi Hospital; 9.3 was not authorized or permitted to be within the confines of the hospital; 9.4 was convicted of rape and sentenced to 15 years‟ imprisonment. 10. At the time – 10.1 there was building construction work being carried out at the hospital; 10.2 the defendant admits that a portion of the parameter fencing was under temporary repair, but not missing; 10.3 the elevator between the ground and first floor where the incident occurred was not working. 10.4 the lights on the first floor where the incident took place were not working. 11. Defendant alleged that the attack and rape were not foreseeable to the defendant.‟ [4] The high court (Mocumie J) set out what it thought the issues were that had to be determined: „(a) whether the incident in this case was an “accident” as contemplated in s 35 of COIDA; and (b) Whether the incident arose out of and in the course of employment?‟ [5] After considering s 35 of COIDA and a host of authorities, Mocumie J held that the incident did not arise out of and in the course of the doctor‟s employment as a Registrar and that consequently the rape was not an accident contemplated by s 35. In essence, she held that the attack on the doctor bore no relationship to her employment. In the result, the high court dismissed the appellant‟s first special plea with costs. The question in the present appeal that is before us with the leave of that court, is whether those conclusions and order are correct. [6] At the outset it is necessary to consider that COIDA is, as described by the Constitutional Court, in Jooste v Score Supermarket Trading (Pty) Ltd 1999 (2) SA 1 (CC); „important social legislation which has a significant impact on the sensitive and intricate relationship amongst employers, employees and society at large‟.1 The purpose of COIDA was described in that judgment at para 13 as follows: „ The purpose of the Compensation Act, as appears from its long title, is to provide compensation for disability caused by occupational injuries or diseases sustained or contracted by employees in the course of their employment.‟ The Constitutional Court went on to examine the difference between compensation in terms of COIDA and at Common Law. „The Compensation Act provides for a system of compensation which differs substantially from the rights of an employee to claim damages at common law. Only a brief summary of this common-law position is necessary for the purpose of this case. In the absence of any legislation, an employee could claim damages only if it could be established that the employer was negligent. The worker would also face the prospect of a proportional reduction of damages based on contributory negligence and would have to resort to expensive and time-consuming 1 Para 9. litigation to pursue a claim. In addition, there would be no guarantee that an award would be recoverable because there would be no certainty that the employer would be able to pay large amounts in damages. It must also be borne in mind that the employee would incur the risk of having to pay the costs of the employer if the case were lost. On the other hand, an employee could, if successful, be awarded general damages, including damages for past and future pain and suffering, loss of amenities of life and estimated “lump sum” awards for future loss of earnings and future medical expenses, apart from special damages including loss of earnings and past medical expenses.‟ (My emphasis.) [7] In Joubert (ed) The Law of South Africa (2ed) vol 13(3) para 114, M P Olivier stated: „[COIDA] provides a system of no-fault compensation for employees who are injured in accidents that arise out of and in the course of their employment or who contract occupational diseases. However, negligence continues to play a role since an employee is entitled to additional compensation if he or she can establish that the injury or disease was caused by the negligence of the employer (or certain categories of managers and fellow employees). The compensation fund established in terms of the Act requires employers to contribute to a centralised state fund. . . . The Act provides for benefits to be paid to employees who suffer a temporary disablement, employees who are permanently disabled and the dependants of employees who die as a result of injuries sustained in accidents at work or as a result of an occupational disease.‟ The learned author correctly points out that courts have consistently held that the provisions of COIDA have to be generously construed in favour of employees. In Davis v Workmen’s Compensation Commissioner 1995 (3) SA 689 (C), at 694F the following appears: „The policy of the Act is to assist workmen as far as possible. See Williams v Workmen’s Compensation Commissioner 1952 (3) SA 105 (C) at 109C. The Act should therefore not be interpreted restrictively so as to prejudice a workman if it is capable of being interpreted in a manner more favourable to him.‟ [8] In a nutshell, the Act provides a ready source of compensation for employees who suffer employment related injuries and provides for compensation without the necessity of having to prove negligence, although negligence may result in greater compensation. It should, however, be borne in mind, that the object of the Act is to benefit employees and that their common law remedies were restricted to enable easy access to compensation. It does not necessarily mean that compensation for every kind of harm they suffer whilst at their place of employment has to be pursued through that statutory channel. However, if the injury was caused by an accident that arose out of an employee‟s employment, then the latter is restricted to a claim under the Act. This is referred to as the exclusivity doctrine. It also has to be borne in mind that the Act sets minimum and maximum amounts of compensation for temporary total or partial disablement and for permanent disablement. For a most comprehensive history and analysis of Workers‟ Compensation Legislation in this country, dating back to 1907, see Mankayi v Anglogold Ashanti Ltd 2010 (5) SA 137 (SCA) paras 14 to 21. [9] That then gives some context to what is now necessary, namely, a perusal of the relevant provision of COIDA. Section 35(1) of COIDA, which is at the centre of this appeal, reads as follows: „No action shall lie by an employee or any dependant of an employee for the recovery of damages in respect of any occupational injury or disease resulting in the disablement or death of such employee against such employee‟s employer, and no liability for compensation on the part of such employer shall arise save under the provisions of this Act in respect of such disablement or death.‟ (My emphasis.) „Occupational injury‟ is defined in s 1 of COIDA as follows: „“occupational injury” means a personal injury sustained as a result of an accident.‟ „Accident‟ is defined in the Act as: „“accident” means an accident arising out of and in the course of an employee‟s employment and resulting in a personal injury, illness or the death of the employee.‟ (My emphasis.) [10] Thus, as can be seen, in order for COIDA to operate and preclude a common law claim, the facts must show that the employee either contracted a disease or met with an accident arising out of and in the course of his or her employment. This requires a determination of whether the respondent‟s rape constituted an „accident‟ for the purposes of COIDA and arose out of and in the course of her employment by the appellant. If that is answered in the affirmative, the special plea should succeed. [11] Courts in this country and elsewhere have over decades grappled with the enduring difficulty of determining, for the purposes of similar, preceding and present legislation, whether an incident constitutes an accident and arose out of and in the course of employment of an employee. They also discussed the policy behind employee compensation legislation and the approach to be adopted in interpreting the legislation. In McQueen v Village Deep G.M. Co Ltd 1914 TPD 344 De Villiers JP at 347, in relation to the then prevailing employee compensation scheme, said the following at the commencement of the judgment: „The most difficult question which arises in the present case is whether the facts as stated by the magistrate can be said to constitute an “accident” within the meaning of the law.‟ De Villiers JP took the view that it was perfectly plain that an „accident‟ in the legislative context was not an accident in the ordinary acceptance of the word, which, in general terms, is „an effect which was not intended‟. He had regard to developments in English Law in which an „accident‟ for the purposes of the legislation there in force had been given an extended meaning beyond an „unlooked for mishap‟ and „an untoward event which is not expected or designed‟. He recorded in his judgment that our then Workmen‟s Compensation Act derived directly from the English Act and, as discussed above, considered that it ought to be interpreted beneficially for an employee. De Villiers JP went on to the next critical question: whether it could be said that the injury arose out of the employee‟s work? With reference to Mitchinson v Day Bros. (1913, 1 KBD 602), he reasoned that what fell to be decided is whether the event is a risk which can be reasonably held to be incidental to the employment. On that aspect he concluded as follows at 349: „If it be such a risk, and if the injury flows from that risk, it must be held to be an injury arising out of the employment.‟ [12] The facts in McQueen, discussed in the preceding paragraph were as follows: The employee in question was a trammer in a mine in charge of a gang of employees who were doing shovelling work in one of the stopes underground. He grabbed one of them by the wrist in an attempt to take him to a particular spot where he thought work should be done. In retaliation, the labourer concerned struck him on the head with a stone. In a patronising tone and language typical of the times, the court concluded as follows: „It seems to me that it can fairly be said that this is a special risk which is incidental to the employment of a man in charge of a gang of uncivilised natives underground in a mine.‟ Thus, the court held that the said injuries were caused by an accident which arose out of and in the course of the plaintiff‟s employment. [13] In Nicosia v Workmen’s Compensation Commissioner 1954 (3) SA 897 (T) Roper J, like De Villiers JP in McQueen, recorded that the origin of our then Workmen‟s Compensation Act lies in the then British Employee Compensation Act. In Nicosia what had to be determined was whether an employee, a fitter and turner, required to work on a drilling machine who had hurt himself whilst picking up an instrument to insert into the machine, was entitled to claim compensation due to the injuries suffered by the slipping out of one of his intervertebral discs. Predictably, a decision was made in favour of the workman and it was held that the injury the employee sustained was due to an accident within the meaning of the legislation. [14] In Langeberg Foods Limited & another v Tokwe [1997] 3 All SA 43 (E), the court was dealing with a labourer who had been assaulted by a security officer because he was found smoking dagga on his employer‟s premises. The employee, whilst fleeing, had sustained bodily injuries when the security officer tumbled and fell onto him. The employee instituted a claim for damages. As in the present case, the defence was raised that the equivalent of the legislation under consideration precluded the employee from proceeding with the damages claim against the employer. The trial court dismissed the defence and found the employer and the security guard jointly and severally liable for the damages sustained by the employee. On appeal, the question that arose was whether the incident, which resulted in a personal injury, was an accident arising out of and in the course of the workman‟s employment and resulting in a personal injury. In Langeberg at 49 the following appears: „In terms of section 2 of the Workmen‟s Compensation Act 30 of 1941 an accident means an accident arising out of and in the course of a workman‟s employment and resulting in a personal injury. That second appellant‟s actions were deliberate in the sense that they constituted an assault does not detract from the notion that respondent was injured as a result of an accident because “even where the act is intentional as regards third parties, as long as it was not intended so far as the workman was concerned it must be taken to be an accident qua the workman” – per De Villiers JP in [McQueen] at 348. The question is therefore whether the accident arose out of and in the course of respondent‟s employment. The fact that respondent was at the time on a tea break and not actually working does not mean that he was not injured during the course of his employment cf. Beukes v Knights Deep Ltd 1917 TPD 683. Indeed it is not in issue that respondent was injured during the course of his employment so that the crucial question to be answered is whether the incident “arose out of” respondent‟s employment.‟ [15] In Langeberg the court, with reference to authorities, reminded itself that a decision in each case is to be made with reference to its particular facts.2 In considering the facts before it, the court said the following: „Respondent in the present case was employed as a labourer. The incident giving rise to his injuries was an assault upon him and although this occurred during a tea break in the course of his employment, it did not arise out of his employment. It arose out of the fact that respondent was seen to be smoking dagga which had nothing whatsoever to do with his employment. In other words it was respondent‟s smoking of dagga and not that he was in the course of his employment that brought respondent within the range or zone of a possible assault upon him. The distinction accords in my view with the decision in Kau v Fourie 1971 (3) SA 623 (T) and it is a distinction well illustrated in Fried v SA Iron Works Ltd 1919 CPD 253 where the head note reads: “Where a workman in order to perform certain work on a ship climbed up a prop which was used to support the ship in dry dock, instead of proceeding along a gangway which was provided for the purpose, and fell and was killed. Held, on appeal, that the accident occurred „in the course of‟ but did not arise „out of‟ the employment in terms of section 1 of Act 25 of 1914, as it was attributable solely to an added and 2 Langeberg supra at 50d to f. unnecessary risk outside the sphere of employment and that the deceased‟s widow was therefore not entitled to recover compensation under Act 25 of 1914.”‟ [16] In Minister of Justice v Khoza 1966 (1) SA 410 (A), this court had to wrestle with the vexed question of whether an accident arose out of an employee‟s employment. That question is at the heart of the present case. The passage in Khoza in which the relevant principles appear, bears repeating in its entirety. In the paragraph succeeding this one, there is a summary in English of the relevant parts of that dictum. At 417D-H Rumpff JA said: „Luidens Wet 30 van 1941 moet die ongeval uit die werksman se diens ontstaan en in die loop daarvan plaasvind. “In die loop daarvan” beteken dat die ongeval moet plaasvind terwyl die werksman besig is met sy werksaamhede en dit onstaan “uit sy diens” as die ongeval in verband staan met sy werksaamhede. Die Wetgewer het daardie verband nie omskryf nie en eis alleen in breë sin „n kousale verband tussen diens en ongeval. Wanneer hierdie onomskrewe verband gesien word in die lig van die doel en ingrypende omvang van Wet 30 van 1941, moet dit m.i. bevind word dat die kousale verband tussen ongeval en diens in die algemeen voldoende geskep word wanneer die ongeval plaasvind op die plek waar die werksman by die uitvoering van sy diens is. Omdat „n werksman in die uitvoering van sy diens altyd êrens moet wees, hetsy hy staan, loop, ry of vlieg, sal hy – behoudens sekere uitsonderings – weens sy diens, en dus uit sy diens, beseer word, indien hy beseer word waar hy is wanneer hy sy werksaamhede verrig. „n Fabrieksarbeider wat beseer word omdat „n sterk wind „n sinkplaat van die dak op hom gooi, en „n werksman wat in die loop van sy diens langs die straat wandel of in „n motorkar ry en beserings opdoen weens nalatigheid van iemand anders, blote ongeluk of weersomstandighede, doen nietemin die besering op weens sy diens en dus uit sy diens. Vir doeleindes van hierdie uitspraak is dit nie nodig om die uitsonderings te probeer opspoor nie. Dis in elk geval duidelik dat hierdie kousale verband vir doeleindes van die Wet sou verdwyn, onder andere, indien die ongeval van so „n aard is dat die werksman die beserings sou opgedoen het al was hy op „n ander plek as wat sy diens sou vereis het of wanneer die werksman deur sy eie handeling die plaaslike verband tussen diens en ongeval uitskakel of wanneer die werksman opsetlik beseer word deur „n ander persoon en die motief van die aanranding geen verband hou met die werksaamhede van die werksman nie.‟ [17] In order for a common law claim against an employer to be precluded, the accident must have occurred during the course of an employee‟s employment and it must also arise out of that employment. In Khoza this court considered the sole difficulty in that case to be whether the accident it was considering arose out of the respondent‟s employment. That is also the sole problem present in this case. In Khoza, the respondent was injured as a result of a fellow-policeman discharging his firearm whilst playfully waving it about at a time when they were transporting arrested persons in the back of a police van. In the passage set out in the preceding paragraph, this court noted that the then prevailing Employee Compensation legislation did not circumscribe the expression „arising out of an employee‟s employment‟. Rumpff JA stated that what was required in the broad sense was a causal connection between employment and the accident. He went on to state that, in general, the causal connection between the accident and employment is met when the accident occurs at the place where the employee works. The learned judge of appeal took into account that an employee, in the execution of his duties may be at various locations but that an accident could notionally be said to arise out of an employee’s employment if it occurred and the workman was injured whilst he was busy executing his duties. As examples he considered the position of a labourer at a factory who is injured when a gust of wind dislodged a sheet of roof iron which strikes him, whilst he is walking in the street or riding in a motor vehicle going about his duties as an employee. Rumpff JA went on to consider instances in which the causal connection for the purposes of the Act could be said to have been severed. He held that it was clear that the causal connection would be extinguished if the accident was of such a kind that the employee would have sustained the injuries even if he had been at a place other than where he was executing his duties as an employee or when, through his own act, he caused the causal connection to be extinguished. More significantly, for the purposes of the present case, he considered the causal connection to be severed when the employee was intentionally injured by a stranger and the motive for the assault bore no connection to the injured person‟s employment. I shall, in due course, return to this important aspect. [18] In Van De Venter v MEC of Education: Free State Province (3545/2010) [2012] ZAFSHC 185 (4 October 2012), the Free State High Court, without reference to Khoza, said the following concerning an injury that an employee sustained during the course of a robbery: „The injury which the applicant sustained during the course of the robbery was and remains an occupational injury. It seemed to be of little moment whether a particular injury was causatively brought about by a criminal act or not . . . . It follows, therefore, that any personal injury sustained by an employee caused by any criminal act arising out of and during the course of an employee‟s employment amounts to an accident as defined in section 1 [of the COIDA] . . . . In our law, therefore, an employee who sustains a compensatable injury or personal injury or occupational injury as envisaged in s 3(1) of [the COIDA] is legislatively barred from claiming further compensation in delict, by way of common law action, from her employer, on the ground that her employer had breached a duty to provide her with a safe working environment and on the ground that her employer had breached a duty to provide her with a safe working environment and on the ground that her criminal assault rendered her personal injury so unique that it fell outside the cadre of occupational injury . . . . . . . . The fact that the applicant was injured by criminal outsiders and not by fellow employees made no difference.‟ [19] In Ex Parte Workmen’s Compensation Commissioner: In Re Manthe [1979] 4 All SA 885 (E), the court was dealing with an assault on an employee and the question it was called upon to determine was whether the assault was an „accident‟ as defined by s 2 of the Workmen‟s Compensation Act 30 of 1941. The Commissioner had decided that compensation was not payable on the basis that although the employee was injured in the course of his employment, the injuries did not arise out of his employment and consequently it was not an accident as defined. That decision led to the litigation before the Eastern Cape High Court. In determining whether there was a causal connection between the accident and the respondent‟s employment, the high court said the following: „In a consideration as to whether or not that causal connection exists, a number of factors, variable in each case, must play a part. It seems to have been accepted in past decisions that the Act, as remedial legislation, should be given a broad and commonsense interpretation on this issue. That approach appears in such diverse authorities as Beukes’ case supra at 690 – 691 where reference is made to a risk “inherent or incidental to the employment”; [McQueen]; and in the abovementioned dicta of RUMPFF and WILLIAMSON JJA in Khoza’s case. Thus, factors such as time, place and circumstances of the accident must all be given due weight in determining whether it can reasonably be said that, “it was the actual fact that he was in the course of his employment that brought the workman within the range or zone of the hazard . . .”‟ [20] Addleson J, in Manthe held that the passage from Khoza quoted above was obiter and doubted that Rumpff JA intended to „lay down‟ any principle of invariable application to all possible combinations of circumstances. That would have been in conflict with his own earlier statement that the facts must rule the decision in each case; and that the Act has not circumscribed the causal relationship between the employment and the accident „en eis alleen in breë sin „n kousale verband‟. [21] The court in Manthe doubted the wisdom of the commissioner‟s conclusion set out at the end of para 20 on the following basis: „If the commissioner‟s contention is correct, the situation must then be formulated as follows: It is admitted that the workman was on his employer‟s premises, at a place where a robbery could occur, carrying out his employer‟s instructions, in the course of his employment, during working hours, when he was injured; but he is not entitled to compensation solely because the attack which caused his injury was not aimed directly at him as a workman, but simply at a member of the public who could also have been at that place. The permutations of such an argument by the applicant are interesting and illustrative. For example, a workman employed to deliver money to a bank (a so-called “security guard”) would presumably be entitled to compensation if he were robbed in the street and injured by a person who knew he was a security guard; but he would receive no compensation if his assailant did not know the nature of his employment. A workman instructed to deliver money to the bank would apparently be entitled to compensation if we were robbed and injured by a person with the specific intention of robbery but he would receive no compensation once he stepped outside his employer‟s gate and was robbed in the public street.‟ [22] However, in Twalo v The Minister of Safety and Security & another [2009] 2 All SA 491 (E), Y Ebrahim J, appears to have adopted in some measure the reasoning set out in the dictum from Khoza which is set out earlier in this judgment. In Twalo the employee was a policeman who had been shot and killed at a police station by a fellow officer. The plaintiff, in that case, in her personal capacity and in her capacity as the mother and natural guardian of the deceased employee‟s three minor children, sued the Minister of Safety and Security and the policeman who had shot the employee, for loss of support. In a special plea, the Minister sought refuge in s 35(1) of COIDA. Y Ebrahim J said at paras 18, 19 and 21: „. . . The second defendant‟s actions in shooting the deceased were premeditated and carried out with the intention to kill him. The second defendant was motivated by personal malice towards the deceased who had taunted him about the relationship the deceased had with his wife. In addition to the fact that the intentional shooting of the deceased was not an accident he was not, as said by Zulman AJ in ABSA Bank Ltd v Bond Equipment (Pretoria) (Pty) Ltd, “about affairs, or business, or doing the work of, the employer” namely the first defendant. The sole reason for the second defendant shooting the deceased was the existence of a private dispute between them. The fact that it took place while both of them were on duty as policemen and at their workplace was entirely coincidental. The shooting could have occurred, for that matter, at any other place entirely unrelated to their work environment as the motive for the shooting bore no causal relationship with their work. . . . I am accordingly satisfied on the facts, as presented, that the intentional shooting of the deceased was not an accident and that the deceased did not sustain an occupational injury that resulted in his death. The provisions of section 35 of COIDA are accordingly not applicable and the plaintiff is not precluded from claiming damages from the first defendant.‟ [23] South African courts have not been a model of consistency in their approach to the determination of whether an accident arose out of an individual‟s employment. Internationally the position is often dependant on prevailing Employee Compensation Legislation. In New Zealand, the compensation scheme that came into effect in 1974 was one of the most comprehensive schemes at that time.3 Section 25 of the Injury Prevention, Rehabilitation and Compensation Act 2001 contains an extensive definition of „accident‟ which outlines both those circumstances that are encompassed therein as well as certain exclusions. Oliphant4 notes „[I]t has always been the case . . . that intentional acts like battery and rape are covered [by New Zealand‟s personal injury scheme], being an “accident” to the victim‟. See also G v Auckland Hospital Board [1976] 1 NZLR 638 (SC). [24] Markesinis and Unberath5 explore the nature of Germany‟s „gesetzliche Unfallversicherung‟ (statutory accident insurance), and note that „[a] basic assumption of the system is that if an employee is entitled to compensation under [the German code] (for an accident suffered at work), save in cases of intentionally inflicted injury, the injured victim cannot claim any further compensation by relying on the ordinary tort rules of the [code]: the employer . . . enjoy[s] an immunity . . . .‟ (My emphasis.) It is thus clear that intentional acts, which of necessity include sexual harassment and rape, would not constitute an accident for the purposes of German workmen‟s compensation law, and thus claims arising from such acts are pursuable under tort law. [25] In England the system of non-tort compensation is separated by way of various statutes, two of which are relevant. The first, the Industrial Injuries Scheme,6 provides for compensation for injuries and certain prescribed diseases where such were caused by an accident arising out of and in the course of employment. Second, the Criminal Injuries Compensation Scheme provides for compensation for personal injury „caused by a crime of violence broadly in line with common law damages for tort‟,7 and thus does not govern accidents. 3 B Atkin, K Evans, G McLay, S Petersson and D Carter Torts in New Zealand 3ed(2003) at 143. 4 K Oliphant Private and Social Insurance in C Sappideen & P Vines (eds) Fleming’s The Law of Torts 10ed (2011) at 481-482. 5 B S Markesinis and H Unberath The German Law of Torts: A Comparative Treatise 4 ed (2002) at 725- 726. 6 Which has nevertheless been referred to as a „misnormer since there is no separate fund nor even, now, a separate Act‟. See W V H Rogers Winfield & Jolowicz on Tort 17 ed (2002) at 26. 7 WVH Rogers Winfield & Jolowicz on Tort 17 ed (2002) at 37. [26] There does not appear to be a case in which a rape or sexual harassment gave rise to a claim under the Industrial Injuries Scheme, which appears to be a direct consequence of this clear separation and the provision for such claims under the criminal scheme.8 [27] American courts have largely held that claims arising from rape and/or sexual assault fall within the definition of an „accident‟ in the governing workmens‟ compensation scheme and are thus barred at common law by way of application of the exclusivity doctrine.9 However, and importantly for our purposes, the judgment of the Supreme Court of Arizona in Ford v Revlon Inc. 153 Ariz. 38 (1987) 734 P.2d 580, is instructive. In that case the employee worked for Revlon and was subjected to continued sexual harassment by a supervisor. Her repeated complaints over several months to Revlon went unheeded. As a result of the supervisor‟s behaviour, she developed symptoms of emotional stress. A year and one month after the first act of sexual harassment, the supervisor was issued with a letter of censure. Shortly thereafter the employee attempted suicide. Later she sued Revlon and the supervisor for assault and battery, and for intentional infliction of emotional distress. A jury found the supervisor liable for assault and battery but not for the intentional infliction of emotional distress. It found Revlon liable for intentional infliction of emotional distress. Only Revlon appealed. The only issue on appeal was whether Revlon was liable for intentional infliction of emotional distress. The court of appeals reversed the judgment of the trial court, holding that, since the supervisor was not found guilty of the intentional infliction of emotional distress, Revlon as principal could not be found guilty. The Arizona Supreme Court granted a review because it disagreed with that limitation of liability of Revlon. Although not considered by the court of appeals, the parties raised the question whether the matter was controlled by Arizona‟s Worker‟s Compensation Act and it was considered by the Supreme Court. It disagreed with the contention on 8 W V H Rogers Winfield & Jolowicz on Tort 17 ed (2002) at 39 notes that „Because injury arising from an intentional act is “accidental” as far as the victim is concerned, there is no need for a separate criminal injuries compensation scheme in New Zealand.; See also A J Rycroft and D Perumal „Compensating the Sexually Harassed Employee‟ (2004) 25 ILJ 1153 at 1168. 9 In addition to those cases discussed above, see Driscoll v. Gen. Nutrition Corp., 752 A.2d 1069, 1076 (Conn. 2000); Rogers v. Burger King Corporation, 82 P.3d 116, 121 (Okla. 2003). behalf of Revlon that the matter was controlled by the legislation. The Supreme Court held that since the jury found the severe emotional distress to be essentially non- physical in nature, it fell outside the legislation which regulated claims for physical injuries. The Supreme Court, considered the original purpose of workmen‟s compensation was, namely, to compensate workers for injury which had its origins in a risk „connected with the employment‟. [28] In Revlon, The Arizona Supreme Court noted that some courts have provided a tort remedy instead of workers‟ compensation to employees injured by wrongs that are not „a necessary risk or danger‟ of their employment. Other courts have invoked the bar of exclusivity and have refused to recognise a tort remedy. The same could be said of our courts. Importantly, in Revlon the Supreme Court said the following: „By law, exposure to sexual harassment is not an inherent or necessary risk of employment, even though it may be or may have been endemic. The cost of such conduct ought not to be included in the cost of the product and passed to the consumer. If my employer invades my right to privacy by tapping my telephone, it is my employer who should pay the piper for such wrong, not his compensation carrier. Given the substantive nature of the wrong committed here, I believe that this form of the action falls outside the compensation system. The action for outrage, now called infliction of emotional distress, was first recognized as a remedy for emotional injury caused by outrageous conduct and as a response to the doctrine that, unaccompanied by preceding physical harm, such injury was noncompensable.‟ [29] In England, in Nisbet v Rayne & Burn [1910] 2 KBD 689 the court considered the question whether the murder of a cashier while traveling in a railway carriage to a colliery with a large sum of money for the payment of his employers‟ workmen, was an accident within the meaning of that expression in the Workers‟ Compensation Legislation. Farwell LJ in considering whether the accident arose out of the cashiers employment said the following: „It is plain that it arose in the course of his employment; it was part of his regular duty to take the money required for the wages on pay day by train to the colliery; it was his duty to carry it safely and to protect it from thieves and robbery . . . I have come to the conclusion that there is a distinct and well-known risk run by cashiers and the like who are known to carry considerable sums in cash on regular days by the same route to the same place, of being robbed and, if they do their duty by defending their charge, murdered, and that such a risk is as incidental to their employment as the risk from missiles from bridges is to the employment of engine-drivers or the risk of injury by poachers to that of gamekeepers.‟ [30] By employing terms such as „necessary risk of employment‟ or „risk incidental to employment‟, courts have attempted to determine whether the cause of injuries sustained by employees was related to the employee‟s employment. The latter part of the quote from Khoza set out in para 17 and summarised in English in para 18, in similar fashion, sought to provide some guidance in determining whether an accident „arose out of employment‟. [31] Counsel on behalf of the MEC did not go so far as to suggest that the dictum in Khoza referred to in the preceding paragraph was clearly wrong and that we should depart from it, but pointed out that relating the causal connection, as Rumpff JA did, to the motive of the perpetrator of the wrong that caused the injury was problematic and would lead to uncertainty. I agree. However, it appears to me that the problem can be resolved by a slight adjustment, namely to ask the question whether the wrong causing the injury bears a connection to the employee‟s employment. Put differently, the question that might rightly be asked is whether the act causing the injury was a risk incidental to the employment. There is of course, as pointed out in numerous authorities, no bright-line test. Each case must be dealt with on its own facts. [32] I am unable to see how a rape perpetrated by an outsider on a doctor – a paediatrician in training – on duty at a hospital arises out of the doctor‟s employment. I cannot conceive of the risk of rape being incidental to such employment. There is no more egregious invasion of a woman‟s physical integrity and indeed of her mental well- being than rape. As a matter of policy alone an action based on rape should not, except in circumstances in which the risk is inherent, and I have difficulty conceiving of such circumstances, be excluded and compensation then be restricted to a claim for compensation in terms of COIDA. [33] I can understand that courts have strained to come to the rescue of particularly impecunious individuals and have held them entitled to claim compensation from a fund established for that purpose. I also understand that courts have done this by adopting a position in line with the policy behind the Workers‟ Compensation Legislation, namely, that workers should as far as possible be assisted to claim compensation that is their due under the Act and which flow from incidents connected to their employment and which can rightly be said to be a risk attendant upon or inherent to the employment. Dealing with a vulnerable class within our society and contemplating that rape is a scourge of South African society, I have difficulty contemplating that employees would be assisted if their common law rights were to be restricted as proposed on behalf of the MEC. If anything, it might rightly be said to be adverse to the interest of employees injured by rape to restrict them to COIDA. It would be sending an unacceptable message to employees, especially women, namely, that you are precluded from suing your employer for what you assert is a failure to provide reasonable protective measures against rape because rape directed against women is a risk inherent in employment in South Africa. This cannot be what our Constitution will countenance. [34] For the reasons stated above, the following order is made: The appeal is dismissed with costs. ________________________ MS NAVSA ACTING DEPUTY PRESIDENT APPEARANCES: FOR FIRST APPELLANT: Adv A Cockrell S.C. Instructed by: Office of the State Attorney, Bloemfontein FOR RESPONDENT: Adv. T J Bruinders S.C. Instructed by Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 8 October 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. MEC for the Department of Health v De Necker (924/2013) [2014] ZASCA 167 (8 October 2014) The Supreme Court of Appeal handed down judgment today in an appeal from the Free State High Court, Bloemfontein. The respondent, a medical doctor, had sought damages from the appellant arising from a rape perpetrated on her by an intruder who had gained access to the hospital premises while she was discharging her duties as a Registrar in order to specialise as a paediatrician, and while she was an employee of the Department of Health. The appellant had raised a special plea to the respondent’s claim, arguing that such a claim was barred by s 35(1) of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA) which provides that an injury caused by an accident that arose out of and in the course of an employee’s employment is compensable only under that Act, by way of a claim to the Compensation Commissioner established thereunder. A claim for damages under the common law, like the one instituted by the respondent, is precluded where the Act is found to be of application. The high court held that the respondent’s rape was not such an injury that arose out of and in the course of the doctor’s employment as a Registrar, and that consequently the rape was not an accident contemplated by s 35. The appellant’s special plea was thus dismissed with costs. The appellant appealed against that decision with the leave of that court. This court analysed the judgments of courts throughout both South Africa and comparative jurisdictions that dealt with both the definition of ‘accident’ in applicable workers’ compensation schemes as well as the concept of an incident ‘arising out of’ one’s employment. In general, the latter concept requires that a causal connection between employment and the accident be established in order for the COIDA to govern and thereby preclude the common law claim. This connection has in general terms been held to be met when the accident occurs at the place where the employee works, alternatively if it occurred and the workman was injured whilst he was busy executing his duties. The causal connection has been held to be severed, inter alia, where the employee was intentionally injured by a stranger and the motive for the assault bore no connection to the injured person’s employment. In application to the instant matter, this court invoked the reference in comparative jurisdictions to terms such as ‘necessary risks of employment’ or ‘risks incidental to employment’ as the test for determining whether such a causal connection between employment and the accident has been established. Where the accident is the result of an incident that is not such a ‘necessary’ or ‘incidental’ risk of the employee’s particular employment, that causal connection has been severed and the COIDA does not apply. This is to be determined in the context of the specific facts of each matter. With particular reference to the perpetration of rape in the course of one’s employment, this court noted that it is highly unlikely that rape, the most egregious invasion of a woman’s physical integrity and her mental well-being, could ever be considered to be a risk incidental to employment, and is certainly not so in the case of employment as a medical Registrar. Moreover, our Constitution cannot be said to countenance an argument that rape is a risk inherent in employment in South Africa, thereby precluding a common law claim. The respondent’s rape was held not to be an accident arising out of her employment. Accordingly, the appeal was dismissed with costs, and the respondent’s common law claim for damages was held not to be barred by s 35 of the COIDA.

2827

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 167/12 Not reportable In the matter between: AZWIHANGWISI ROBERT MMBOI FIRST APPELLANT ANDRIES NDISHAVHELAFHI MUDAU SECOND APPELLANT and THE STATE RESPONDENT Neutral citation: Azwihangwisi Mmboi v The State (167/12) [2012] ZASCA 142 (28 September 2012). Coram: Mpati P, Ponnan, Mhlantla, Petse JJA and Erasmus AJA Heard: 6 September 2012 Delivered: 28 September 2012 Summary: Murder ─ common purpose ─ absence of proof of prior agreement ─ appellant a passive bystander ─ held, in the absence of conduct manifesting active association in killing, not liable for murder. Sentence ─ cumulative effect of sentences ─ concurrence of sentences ─ when appropriate ─ two sentences ordered to run concurrently. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Limpopo High Court, Thohoyandou (Makgoba AJ sitting as court of first instance): The appeal of the second appellant is allowed to the limited extent that the sentence imposed on count 2 (robbery) is ordered to run concurrently with the sentence imposed on count 1 (murder). The second appellant will thus serve an effective term of twenty years’ imprisonment. The effective term of twenty years’ imprisonment shall run from 10 November 2004. ________________________________________________________________ JUDGMENT ________________________________________________________________ PETSE JA (Mpati P, Ponnan, Mhlantla JJA and Erasmus AJA concurring): Introduction [1] Arising out of an incident which occurred on 21 December 2003 at about 21h00 and at Lwamondo village in the district of Vuwani, Limpopo, the two appellants (together with a third accused who does not feature in this appeal) were tried in the Limpopo High Court, Thohoyandou on a charge of murder and robbery with aggravating circumstances as defined in s 1 of the Criminal Procedure Act 51 of 1977 (the Act). The indictment explicitly stated that the provisions of ss 51(1)(a) and 51(2) of the Criminial Law Amendment Act 105 of 1997 (the so-called minimum sentences legislation) applied respectively to the counts of murder and robbery. [2] In its summary of substantial facts furnished in terms of s 144(3)(a) of the Act, the State alleged that the appellants, together with three other cohorts, planned to rob the deceased. In pursuance of that plan they followed the deceased after he had left the Bar Lounge, where he had been drinking with friends and accosted him. The first appellant tripped the deceased who fell to the ground. Joshua Nematundani who was accused 2 in the court below stabbed the deceased with a knife whilst demanding money from him, which the deceased did not have. He then robbed the deceased of his canvass shoes whilst three of their cohorts kept watch at a short distance from the scene of the robbery to ensure that their plan was effectively executed. [3] The appellants were respectively accused numbers 1 and 5 at the trial. They were initially indicted together with three other persons, namely, Joshua Nematundani and to whom I shall henceforth refer as Joshua, Eric Dovhani Todani (accused 3) and Emmanuel Gundo Radzuma (accused 4). Charges were withdrawn against Todani and Radzuma before the commencement of the trial and both were subsequently called as State witnesses against the appellants. [4] The high court convicted the appellants as charged and sentenced them to twenty years’ imprisonment on the murder count and eighteen years’ imprisonment on the robbery count. These sentences were not ordered to run concurrently. Thus the effective term of imprisonment in respect of each appellant is 38 years’ imprisonment. [5] Subsequently the high court granted the first appellant leave to appeal to this court against both his conviction and sentences whilst the second appellant was granted leave to appeal only against his sentences. [6] The appeal was subsequently heard in this court on 6 September 2012. After hearing argument by counsel we made an order in terms of which the appeal of the first appellant was upheld and both his conviction and sentences set aside. When making that order we indicated that our reasons therefor would be furnished later. The following are those reasons. The facts [7] It is necessary to sketch the circumstances of the commission of the crimes that led to the prosecution of the appellants in a little more detail. [8] The State called several witnesses to support its case. Only the evidence of Todani and Radzuma is relevant for present purposes. Both were accomplices who were duly warned by the high court in terms of the provisions of s 204 of the Act. Todani testified that on 21 December 2003 he was at Tshivhumbe Bar Lounge drinking liquor together with six other persons, two of whom were the appellants. The second appellant suggested that the deceased be robbed because he had a lot of money; this he deduced from the fact that the deceased was drinking expensive liquor. When the Bar Lounge closed at about 21h00, all of the patrons left, including the deceased who left with three companions. Todani and his cohorts proceeded to follow the deceased. At a certain spot Joshua ordered the rest of his companions to stop, saying that he was going to take money and canvass shoes from the deceased. Joshua accosted the deceased and struck him with a beer bottle. Subsequently Todani heard the deceased saying that ‘he [could] kill him because he did not have the money which he wanted.’ Joshua then called upon the second appellant to lend him a knife whereupon he stabbed the deceased three times. Todani went on to testify that at all material times the first appellant was standing next to him together with Radzuma. After the robbery, Joshua left with the second appellant whilst Todani left for a different destination together with the first appellant and Radzuma. [9] Radzuma testified that he was also at Tshivhumbe Bar Lounge together with the appellants, Todani, Joshua and two other men unknown to him. Joshua suggested that they ‘should work with’ the deceased which he understood to mean that the deceased ‘should be assaulted’. When the bar closed, they left as did the deceased together with the latter’s companions. En-route they saw four people walking ahead of them. As they closed the gap between them and this group the first appellant approached the group and assaulted the deceased with a bottle. The deceased fell to the ground and the first appellant put his foot on the deceased’s neck. Joshua joined the first appellant and demanded money from the deceased who said that he had none. Joshua called upon the second appellant to lend him his knife, who in turn obliged, and Joshua then stabbed the deceased twice in his upper body. The first appellant then intervened and told him to stop because the deceased had ‘had enough’, whereafter Joshua removed the deceased’s canvass shoes. Upon being questioned by the court, Radzuma said that when he and his companions left the Bar he was not aware that the deceased would be confronted. [10] The first appellant also testified in his own defence. It is, however, unnecessary to analyse his evidence in any great detail. In essence, the first appellant denied that he was a party to any agreement to rob the deceased. His evidence coincides, in material respects, with that of Todani more particularly on the aspect that whilst they were walking together Joshua instructed them to stop, separated from them and approached the group of four men of which the deceased was part. He further testified that Joshua came back and borrowed a knife from the second appellant and, armed with the knife from the latter, Joshua returned to where the deceased was. Soon thereafter the first appellant heard a person screaming saying that ‘he did not have money’. After a while Joshua re- joined them holding a knife in his right hand and a pair of canvass shoes in his left hand. [11] The high court concluded, on the strength of the evidence presented before it, that the guilt of the first appellant was established. In evaluating the evidence, the high court found that the evidence of Della Mulaudzi (the deceased’s sister who testified on the condition the deceased was in when he returned home that fateful night) and Livhuwani Munwada who was with the deceased when the latter was accosted but ran away, did not advance the State’s case. It also recognised that the fate of the trial hinged on the evidence of Todani and Radzuma who were accomplices. It went on to say the following: ‘Then the witness, Radzuma had an opportunity of observing what was the accused 1’s participation, that he is the person who hit the deceased with a bottle, the person who, while the deceased had fallen down pressed him down with his leg or his knee and this witness happens to have been at a distance of about five to six metres away from the deceased and accused 1. Hence I say that the two witnesses corroborate each other on material aspects. They are accomplices, they were at the scene, they know all that happened, especially the witness, Eric [Todani], who even conceded that he was part and parcel of the whole plan.’ Discussion [12] I deal first with the first appellant. It is noteworthy that the indictment alleged that the first appellant and his cohorts acted in furtherance of a common purpose. Professor J M Burchell deals with the doctrine of common purpose in Principles of Criminal Law 3ed (2008) at 574. The learned author states that in essence the doctrine applies: ‘Where two or more people agree to commit a crime or actively associate in a joint unlawful enterprise, each will be responsible for the specific criminal conduct committed by one of their number which falls within their common design.’ [13] It is trite that the State bore the onus of proving the guilt of the first appellant beyond reasonable doubt. As it was held in S v Van der Meyden 1999 (2) SA 79 (W), which was approved and applied by this court in S v Van Aswegen 2001 (2) SACR 97 (SCA), an accused is entitled to be acquitted if there exists a reasonable possibility that he might be innocent. In assessing whether or not the guilt of the accused has been established this court in S v Hadebe & others 1998 (1) SACR 422 (SCA) at 426e-h approved of the approach adopted in Moshephi & others v R (1980-1984) LAC 57 at 59F-H in which the following was stated: ‘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 part of what is, after all, a mosaic of proof. Doubts about one aspect of the evidence led in a trial may arise when that aspect is viewed in isolation. Those doubts may be set at rest when it is evaluated again together with all the other available evidence. That is not to say that a broad and indulgent approach is appropriate when evaluating evidence. Far from it. There is no substitute for a detailed and critical examination of each and every component in a body of evidence. But, once that has been done, it is necessary to step back a pace and consider the mosaic as a whole. If that is not done, one may fail to see the wood for the trees.’ [14] In this case the first appellant was convicted on the basis of the evidence of the accomplices. It is trite that when one deals with the evidence of an accomplice it is incumbent upon the trial court to properly evaluate such evidence. In R v Ncanana 1948 (4) SA 399 (A) at 405, Schreiner JA put it thus: ‘The cautious Court or jury will often properly acquit in the absence of other evidence connecting the accused with the crime, but no rule of law or practice requires it to do so. What is required is that the trier of fact should warn himself, . . . , of the special danger of convicting on the evidence of an accomplice; for an accomplice is not merely a witness with a possible motive to tell lies about an innocent accused but is such a witness peculiarly equipped, by reason of his inside knowledge of the crime, to convince the unwary that his lies are the truth. This special danger is not met by corroboration of the accomplice in material respects not implicating the accused, . . . The risk that he may be convicted wrongly although sec 285 has been satisfied will be reduced, . . . if there is corroboration implicating the accused. . . . [I]t will also be reduced, even in the absence of these features, if the trier of fact understands the peculiar danger inherent in accomplice evidence and appreciates that acceptance of the accomplice and rejection of the accused is, in such circumstances, only permissible where the merits of the former as a witness and the demerits of the latter are beyond question.’ [15] This theme was taken further by Holmes JA in S v Hlapezula & others 1965 (4) SA 439 (A) at 440D-H where the following appears: ‘It is well settled that the testimony of an accomplice requires particular scrutiny because of the cumulative effect of the following factors. First, he is a self-confessed criminal. Second, various considerations may lead him falsely to implicate the accused, for example, a desire to shield a culprit or, particularly where he has not been sentenced, the hope of clemency. Third, by reason of his inside knowledge, he has a deceptive facility for convincing description ─ his only fiction being the substitution of the accused for the culprit. Accordingly, even where sec. 257 of the Code has been satisfied, there has grown up a cautionary rule of practice requiring (a) recognition by the trial Court of the foregoing dangers, and (b) the safeguard of some factor reducing the risk of a wrong conviction, such as corroboration implicating the accused in the commission of the offence, or the absence of gainsaying evidence from him, or his mendacity as a witness, or the implication by the accomplice of someone near and dear to him; see in particular R v Ncanana, 1948 ( 4) SA 399 (AD) at pp. 405-6; R v Gumede, 1949 (3) SA 749 (A.D) at p. 758; R v Nqamtweni & another 1959 (1) SA 894 (A.D) at pp 897G-898D. Satisfaction of the cautionary rule does not necessarily warrant a conviction, for the ultimate requirement is proof beyond reasonable doubt, and this depends upon an appraisal of all the evidence and the degree of the safeguard aforementioned.‘ [16] In convicting the appellants the high court based its decision on its finding that a prior agreement between the appellants and their cohorts had been proved beyond reasonable doubt by the State. Moreover, the high court accepted the evidence of Radzuma without reservation and said that: ‘. . . the witness Radzuma had an opportunity of observing what accused 1’s participation was, that he is the person who hit the deceased with a bottle, the person who, while the deceased had fallen down pressed him down with his leg or his knee and this witness happens to have been at a distance of about five or six metres away from the deceased and accused 1.’ It went on to find that the two accomplices corroborated each other in material respects. However, a reading of the record reveals that Todani and Radzuma contradicted each other on the critical aspect of whether the first appellant had participated in the killing and robbery of the deceased. The State’s case as to the existence of a prior agreement was entirely unsatisfactory given the inherent inconsistencies. In my view, therefore, the high court erred in finding that a prior agreement had been proved. [17] In S v Mgedezi & others 1989 (1) SA 687 (A) this court said the following at 705I-706C: ‘In the absence of proof of a prior agreement, accused No 6, who was not shown to have contributed causally to the killing or wounding of the occupants of room 12, can be held liable for those events, on the basis of the decision in S v Sefatsa & others 1988 (1) SA 868 (A), only if certain prerequisites are satisfied. In the first place, he must have been present at the scene where the violence was being committed. Secondly, he must have been aware of the assault on the inmates of room 12. Thirdly, he must have intended to make common cause with those who were actually perpetrating the assault. Fourthly, he must have manifested his sharing of a common purpose with the perpetrators of the assault by himself performing some act of association with the conduct of others. Fifthly, he must have had the requisite mens rea; so, in respect of the killing of the deceased, he must have intended them to be killed, or he must have foreseen the possibility of their being killed and performed his own act of association with recklessness as to whether or not death was to ensue.’ [18] In this matter counsel for the State readily conceded in this court that the existence of a prior agreement had not been proved by the State. Accordingly the conviction of the first appellant can be sustained only if the five prerequisites for criminal liability spelt out in Mgedezi are satisfied. On this score the dictum of the Constitutional Court in Thebus & another v S1 2003 (2) SACR 319 (CC) (para 45) 1 Also reported in 2003 (6) SA 505; 2003 (10) BCLR 1100. is instructive. The Constitutional Court said the following: ‘A collective approach to determining the actual conduct or active association of an individual accused has many evidentiary pitfalls. The trial court must seek to determine, in respect of each accused person, the location, timing, sequence, duration, frequency and nature of the conduct alleged to constitute sufficient participation or active association and its relationship, if any, to the criminal result and to all other prerequisites of guilt. Whether or not active association has been appropriately established will depend upon the factual context of each case.’ [19] Thus the fate of the trial with respect to the first appellant hinged on the cogency or otherwise of the evidence. Hence it has been reiterated time and again that the proper approach in evaluating evidence is to weigh up all the elements which point to the guilt of the accused as against those which are indicative of his innocence, taking cognisance of inherent strengths and weaknesses, probabilities and improbabilities and then decide whether the scales tilt so heavily in favour of the State as to exclude any reasonable doubt about the accused’s guilt. [20] Accordingly, the question arose as to whether there was evidence of sufficient weight to sustain the conviction of the first appellant. To my mind the answer must be no. This is so for three principal reasons. First, of the two accomplices only Radzuma implicated the first appellant. Radzuma was thus a single witness whose testimony was contradicted on a crucial aspect by Todani (see eg S v Sauls 1981 (3) SA 172 (A) at 180). Secondly, Radzuma was an accomplice to whom the cautionary rule applied and thus the question whether or not the cautionary rule had been satisfied depended upon an appraisal of all the evidence. The contradictions and inconsistencies inherent in the State’s case were, in my view, such that the high court ought to have entertained doubt as to the truthfulness of Radzuma’s testimony. Thirdly, the testimony of the first appellant should not have been rejected merely because it was found to be improbable. It could be rejected only if it were found to be so improbable that it could not reasonably possibly be true (see eg S v Shackell 2001 (4) SA 1 (SCA) para 30). [21] Whilst we must accept that the first appellant was present at the scene of the crime it should be pointed out, however, that on a conspectus of all the evidence he did not manifest any conduct that could be said to have constituted active association with the killing of the deceased. On the contrary, his evidence, which cannot be rejected as false, and which was supported by Todani, establishes that he was merely a passive bystander. Quite clearly, therefore, his conviction is unsustainable. [22] It was therefore for all the foregoing reasons that the appeal of the first appellant against his conviction was allowed and his conviction and the sentences were set aside. [23] I now turn to the appeal of the second appellant against his sentence. As already mentioned in para 5 above, he was sentenced to twenty years’ imprisonment for murder and eighteen years’ imprisonment for robbery with aggravating circumstances. Counsel for the second appellant argued in his written heads of argument that the sentences imposed on the second appellant were disturbingly inappropriate and that the high court misdirected itself in its approach to sentence. [24] At the outset it must be emphasised that the principle that applies with respect to an appeal against sentence is well-established. It is trite that sentencing is a matter pre-eminently within the discretion of the trial court and that a court of appeal will interfere with the exercise of such discretion only on limited grounds (see eg S v Giannoulis 1975 (4) SA 867 (A) at 868G-H; S v Kgosimore 1999 (2) SACR 238 (SCA) para 10). [25] In S v Malgas2 2001 (2) SA 1222 (SCA) this court restated the test in these terms at para 12: ‘A Court exercising appellate jurisdiction cannot, in the absence of material misdirection by the trial court, approach the question of sentence as if it were the trial court and then substitute the sentence arrived at by it simply because it prefers it. To do so would be to usurp the sentencing discretion of the trial court. Where material misdirection by the trial court vitiates its exercise of that discretion, the appellate Court is of course entitled to consider the question of sentence afresh. In doing so, it assesses sentence as if it were a court of first instance and the sentence imposed by the trial court has no relevance. As it is said, an appellate Court is at large. 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”.’ [26] During his oral address counsel for the second appellant was constrained to concede that the sentences imposed by the high court, when viewed individually point to no discernible material misdirection. Nor could it be seriously contended that these sentences reveal a disparity of such a degree so as to render them ‘shocking’, ‘startling’ or ‘disturbingly inappropriate’. [27] To my mind counsel acted wisely in making this concession. It is plain from the judgments of our courts that crimes involving violence ─ as murder and robbery do ─ are always viewed in a serious light. Their gravity is, for example, reflected in a passage from the judgment of the Constitutional Court in S v Makwanyane & another 1995 (2) SACR 1 (CC) para 117: ‘The need for a strong deterrent to violent crime is an end the validity of which is not open to question. The State is clearly entitled, indeed obliged, to take action to protect human life against violation by others. In all societies there are laws which regulate the behaviour of people and which authorise the imposition of civil or criminal sanctions on 2 Also reported in [2001] 3 All SA 220; 2001 (1) SACR 469. those who act unlawfully. This is necessary for the preservation and protection of society. Without law, society cannot exist. Without law, individuals in society have no rights. The level of violent crime in our country has reached alarming proportions. It poses a threat to the transition to democracy, and the creation of development opportunities for all, which are primary goals of the Constitution. The high level of violent crime is a matter of common knowledge and is amply borne out by the statistics provided by the Commissioner of Police in his amicus brief. The power of the State to impose sanctions on those who break the law cannot be doubted. It is of fundamental importance to the future of our country that respect for the law should be restored, and that dangerous criminals should be apprehended and dealt with firmly. Nothing in this judgment should be understood as detracting in any way from that proposition. But the question is not whether criminals should go free and be allowed to escape the consequences of their anti-social behaviour. Clearly they should not; and equally clearly those who engage in violent crime should be met with the full rigour of the law. . . .’ [28] It goes without saying that by their very nature murder and robbery are extremely serious crimes and the frequency with which they are committed is a matter of grave concern. Mr Thomu, counsel for the second appellant, nonetheless persisted in his argument that the high court should have mitigated the cumulative effect of the two sentences, given the circumstances in which the crimes for which he was convicted were committed, by directing a concurrence between the sentences of imprisonment imposed in respect of the murder and robbery convictions. [29] On his part, counsel for the State readily conceded that the cumulative effect of the sentences is such as to justify interference on appeal. In my view, a cumulative sentence of 38 years’ imprisonment for someone who was 19 years old when the crimes were committed, a factor acknowledged by the high court, is undoubtedly a heavy sentence. It suggests that the high court did not sufficiently consider the cumulative effect of the sentences on the second appellant given that the elements of the murder count were inextricably bound up with the elements of the robbery count. Accordingly the appeal of the second appellant against sentence must succeed albeit only to the limited extent that his sentences will be ordered to run concurrently. [30] Before concluding there are two other aspects that require mention. First, with respect to the first appellant’s application for leave to appeal the high court, in the course of its judgment, said the following: ‘. . . considering the fact that I have already decided to grant the applicants leave to appeal in respect of sentences I find it more convenient that I should also consider granting the first applicant leave to appeal on conviction, regard being had to the fact that in any event the appeal court is going to read the whole record and decide this case on appeal on the totality of the evidence. No inconvenience will be caused whatsoever, and I find that it will be in the interest of justice that the appeal court be given the opportunity also to hear the first applicant’s argument in respect of his conviction.’ [31] To my mind the implication of this statement is that the high court did not consider the proper test for leave to appeal, which is whether there is a reasonable prospect that ‘another court might come to a different conclusion on appeal.’ See eg Rex v Baloi 1949 (3) SA 523 (A) at 524; S v Mabena & another 2007 (1) SACR 482 (SCA) at 494e-f. [32] Moreover, the high court appears to have been entirely oblivious to the existence of rule 10A(a)(ix) of the rules of this court3 which requires of counsel to indicate which portions of the record are in their opinion necessary for the determination of the appeal. It is implicit in this rule that in the context of a criminal appeal it behoves the high court not to grant leave to appeal against conviction ─ simply because it is disposed to grant leave to appeal against sentence ─ where the envisaged appeal against conviction has no reasonable prospect of success, and is manifestly doomed to fail. 3 The object of this rule was explained in, inter alia, Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd 1998 (3) SA 938 (A) at 954H. [33] Secondly, as already pointed out in para 2 above, the indictment explicitly stated that the State would, upon conviction of the accused, rely on the provisions of ss 51(1)(a) and 51(2) when it came to sentencing. Accordingly, as Marais JA made plain in Malgas (para 8) ‘it was no longer business as usual. First, a court was not to be given a clean slate on which to inscribe whatever sentence it thought fit. Instead it was required to approach that question conscious of the fact that the legislature has ordained life imprisonment or the particular prescribed sentence of imprisonment as the sentence which should ordinarily be imposed for the commission of the listed crimes in the specified circumstances. . .’. [34] It is beyond question in this case that the high court determined sentence without any regard for the provisions of ss 51(1)(a) and 51(2) of the minimum sentences legislation despite being statutorily obliged to do so. But the State, despite its declared intention foreshadowed in the indictment that it would invoke the provisions of the minimum sentences legislation upon conviction, did not cross-appeal against sentence on the grounds that the high court should have heeded the statutory prescripts bearing on sentence evidently because its attitude, manifested during the hearing of the appeal, was that the second appellant had, in any event, got his just desserts. Consequently it would be wrong for this court to now revisit that aspect. Nonetheless the glaring oversight of the high court in this regard is deprecated. Order [35] In the result the following order is made: The appeal of the second appellant is allowed to the limited extent that the sentence imposed on count 2 (robbery) is ordered to run concurrently with the sentence imposed on count 1 (murder). The second appellant will thus serve an effective term of twenty years’ imprisonment. The effective term of twenty years’ imprisonment shall run from 10 November 2004. __________________ X M PETSE JUDGE OF APPEAL Appearances: First appellant: S O Ravele Instructed by S O Ravele Attorneys, Thohoyandou Naudes, Bloemfontein Second appellant: A L Thomu Instructed by: Justice Centre, Thohoyandou Justice Centre, Bloemfontein Respondent: A I S Poodhun Instructed by: Director of Public Prosecutions, Thohoyandou Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 September 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Azwihangwisi Mmboi & another v The State Today the Supreme Court of Appeal (SCA) upheld an appeal by the first and second appellants. With regard to the first appellant the SCA granted an order setting aside both his conviction and sentences whereas the appeal of the second appellant was allowed to a limited extent in that the sentence imposed on the count of robbery was ordered to run concurrently with the sentence imposed on the count of murder. The main issue on appeal was whether there was evidence of sufficient weight to sustain the conviction of the first appellant and whether in light of all the evidence, the guilt of the first appellant was proved beyond a reasonable doubt by the State and whether the sentences imposed were appropriate. The appellants together with their three accomplices were alleged to have planned to rob the deceased. In pursuance of that plan the deceased was murdered. It was alleged that the first appellant had struck the deceased with a bottle after which the second appellant stabbed the deceased with a knife and demanded money from the deceased which the deceased did not possess. The second appellant then robbed the deceased of his canvass shoes whilst the three cohorts kept watch at a short distance. The appellants were then indicted and the charges against two of the accused were subsequently withdrawn. These two accused then testified for the State against the appellants. The third accused did not feature in the appeal before the SCA. The two appellants were tried in the Limpopo High Court, Thohoyandou on the charges of murder and robbery with aggravating circumstances. The high court convicted the appellants on the basis that a prior agreement between the appellants and their accomplices had been proved beyond a reasonable doubt. The high court thereafter sentenced them to twenty years’ imprisonment on the count of murder and eighteen years’ imprisonment on the count of robbery. These sentences were not ordered to run concurrently and as a result each appellant was sentenced cumulatively to a period of 38 years’ imprisonment. On appeal to the SCA, the SCA found that the first appellant was convicted on the basis of the evidence of the accomplices. The SCA stated that there was insufficient evidence against the first appellant, to sustain his conviction. The SCA held further that on a conspectus of all the evidence the first appellant did not manifest any conduct that could be said to have constituted active association with the killing of the deceased. With regard to the second appellant; counsel for the second appellant submitted that the high court should have mitigated the cumulative effect of the two sentences, given the circumstances in which the crimes, for which he was convicted, were committed, by directing a concurrence between the sentences of imprisonment imposed in respect of the murder and robbery convictions. The SCA held that a cumulative sentence of 38 years’ imprisonment for someone who was 19 years old when the crimes were committed, a factor acknowledged by the high court, is undoubtedly a heavy sentence. Such sentence implied that the high court did not sufficiently consider the cumulative effect of the sentences on the second appellant given that the elements of the murder count were inextricably bound up with the elements of the robbery count. The SCA, as a result, held that the appeal of the second appellant against sentence must succeed albeit only to the limited extent that his sentences be ordered to run concurrently.

2977

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20099/2014 Not Reportable In the matter between: JUAN HATTINGH APPELLANT and THE STATE RESPONDENT Neutral citation: Hattingh v The State (20099/2014) [2015] ZASCA 84 (28 May 2015) Coram: Cachalia, Majiedt, Petse and Zondi JJA and Gorven AJA Heard: 20 May 2015 Delivered: 28 May 2015 Summary: Sentence ─ imposition of ─ factors to be taken into account ─ appellant convicted on 64 counts of fraud, one count of theft and one count of money laundering ─ minimum sentencing provisions of the Criminal Law Amendment Act 105 of 1997 not applicable ─ period spent in prison awaiting trial being one of the factors to take into account in determining appropriate sentence ─ leave to appeal ─ s 16(1)(b) of the Superior Courts Act 10 of 2013 ─ an appeal to this court against a decision of a division of the high court on appeal to it competent only with the special leave of the Supreme Court of Appeal. ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Rampai AJP and Monaledi AJ sitting as court of appeal): The following order is made: 1 The appellant is granted special leave to appeal in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 against the sentence imposed by the regional court, Bloemfontein in respect of the 64 counts of fraud, confirmed on appeal by the court a quo. 2 The appeal is upheld. The order of the court a quo is set aside and substituted with the following order: „The appeal is upheld. The sentences imposed by the trial court in respect of the counts of fraud are set aside and substituted as follows: (i) On counts 1 to 64 the accused is sentenced to 12 years‟ imprisonment. (ii) The sentence of six years‟ imprisonment imposed in respect of count 65 is ordered to run concurrently with the sentence imposed in respect of counts 1 to 64. (iii) The sentence is ante-dated to 23 May 2011.‟ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Petse JA (Cachalia, Majiedt and Zondi JJA and Gorven AJA concurring): [1] The appellant was convicted on his plea of guilty in the regional court, Bloemfontein, on 64 counts of fraud, one count of theft and one count of money laundering in contravention of s 4(a) of the Prevention of Organised Crime Act 121 of 1998. [2] Before the appellant pleaded to the charges the prosecutor informed the trial court that the appellant was represented by counsel and intended pleading guilty to all counts and that to that end counsel had prepared a written statement in terms of s 112(2) of the Criminal Procedure Act 51 of 1977 (CPA). [3] Thereafter the appellant pleaded guilty to all counts. The appellant‟s counsel then handed in the s 112(2) written statement and sought leave of the trial court to read its contents into the record. At the outset the trial court, cognisant of the fact that the charge sheet had made reference to the provisions of s 51(2)(a) of the Criminal Law Amendment Act 105 of 1997 (the Act) in respect of 32 of the fraud counts, each involving an amount in excess of R500 000, which would attract a mandatory minimum sentence of 15 years‟ imprisonment, inquired of the appellant‟s counsel whether the appellant was alive to that fact. Both the appellant and his counsel confirmed that this was indeed the position. [4] Once these preliminary issues were resolved, the appellant‟s written statement was read into the record. In that statement the appellant, with reference to annexure A to the charge sheet, which was a schedule containing, inter alia, (a) the dates on which the various offences were committed; (b) the identities of the victims of his criminal transgressions; (c) the amounts relating to each count; and (d) particulars of the immovable property sold and mortgaged, admitted all the material elements of the various offences as well as the underlying facts but not that the amounts involved in respect of the 32 counts of fraud were in excess of R500 000. Although the appellant had explicitly admitted the amounts relating to the count of theft ─ all of which were less than the threshold that would trigger the application of the minimum sentence legislation ─ he studiously did not do so in relation to all of the fraud counts. On the contrary he maintained that the potential or actual prejudice to his victims, being, amongst others, The Standard Bank of South Africa Ltd, ABSA Bank Ltd, First National Bank Ltd and Nedbank Ltd, would be mitigated by the proceeds of sale of the immovable properties mortgaged in their favour when they are eventually sold and thus their ultimate loss would be substantially less than the amount reflected in column 5 of annexure A to the charge sheet. [5] The prosecutor accepted the plea and the trial court, being satisfied that the appellant had „correctly pleaded to the elements of fraud relating to count 1 to 64‟ convicted the appellant „as charged in respect of counts 1 to count 64‟. The appellant was similarly convicted as charged in respect of the counts of theft and money laundering. In this appeal we are concerned only with the sentence for the 64 counts of fraud. The crisp issue is whether the 32 counts where the State alleged that the prejudice suffered equalled or exceeded R500 000, brought the convictions on those counts within the ambit of the Act. This issue revolves around the precise scope of the plea of guilty as substantiated by the s 112(2) statement, and whether the evidence adduced after conviction during the sentencing stage should have been taken into account in relation to the conviction. As to the latter point, it is clear that no such evidence can be taken into account as forming the basis for the conviction. Once a plea explanation has been accepted, that alone forms the factual matrix for the conviction. This means that any evidence led after conviction which may place the matter within the ambit of the minimum sentencing provisions must be disregarded. [6] At the conclusion of the evidence led in aggravation and mitigation of sentence the trial court proceeded to consider what the appropriate sentence should be. After setting out the principles relevant to sentence it went on to deal with the mandatory minimum sentencing provisions prescribed in terms of s 51(2)(a) of the Act. It found that these were applicable but that substantial and compelling circumstances justifying a lesser sentence than the mandatory one existed. In consequence it imposed a composite sentence of 10 years‟ imprisonment in respect of the 32 counts of fraud to which s 51(2)(a) of the Act applied. In respect of the remaining counts of fraud the trial court, again taking them together for purposes of sentence, also imposed a sentence of 10 years‟ imprisonment. A sentence of six years‟ imprisonment was imposed on count 65 (theft) which was ordered to run concurrently with the combined sentence of 20 years‟ imprisonment. Eight years‟ imprisonment, wholly suspended conditionally, was imposed on count 66 (money laundering). The end result was an effective sentence of 20 years‟ imprisonment. It subsequently granted the appellant leave to appeal against that sentence to the Free State Division. [7] The appeal to the court a quo was dismissed in a judgment of Rampai AJP (in which Monaledi AJ concurred). Disenchanted with the outcome of his appeal, the appellant applied for leave to appeal to this court. In granting leave, the court a quo, in a judgment by C J Musi J in which Rampai J concurred, said the following: „[15] It is clear that the applicant did not admit the amounts as per the charge sheet. He admitted that the prejudice or potential prejudice suffered is a lesser amount than that stated in the charge sheet in respect of counts 1 to 58. [16] It is clear that neither the regional magistrate nor the prosecutor properly understood the import of the statement in amplification of the plea . . . In my view the [appellant] did not admit the amounts in column 5 of annexure “a” to the charge sheet.‟ Since the coming into effect of the Superior Courts Act 10 of 2013, the position regarding the grant of leave to appeal to this court in those circumstances has changed. The provisions of s 16(1)(b) of that Act applies in 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‟. Since this is an appeal as defined in that Act, the court a quo lacked jurisdiction to entertain such an application.1 At the outset of the hearing, this provision was quite properly drawn to our attention by Mr Nel, who appeared for the appellant, and an application was sought for special leave to appeal to be granted. In the light of the test for special leave, it is appropriate to grant special leave and it was also appropriate to deal with the substance of the appeal. [8] It is unnecessary to recapitulate the evidence adduced during the sentencing stage in detail. It will suffice to set out the background in broad outline. The appellant, who was 36 years of age at the time of his trial, was practising as an attorney and conveyancer in Bloemfontein. Amongst his clients, he counted the so- called big four local banks, namely, The Standard Bank of South Africa Ltd, First National Bank Ltd, ABSA Bank Ltd and Nedbank Ltd. The work that he received 1 Van Wyk v The State; Galela v The State [2014] ZASCA 152 (22 September 2014) para 24(b). [2014] 4 All SA 708 (SCA) para 24(b). from these banks encompassed the registration of transfers of immovable property, registration of mortgage bonds in favour of the banks to secure moneys lent by the banks to their clients, cancellation of mortgage bonds and issuing money guarantees to third parties on behalf of the banks. Apart from his firm, Hattingh Attorneys, of which he was the sole proprietor, he also held interests in other local firms of attorneys. As his practice flourished he ventured into other enterprises such as property development, construction, an estate agency and a franchise in Quatro Home Loans, who were bond originators. [9] His professional relationship with his clients was founded on the absolute trust that the clients reposed in him. For this reason the banks, in particular, placed absolute reliance on him that the mortgage bonds that he was, from time to time, instructed to register would afford the banks valid and enforceable rights at all times given the risk that the banks undertook when lending money to their clients. The appellant‟s decision to venture into construction and property development was motivated by his belief that those were lucrative enterprises. But he soon ran into financial difficulties when he could not recoup a sum of R800 000 that he had invested in the construction of 12 houses as a sub-contractor to R J Contractors. This was the origin of the trail of his criminal escapades that persisted over a period of four years until his exposure. [10] To make up for the cash shortfall in his business ventures he devised an elaborate scheme to perpetrate fraud against the banks and the entities that extended bridging finance to third parties through his practice. He issued guarantees on behalf of the banks and when he received the money in the fullness of time he appropriated it for his own use. On several occasions he registered double mortgage bonds over properties without the knowledge of the banks. He sometimes misrepresented to the banks that mortgage bonds that he had been instructed to register had been registered when in truth that was not the case. He lured unsuspecting third parties to become participants in what, on the face of it, were legitimate activities, in order to effectively execute his nefarious schemes. [11] The State called four witnesses in aggravation of sentence. They were the representatives of the four banks affected by the appellant‟s crimes. The State‟s evidence in essence was that the appellant was one of the attorneys who were on the panel of attorneys retained by the affected banks to undertake conveyancing work on their behalf. For a long time the banks believed all was well until the appellant‟s machinations came to light. When this occurred, the true state of affairs set out in the preceding paragraph, was exposed. On occasions the banks were induced to believe, through false representations made by the appellant, that certain persons or legal entities received advances from them, thus concealing from the banks the extent of their exposure. And whilst the various properties remained unsold the banks were obliged to secure them in order to mitigate their potential losses. Aggravating factors [12] The crimes committed by the appellant are undoubtedly serious. And, it is sad to say, they are also prevalent. He was an attorney from whom the highest standards of propriety, honour and impeccable integrity were expected. He used his practice as an attorney to perpetrate fraud, theft and money laundering thus manifesting conduct that is anathema to the practice of an attorney. He deliberately subverted all the controls that the banks expected him to uphold. His malpractices were premeditated, carefully planned and executed and persisted in over four years. He betrayed the trust that his clients and those who dealt with him reposed in him. He engineered a deceitful scheme to conceal what he was about in his practice and thereby debased his profession. He employed the trust account of his practice to give legitimacy to the disbursements effected through it, indifferent to the enormous risks that exacerbated the banks‟ exposure. Mitigating factors [13] There are, however, a number of factors which count in the appellant‟s favour and I will mention some of them. He pleaded guilty to all of the charges of which he was convicted thereby manifesting contrition. He co-operated with the police investigation and even assisted the State to formulate the charges against himself. He was struck off the roll and suffered an ignominious fall from grace. He is a first offender. As an inevitable consequence of his misconduct and given the scale of his fraudulent activities his joint estate was sequestrated. After his initial attempt to evade justice he had cause to pause and surrendered himself to the authorities. He co-operated with the trustee of his insolvent estate in identifying and tracing his assets for the benefit of his creditors. He was incarcerated for almost a year awaiting trial. Although the appellant is the author of his own misfortune, he must have suffered embarrassment, disgrace and humiliation in the aftermath of his arrest, prosecution and conviction. He will live with a sense of shame for the anguish that he has caused those who are close to and looked up to him. [14] I now turn to a consideration of the merits of the appeal. In summary the gravamen of the appellant‟s submissions in this court is that: (a) s 51(2)(a) of the Act, read with Part II of Schedule 2, was not applicable and should not have been invoked by the trial court; (b) there were material misdirections committed by the trial court and perpetuated by the high court; (c) that aggravating circumstances were overemphasised whilst mitigating circumstances were underemphasised; and (d) that the mitigating effect of the period spent in gaol awaiting trial was not accorded due weight. [15] The circumstances in which an appellate court will interfere with a sentence imposed by a court of first instance are trite. They were reiterated by this court in S v Sadler 2000 (1) SACR 331 (SCA).2 Sentencing is a matter pre-eminently within the discretion of the trial court and a court of appeal will interfere with the exercise of such discretion only on limited grounds. 2 S v Sadler 2000 (1) SACR 331 (SCA) at 334d-335g. [16] In S v Malgas3 this court restated the test as follows: „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. Where material misdirection by the trial court vitiates its exercise of that discretion, an appellate Court is of course entitled to consider the question of sentence afresh. In doing so, it assesses sentence as if it were a court of first instance and the sentence imposed by the trial court has no relevance. As it is said, an appellate Court is at large. 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”. It must be emphasised that in the latter situation the appellate court is not at large in the sense in which it is at large in the former. In the latter situation it may not substitute the sentence which it thinks appropriate merely because it does not accord with the sentence imposed by the trial court or because it prefers it to that sentence. It may do so only where the difference is so substantial that it attracts epithets of the kind I have mentioned.‟ [17] It is evident from the judgments of this court and other courts that offences involving dishonesty, such as those of which the appellant was convicted, have always been viewed in a serious light. Their gravity is, for example, underscored by what this court said in S v Blank 1995 (1) SACR 62 (A) at 73b-d: „In view of all these facts, I feel fully justified in imposing a sentence which will deter not only the accused and other stockbrokers from committing crimes similar to those of which the accused has been convicted, but also others involved in business who may be tempted to indulge in larger-scale crimes of dishonesty. The time has already arrived when the severity of punishments imposed for this sort of crime while of course taking the personal circumstances of a particular accused into account, should proclaim that society has had enough and that the courts, who are the mouthpiece of society, will not tolerate such crimes and will severely punish offenders: cf S v Zinn 1969 (2) SA 837 (A) at 542D-E.‟ 3 S v Malgas 2001 (1) SACR 469 (SCA); (2001 (2) SA 1222 (SCA); [2001] 3 AllSA 220 (SCA) para 12. [18] In Sadler this court recognised the seriousness of crimes such as fraud and their corrosive impact upon society. Concerning the appellant, the situation is exacerbated by the fact that he was also an attorney and thus occupied a position of trust vis-à-vis his clients. Our courts have for a long time taken a dim view of attorneys who betray the trust of their clients. Attorneys are, for reasons too obvious to require elaboration, expected to scrupulously observe the highest standard of professional integrity. A deviation from those standards not only impairs the integrity of those who stray from the path of rectitude but also debase their entire profession. As long ago as 1954 in R v Roux 1954 (4) SA 110 (T) Ramsbottom J said the following (at 111F-H): „I have been asked by your counsel to say that because of your high position in the profession and because of your position in society your fall is all the greater and the suffering which comes to you by reason of that fall is all the greater. But I have some difficulty in giving effect to that argument. There is another side to that. The profession of the law is a most honourable profession. A very high standard of honour is required from its members. An attorney owes the greatest good faith to his partners and to his clients, and the higher he rises in his profession the greater is the responsibility which rests upon him. It must not and cannot be thought that greater leniency can be shown towards those members of the profession who have reached positions of eminence than to other practitioners who have not risen so high in the profession. All must be treated alike. Theft is always a serious crime. When it is committed by an attorney, who is in a position of trust, that is an aggravating circumstance.‟ See also S v Brown 2015 (1) SACR 211 (SCA) para 123. Accordingly, it is in the light of the foregoing backdrop that this appeal must be considered. Application of s 51(2)(a) [19] As I have stated before, the guilty plea tendered by the appellant was accepted by both the trial court and the prosecution. And having regard to the tenor of the appellant‟s s 112(2) statement and as observed by the court a quo in granting leave to this court it is evident that all those involved in the trial failed to appreciate the import of the admissions made by the appellant. They laboured under a misconception that the appellant had admitted not only the elements of the offences with which he was charged but most importantly also all of the amounts involved including those that would have triggered the applicability of s 51(2)(a) had they been admitted. [20] In S v Legoa 2003 (1) SACR 13 (SCA)4 this court dealt with the import of s 51(2)(a) and noted that for the minimum sentencing jurisdiction to exist in respect of an offence, the accused‟s conviction must encompass all the elements of the offence set out in the Schedule. It went further and said the following (para 15): „It is an established principle of our law that a criminal trial has two stages - verdict and sentence. The first stage concerns the guilt or innocence of the accused on the offence charged. The second concerns the question of sentence. Findings of fact may be relevant to both stages. However, those in the first stage relate to the elements of the offence (or the specific form of the offence) with which the accused is charged. Those in the second mitigate or aggravate the sentence appropriate to the form of the offence of which the accused has been convicted.‟ [21] It therefore goes without saying that for s 51(2)(a) to find application in this case it was incumbent upon the prosecution to prove all the elements of the offence of the affected fraud counts „in the form specified in the Schedule‟. This entailed that the evidence regarding all the elements of the form of the scheduled offence ought to have been led before verdict and for the trial court to find, as a matter of fact, that those elements specified in the Schedule were present.5 This, the prosecution failed to do. Accordingly, where an accused is convicted solely on the basis of a s 112(2) statement, the offence contemplated in s 51(2)(a) of the Act must be determined only with reference to the contents of that statement.6 [22] Thus, having regard to the absence of a crucial element of the form of the scheduled offence charged before verdict, the trial court did not acquire the requisite jurisdiction to invoke s 51(2)(a) of the Act. Put differently, the trial court had „a clean slate on which to inscribe whatever sentence it thought fit‟7 untrammelled by s 51(2)(a). Accordingly, it was impermissible for the trial court to rely on the evidence adduced during the sentencing stage to the extent that it sought to cure the shortcomings in the State‟s case before conviction. This amounted to a clear and material misdirection as was mentioned in Malgas. This much was conceded by 4 Pararaph 15. 5 Fn 2 paras 17-18. 6 S v Gagu & another 2006 (1) SACR 547 (SCA) para 7. 7 S v Malgas 2001 (1) SACR 469 (SCA); (2001 (2) SA 1222 (SCA); [2001] 3 All SA 220 (SCA)) para 8. Mr Mlotshwa, who appeared for the State. Consequently the sentence imposed in respect of the 32 counts of fraud thought by the trial court to fall within the purview of s 51(2)(a) falls to be reconsidered and a fresh sentence imposed in respect of counts 1 to 64. In my view, these should be treated, as the trial court did, as one for purposes of sentence. Mr Mlotshwa agreed that this should be the case. Misdirections [23] The main thrust of the appellant‟s argument on this score is that both the trial court and the court a quo made certain factual findings that cannot be sustained on the evidence adduced during the sentencing stage. Counsel‟s heads of argument contain references to instances where the trial court and the court a quo misdirected themselves. I have already said that evidence which seeks to bring the offences within the purview of the minimum sentencing provisions cannot operate to do so. On the view I take of the matter I do not propose to traverse the balance of these submissions in this judgment. Suffice it to say that they do not seem to me in themselves to be of such magnitude as to demonstrate that those courts did not exercise their sentencing discretion properly and judicially. Appropriate sentence [24] As I have already found, both the trial court and the court a quo erroneously thought that s 51(2)(a) was applicable. But for that erroneous view there can be no doubt that the trial court would have imposed a composite sentence in respect of counts 1 to 64. A reading of the trial court‟s judgment on sentence otherwise reveals that it painstakingly weighed all the relevant factors in determining appropriate sentences. It took into account the cumulative effect of all the sentences and decided to ameliorate the appellant‟s situation by ordering the sentence imposed in respect of the count of theft to run concurrently with the sentences imposed for fraud and suspending the whole of the sentence imposed on the count of money laundering. It erred only to the extent that it treated some of the fraud charges differently from the rest as a consequence of the misconception under which it was labouring. [25] I am therefore driven to the conclusion that the gravity of the offences of which the appellant was convicted undoubtedly calls for a severe sentence. However, the severity of that sentence will be tempered by mercy. In S v Muller8 this court said: „When dealing with multiple offences, a sentencing court must have regard to the totality of the offender's criminal conduct and moral blameworthiness in determining what effective sentence should be imposed, in order to ensure that the aggregate penalty is not too severe. In doing so, while punishment and deterrence indeed come to the fore when imposing sentences for armed robbery, it must be remembered, as Holmes JA pointed out in his inimitable style, that mercy, and not a sledgehammer, is the concomitant of justice. And while a judicial officer must not hesitate to be firm when necessary, 'he should approach his task with a humane and compassionate understanding of human frailties and the pressures of society which contribute to criminality'. In addition, although it is in the interest of the general public that a sentence for armed robbery should act as a deterrent to others, an offender should not be sacrificed on the altar of deterrence.‟9 In the light of both aggravating and mitigating circumstances, the cumulative effect of the sentence and taking into account the period that the appellant spent in prison awaiting trial as one of the relevant factors, 10 I am of the view that a period of twelve years‟ imprisonment is appropriate on counts 1 - 64. The learned magistrate had good reason to make the period of six years‟ imprisonment imposed in respect of count 65 run concurrently with the sentence imposed for counts 1 – 64 and this shall remain the case. [26] In the result the following order is made: 1 The appellant is granted special leave to appeal in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 against the sentence imposed by the regional court, Bloemfontein in respect of the 64 counts of fraud, confirmed on appeal by the court a quo. 2 The appeal is upheld. The order of the court a quo is set aside and substituted with the following order: „The appeal is upheld. The sentences imposed by the trial court in respect of the counts of fraud are set aside and substituted as follows: 8 S v Muller & another 2012 (2) SACR 545 (SCA). 9 Footnotes omitted. 10 S v Radebe & another 2013 (2) SACR 165 (SCA) para 14; Director of Public Prosecutions, North Gauteng: Pretoria v Gcwala & others 2014 (2) SACR 337 (SCA) paras 15-18. (i) On counts 1 to 64 the accused is sentenced to 12 years‟ imprisonment. (ii) The sentence of six years‟ imprisonment imposed in respect of count 65 is ordered to run concurrently with the sentence imposed in respect of counts 1 to 64. (iii) The sentence is ante-dated to 23 May 2011.‟ _________________ X M PETSE JUDGE OF APPEAL APPEARANCES: For Appellant: J Nel Instructed by: Kramer Weihmann & Joubert, Bloemfontein For Respondent: J J Mlotshwa Instructed by: The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 28 May 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Hattingh v The State (20099/2014) [2015] ZASCA 84 (28 May 2015) MEDIA STATEMENT Today the Supreme Court of Appeal (SCA) delivered a judgment granting special leave to the appellant in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 to appeal against the dismissal of his appeal by the Free State Division against his sentence imposed by the Bloemfontein Regional Court. It subsequently upheld the appeal. The issue before the SCA was whether the 32 counts of fraud - where the State alleged that the prejudice suffered equalled or exceeded R500 000 - brought the convictions of the appellant on those counts within the ambit of s 51(2)(a) the Criminal Law Amendment Act 105 of 1997 (the Act). Section 51(2)(a) provides for a prescribed minimum sentence of 15 years’ imprisonment for a certain category of offences listed in the schedule to the Act. This issue revolved around the precise scope of the plea of guilty as substantiated by the s 112(2) statement and further whether the evidence adduced after conviction during the sentencing stage should have been taken into account in relation to the conviction The appellant was convicted on his plea of guilty in the regional court, Bloemfontein, on 64 counts of fraud, one count of theft (count 65) and one count of money laundering in contravention of s 4(a) of the Prevention of Organised Crime Act 121 of 1998. The appellant, who was 36 years of age at the time of his trial, was practising as an attorney and conveyancer in Bloemfontein. Amongst his clients, he counted four local banks, namely, The Standard Bank of South Africa Ltd, First National Bank Ltd, ABSA Bank Ltd and Nedbank Ltd. The work that he received from these banks encompassed the registration of transfers of immovable property, registration of mortgage bonds in favour of the banks to secure moneys lent by the banks to their clients, cancellation of mortgage bonds and issuing money guarantees to third parties on behalf of the banks. The appellant had also ventured into construction and property development which was motivated by his belief that those were lucrative enterprises. But he soon ran into financial difficulties when he could not recoup a sum of R800 000 that he had invested in his construction business. To extricate himself from this situation the appellant resorted to using his practice’s trust account to perpetrate the offences of which he was convicted. The appellant admitted all the material elements of the various offences as well as the underlying facts but not the amounts involved in respect of the 32 counts of fraud that were in excess of R500 000. The prosecutor accepted the plea and the trial court, being satisfied that the appellant had correctly pleaded to the elements of fraud relating to counts 1 to 64, convicted the appellant as charged. The trial court found that s 51(2)(a) read with Part II of Schedule 2 of the Act was applicable but that substantial and compelling circumstances existed justifying the imposition of a lesser sentence. It imposed a composite sentence of 10 years’ imprisonment in respect of the affected 32 counts of fraud and in respect of the remaining counts of fraud the trial court, also imposed a sentence of 10 years’ imprisonment. A sentence of six years’ imprisonment was imposed on count 65 which was ordered to run concurrently with the combined sentence of 20 years’ imprisonment. The trial court then granted the appellant leave to appeal against that sentence to the Free State Division which dismissed the appeal, prompting the appellant to apply for special leave to appeal to the SCA. The SCA held that for s 51(2)(a) to find application in this case it was incumbent upon the prosecution to prove all the elements of the offence of the affected fraud counts in the form specified in the Schedule. This entailed that the evidence regarding all the elements of the form of the scheduled offence ought to have been led before verdict and for the trial court to find, as a matter of fact, that those elements specified in the Schedule were present. This, the prosecution failed to do. Accordingly, where an accused is convicted solely on the basis of a s 112(2) statement, the offence contemplated in s 51(2)(a) of the Act must be determined only with reference to the contents of that statement. Therefore the trial court did not acquire the requisite jurisdiction to invoke s 51(2)(a) of the minimum sentence provisions. Consequently, the SCA found that the sentence imposed in respect of the 32 counts of fraud thought by the trial court to fall within the purview of s 51(2)(a) falls to be reconsidered and a fresh sentence imposed in respect of counts 1 to 64. The SCA, in consequence, held that a period of 12 years’ imprisonment was appropriate in the circumstances. ~~~ ends ~~~

3595

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 845/2019 and 898/2019 In the matter between: SILOSTRAT (PTY) LIMITED FIRST APPELLANT THE STANDARD BANK OF SOUTH AFRICA LIMITED SECOND APPELLANT SUIDWES LANDBOU (PTY) LIMITED THIRD APPELLANT and PIETER HENDRIK STRYDOM NO DEON MARIUS BOTHA NO CAROLINE MMAKGOKOLO LEDWABA NO (in their capacities as joint trustees of the Insolvent Estate of Frederick Barend Christoffel Kirsten) FIRST RESPONDENT THE LAND & AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA SECOND RESPONDENT TECHNICHEM OESBESKERMING (PTY) LIMITED THIRD RESPONDENT Neutral citation: Silostrat (Pty) Ltd & Others v Pieter Hendrik Strydom N.O & Others (case no 845/2019 and 898/2019) [2021] ZASCA 93 (25 June 2021) Coram: PONNAN, DAMBUZA and NICHOLLS JJA, GORVEN and MABINDLA-BOQWANA AJJA Heard: 15 February 2021 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 25 June 2021. Summary: Law of Contract – cession – interpretation of three competing cessions – principles of interpretation of legal documents applicable – importation of words not used in the cession not permitted. Rectification of cession – insufficient evidence to prove mistake common to both parties to the cession for purposes of a claim for rectification thereof. Insolvency - Institution of proceedings against the trustees of the insolvent estate where a debt had been proved and admitted by the trustees improper. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Janse van Nieuwenhuizen J, sitting as court of first instance): The appeal in each instance by: (i) the first appellant, Silostrat (Pty) Ltd, against paragraphs 2 and 3; (ii) the second appellant, Standard Bank, against paragraph 1; and (iii) the third appellant, Suidwes Landbou (Pty) Ltd, against paragraph 6; of the order of the court below is dismissed with costs, including those of two counsel where so employed. JUDGMENT Dambuza JA (Ponnan, Nicholls JJA and Gorven and Mabindla-Boqwana AJJA concurring) Introduction [1] Central to this appeal is the validity and ranking of three cessions executed by Mr Frederick Christoffel Kirsten (Kirsten), whose estate was sequestrated in August 2016. The three cessionaries were: the second appellant, Standard Bank of South Africa Limited (Standard Bank or the bank), the third appellant, Suidwes Landbou (Pty) Ltd, a dealer in agricultural commodities (Suidwes), which had ceded a portion of its book debt to the second respondent, the Land and Agricultural Development Bank of South Africa (Land Bank), and the fifth respondent, Technichem Oesbeskerming (Pty) Ltd (Technichem), a supplier of agricultural chemicals. In the high court each of the three cessionaries, relying on their respective cessions, asserted an entitlement to the proceeds of Kirsten’s 2015 maize crop. The first appellant, Silostrat, a grain trader, also laid claim to those funds, based on contracts of sale for the 2015 maize produce, which it had concluded with Kirsten at the start of the 2015/16 maize production season. [2] The high court: 1. Dismissed Standard Bank’s claim against each of the trustees of Kirsten’s insolvent estate, Suidwes and the Landbank, with costs including those of two counsel. 2. Dismissed Silostrat’s conditional counterclaim against Standard Bank with costs including those of two counsel. 3. Dismissed Silostrat’s conditional counterclaim against Suidwes with costs including those of two counsel. 4. Declared Technichem’s cession dated 5 October 2014 valid and enforceable. 5. Held that Technichem’s cession predates the cessions relied upon by Suidwes and the Landbank in respect of Kirsten’s 2015 crop income. 6. Ordered Suidwes to pay Technichem’s costs. Standard Bank appeals against paragraph (1) of the order of the high court, Silostrat against paragraphs (2) and (3) and Suidwes against paragraph (6). In each instance the appeal is with the leave of the high court. Background [3] Until his estate was sequestrated in 2016, Kirsten was a widely respected maize, sunflower and cattle farmer in the North West Province, having taken over the farming enterprise from his father, and extended it by renting some of the neighbouring farms. In the course of his farming operations, Kirsten held several bank accounts and enjoyed credit facilities with Standard Bank. He also enjoyed credit facilities with Suidwes and Technichem. As security for these credit facilities, Kirsten executed deeds of cession in favour of his creditors, Standard Bank, Suidwes and Technichem. He also registered a mortgage bond in favour of Standard Bank and a General Notarial Covering Bond in favour of Suidwes. [4] From October 2014, Kirsten defaulted on his loan repayments. He also failed to deliver the 2015 maize crop, which Silostrat had bought from him. On 13 August 2015, Standard Bank instituted proceedings against Kirsten and the other parties herein, asserting its entitlement to payment of the balance outstanding in Kirsten’s loan account from the proceeds of his 2015 maize crop. On 29 April 2016, his estate was provisionally sequestrated. This triggered a contest amongst the cessionaries. On 31 August 2016, a final order of sequestration was granted against Kirsten. After his sequestration, Kirsten was substituted by his three joint trustees (the Trustees) in the proceedings before the court below. They are collectively cited as the first respondent in the present appeal. The Standard Bank claim [5] As a client of the bank, Kirsten held an overdraft and several loan accounts. From 2009, his credit profile was reviewed by the bank during September of each year. In 2011, Mr Lood Mathee (Mathee), a relationship manager with the bank, conducted the review of Kirsten’s bank accounts. At that time, Kirsten’s indebtedness to Standard Bank was R6.5 million. Kirsten had applied for an increase in his overdraft facility to R 8 million. His financial position was assessed as ‘extremely strong’ and his farming operation as ‘outstanding’. At that stage, the bank held no security for the line of credit afforded to Kirsten. The increase sought was duly approved on condition that he execute a deed of cession in favour of the bank in respect of his crop income and provide proof of the maize that he then held in the silos. It was recorded in his bank file that he owed R16 432 428 to Suidwes and R5 836 988 to another agricultural co-operative, Senwes Limited. Mathee had to investigate and confirm that Kirsten had paid these moneys to the respective institutions. [6] On 6 October 2011, Mathee visited the Suidwes premises where he discussed Kirsten’s account with the Suidwes relationship manager, Mr Louis Botha. Botha advised that Kirsten still owed R11,5 million to Suidwes on a revolving credit loan with a credit limit of R15 million. Mathee recorded this information in Kirsten’s file, together with the following: ‘With above in mind he will definitely again make use of Suidwes’ assistance for the next season on the Revolving credit loan. We therefore will not get that confirmation that he will not make use of any credit facilities at the Co-op. He does not owe Senwes any funds, but they also make a production facility of R4 million available’. [7] On 22 November 2011, Kirsten executed a Deed of Cession in favour of Standard Bank. In the relevant clauses the cession provided: ‘1 Giving of cession I, Frederik Barend Christoffel Kirsten (700407 5240 080) (“Cedent”) cede and transfer in favour of The Standard Bank of South Africa Limited (“the Bank”), or anyone who takes transfer of the Bank’s rights under this cession, all the Cedent’s rights in and to all income and/or moneys due and to become due to the Cedent by agricultural producers (‘Producers”) in respect of Maize supplied by the Cedent and/or agricultural produce (“produce”) purchased from Producers and sold to buyers of the produce from time to time, upon the terms and conditions set out in this agreement. Amount secured under this cession The maximum amount secured under this cession is unlimited. Continuing covering security This cession will be a continuing covering security for all amounts (including interest, collection cost, default administration charges and other cost and fees permissible in terms of the underlying debt and value added tax) which the Cedent now or in the future may owe to the Bank for whatever reason whether directly, contingently as surety or otherwise (“debts”) even if the debts are temporarily settled at any time . . .’ [8] Prior to the execution of this cession, on 16 November 2011, Mathee wrote to Botha of Suidwes, advising that Kirsten had pledged and ceded to Standard Bank all crops and all right, title and interest and claims arising from the proceeds thereof. On 24 November 2011 Mr Olivier of Suidwes responded that Suidwes had approved Kirsten’s application for a revolving credit against cession of his crop and that Standard Bank could obtain a cession for surplus production. [9] Over time Kirsten’s indebtedness to the bank continued to increase steadily. By October 2012, the balance outstanding on his overdraft facility was R19 million. But the bank kept approving further loan applications. During the latter part of 2013, a second production loan was advanced to Kirsten. This loan was to be repaid in full by 31 August 2014. It was approved on condition that Kirsten would provide a ‘cession over [his] crop and crop proceeds’. However, no cession, other than the 2011 cession, was executed by Kirsten in favour of the bank. A further ‘long term loan’ of R20 million, payable over a 10 year period was approved in favour of Kirsten, on condition that he would register first mortgage bonds in favour of the bank over two of his farms. [10] During the period 17 September 2013 to 22 December 2014, Standard Bank concluded six instalment sale agreements with Kirsten in relation to the purchase of farming implements and vehicles. The value of these loan agreements was R79 367 633.04. The bank’s records revealed that the relevant bank officials were of the impression that the bank was in possession of an ‘unrestricted cession of [Kirsten’s] crops and crop income’ executed by him in favour of the bank as security for his credit facilities. [11] During November 2014, the bank approved a production loan application of R21 million in Kirsten’s favour. This loan was intended for use in financing production costs in respect of the 2014 to 2015 maize production season. Part of this loan amount was a roll-over of the unpaid portion of the loan from the previous season (2013).1 The loan agreement between Kirsten and the bank provided that Kirsten would provide collateral security in the form of an ‘unrestricted cession of crops and crop income’ together with an unrestricted cession of a comprehensive crop insurance, and an ‘input cost insurance contract’. On 27 November 2014 Standard Bank extended to Kirsten, an overdraft facility with a maximum limit of R5 000 000.00.2 In the overdraft agreement it was recorded that under the November 2011 cession the bank was in possession of collateral security in the form of ‘monies due and to become due [to Kirsten]’. The Silostrat claim [12] To ensure payment of the 2014/2015 production loan, Kirsten sold 35 000 tons of his 2015 maize produce to Silostrat. This arrangement was implemented through a business relationship between Standard Bank and Quattro-Vest (Pty) Ltd, an entity which conducted the business of ‘arranging’ finance for farmers, among other things. [13] Under this arrangement, Kirsten sold his anticipated 2015 maize produce to Silostrat in three forward contracts, concluded during November 2014, January 2015 and February 2015 respectively. In terms of the first of these agreements the maize was sold at a variable purchase price, pegged to the SAFEX maize price 1 Three loan agreements were concluded between Kirsten and the Bank on 7 November 2014, 10 November 2014 and 11 November 2014 for R68 400 000.00, R4 985 500.00, and R9 244 900.00 respectively. 2 In this regard it was recorded that Standard Bank held as collateral, a cession of moneys ‘due and to become due’. as at 31 July 2015. In the other two contracts the purchase price was fixed. Kirsten undertook to deliver the maize before July 2015. [14] Silostrat immediately sold the maize bought from Kirsten by way of ‘back- to-back’ agreements on the SAFEX commodities exchange, and, consistent with the contracts concluded with Kirsten, Silostrat was to deliver the maize on 31 July 2015; except that Kirsten never delivered the maize to it. [15] During May 2015, as Kirsten struggled to meet his obligations under the various business transactions it became apparent that his creditors were intent on laying claim to the proceeds of his 2015 maize produce. It turned out that during the same period over which Kirsten had obtained loans and other credit facilities from the Standard Bank and Suidwes, he had secured similar credit facilities with Technichem for amounts running into millions of Rand. [16] When Silostrat could not perform its obligations under the back-to-back contracts because of Kirsten’s non-performance, it resorted to ‘buying in’ maize in order to fulfil its obligations under those contracts. It secured replacement maize at a higher price than that contracted for with Kirsten, and incurred purchase costs of R35 288 000.00. The Suidwes (and the Land Bank) claims [17] Kirsten’s relationship with Suidwes also went as far back as October 2009, when he executed the first of what was to be annual cessions in favour of Suidwes. The first two clauses thereof provided: ‘Die kliënt sedeer hiermee aan Suidwes, wat die sessie aanvaar, al die kliënt se reg, titel en belang in die totale opbrengs van alle oeste wat gedurende die 2010 produksieseisoen geproduseer word, van watter aard total ook al en waar ook al verbou, wat – 1.1 reeds deur die kliënt ingesamel, maar nog nie te gelde gemaak is nie; 1.2 reeds aangeplant is, maar wat nog nie op die land is; en 1.3 alle oeste wat die kliënt in die toekoms mag aanplant. Die sessie dien as sekuriteit vir die behoorlike betaling deur die kliënt aan Suidwes van alle gelde wat tans aan Suidwes verskuldig is of in die toekoms verskuldig mag word ontstaande uit watter skuldoorsaak ook al’. [18] In terms of the second cession executed by Kirsten in favour Suidwes on 15 October 2010, he ceded to Suidwes ‘all future crops which [he] might in the future plant’. Clause 3 of that cession provided that it would: ‘. . . bly van krag totdat alle bedrae wat aan Suidwes verskuldig is deur die kliënt betaal aan is en Suidwes, na betaling . . . die sessie skriftelik gekanselleer het.’ Further cessions were executed in November 2011 and in 2013. [19] In August 2014, Suidwes concluded a service level agreement with the Land Bank in terms of which it sold and ceded part of its book debts and related security to the Land Bank. A portion of Kirsten’s debt with Suidwes was sold to the Land Bank, while another portion remained with Suidwes. Hence the Land Bank’s involvement in these proceedings. On 28 October 2014, Kirsten executed the last of the annual cessions in favour of Suidwes, ceding his right, title and interest to the crop produced during the 2015 production season. [20] During May 2015, Suidwes demanded from Kirsten delivery of the 2015 maize crop produce. Subsequently, Kirsten sold 22 619.52 tons of his 2015 maize crop to Africum, a wholly owned subsidiary of Suidwes. The maize was delivered to Suidwes’ silos during the period between 14 July 2015 and 21 September 2015. Africum sold the maize to third parties. The proceeds thereof were paid to Suidwes, who used some of it to credit Kirsten’s debt due to Suidwes, and the balance to settle Kirsten’s debt with the Land Bank. The Technichem claim [21] During the same period as the conclusion of the transactions set out above (2014), Kirsten bought agricultural chemicals from Technichem under a credit agreement. As security for this indebtedness Kirsten executed a Deed of Cession dated 5 October 2014, in terms of which he ceded all of his rights to the income from his 2015 crop produce to Technichem. In the relevant clause the Technichem Deed of Cession provided: ‘As sekuriteit vir betaling van enige of alle bedrae geld wat die aansoeker aan TECHNICHEM verskulding is of mag raak, ongeag wat die skuldoorsaak daarvan is, sedeer en dra en maak die aansoeker hierby oor aan en ten gunste van TECHNICHEM al die aansoeker se reg, titel, belang en aanspraak in en op alle oesopbrengste van die aansoeker verbou het of in die toekoms mag verbou. Verder geskied sodanige sessie op die volgende voorwardes: Die AANSOEKER verklaar en bevestige dat hy gesamentlik en/of afsonderlik die volgende gewasse aangeplant en verbou het en/of van voorneme is om dit te bou, gesamentlik en/of afsonderlik die eienaar daarvan is en dat dit nie aan enige ander party of instansie verpand is, hetsy by ooreenkoms of statuter nie. . . .’ [22] It was not in dispute that the Technichem cession, having been executed 19 days prior to the 2014 Suidwes cession, ranked before the latter cession. It is in this context that Suidwes relied on its earlier cessions which, it maintained, were evergreen. I deal with this contention later in this judgment. By July 2015, an amount of R8 062 498.94 was owing by Kirsten on his credit account with Technichem. The sequestration proceedings [23] At the time of sequestration Kirsten’s liabilities exceeded his assets by approximately R44 751 458.20. Standard Bank, the Land Bank and Technichem proved their claims against his insolvent estate.3 Silostrat’s claim against the 3 The relevant proven claims against the estate were: Standard Bank in the amount of R 73 072 098.93, Suidwes – R 87 350.89, Land Bank – R67 17 234. 02, Silostrat R35 288 000.00, and Technichem – R7 665 946.44. insolvent estate was conceded by the trustees during the course of the trial in the high court and judgment was entered by agreement in respect thereof. Nevertheless, Silostrat persisted with its counter claims against Standard Bank and Suidwes. Proceedings before the court a quo [24] On 13 August 2015, Standard Bank instituted proceedings against Kirsten, Suidwes, and Silostrat for payment of the proceeds of Kirsten’s 2015 crop produce. For this claim Standard Bank relied on the cession executed by Kirsten in its favour on 22 November 2011. The Trustees were subsequently substituted in his place. Later, the Land Bank and Technichem were joined in the proceedings. [25] As against Kirsten, Standard Bank claimed payment of the moneys advanced pursuant to the conclusion of the third production loan agreement concluded on 10 November 2014, for which the bank held, as security, the deed of cession executed by Kirsten in its favour on 22 November 2011. The bank contended that, properly interpreted, that cession meant that Kirsten had ceded and transferred to it all of his rights in and to his entire maize crop, and to all income due and to become due to him in respect of maize sold and supplied by him. It asserted that the amount secured under the cession was unlimited and that the cession was a continuing covering security for all amounts owed by Kirsten to the bank at the time of its execution and in the future. [26] As an alternative, the bank contended that the failure to record in the Deed of Cession the common intention held by itself and Kirsten as set out above, was occasioned by a common and bona fide error in the drafting of the cession and that the cession therefore fell to be rectified to accord with the following intended meaning: ‘1 Giving of cession I Frederik Barend Christoffel Kirsten (700407 5240 080) (“Cedent”) cede and transfer in favour of the Standard Bank of South Africa Limited (“the Bank”), or anyone who takes transfer of the Bank’s rights under this cession, all the Cedent’s rights in and to the Cedent’s entire Maize crop and all income and/or moneys due and to become due to the Cedent in respect of Maize supplied and sold by the Cedent and/or agricultural produce (“produce”) purchased from agricultural producers and sold to buyers of the produce from time to time, upon the terms and conditions set out in this agreement.’(Emphasis added.) [27] The bank maintained that the cession should be interpreted to mean that it was entitled to all the proceeds of Kirsten’s 2015 and 2016 maize crop harvest. It sought a declarator that its cession (as rectified, if necessary) was valid and enforceable, and that it pre-dated the cessions executed by Kirsten in favour of Suidwes and Technichem. It contended that its cession trumped the others and therefore all proceeds realised from Kirsten’s 2015 maize produce should be paid to it. However, the bank later accepted that the 2016 produce fell to be dealt with in the insolvent estate and abandoned its claim in that regard. [28] In their plea, the Trustees contended that the interpretation of the cession advanced by Standard Bank was legally incompetent and that the Standard Bank cession was void for vagueness, a view shared by all the other parties. A further contention by the Trustees was that it was not possible to determine from the cession which maize crop or income was being ceded. Alternatively, the ceded rights were limited to Kirsten’s rights against agricultural producers in respect of maize supplied to them, ie, the rights ceded in the cession had nothing to do with the proceeds of maize sold to grain dealers such as Silostrat and Suidwes. [29] Suidwes and the Land Bank filed similar pleas. In respect of the Standard Bank claim they asserted that from 2009 until 2014 Kirsten provided Suidwes with annual evergreen cessions which trumped those he executed in favour of Standard Bank and Technichem. [30] Suidwes and the Land Bank also asserted their rights flowing from the General Notarial Bond registered by Kirsten in favour of Suidwes over Kirsten’s movable property, and ceded to the Land Bank on the same day of its registration. The Notarial Bond had been perfected by agreement between Kirsten and Suidwes. It was contended that the General Notarial Bond included Kirsten’s 2015 maize produce. This argument was, however, not pursued on appeal. [31] Suidwes and the Land Bank further pleaded that although the maize was delivered by Kirsten to the Suidwes silos and held by Suidwes in pledge on behalf of both entities, it was then sold by Kirsten to Africum and the latter sold it to third parties. The proceeds were paid to Suidwes in settlement of Kirsten’s debts to Suidwes and the Land Bank. Incidentally, the payment made by Africum to Suidwes became the subject of a separate action instituted by the Trustees of Kirsten’s insolvent estate against Africum.4 [32] Silostrat responded to the Standard Bank claim with its own claim against Kirsten’s insolvent estate, for payment of the R35 288 000.00, which it had suffered as a result of Kirsten’s breach of contract in failing to deliver the 2015 maize produce contracted for in the three forward agreements. It also asserted a conditional delictual counter-claim against Standard Bank based on alleged negligence by the bank in failing to ensure that the cession provided by Kirsten would protect it (Silostrat) in the event of Kisten’s failure to deliver the 35 000 tons of maize. 4 Standard Bank was also party to that action. [33] As an alternative to that conditional counterclaim, Silostrat claimed delictual damages against Suidwes for ‘appropriation’ and disposal of the 22 619.52 tons of maize delivered by Kirsten to its silos. Silostrat alleged that there was a legal duty5 on Suidwes not to interfere with its contractual rights under the three forward purchase agreements. It contended that by accepting delivery of Kirsten’s maize and disposing of it with full knowledge of Silostrat’s contractual rights, Suidwes usurped the maize and appropriated it to itself.6 [34] In its plea to the Standard Bank claim, Technichem asserted its entitlement to the proceeds of Kirsten’s 2015 maize produce on the basis of the unpaid balance of Kirsten’s indebtedness to it amounting to R7 665 946.44, and its cession. Technichem disputed Standard Bank’s claim as pleaded under the 2011 cession and maintained that its cession trumped both the Standard Bank and the Suidwes cessions, as well as the General Notarial Bond relied on by Suidwes. However, it also conceded the right of the Trustees to the proceeds of Kirsten’s 2016 harvest. Judgment of the high court [35] In dismissing Standard Bank’s claim, the high court found that the interpretation contended for by the bank on the wording of its cession was untenable. The learned judge further found that, having proved its claim against the insolvent estate in the sequestration proceedings, Standard Bank had no cause of action in relation to the 2015 maize crop. Further, no proper basis had been laid for rectification of the cession as the bank had failed to establish that Kirsten and the bank were labouring under a common mistake when the cession was 5 Silostrat employed the expression ‘duty of care’, which conduces to confusion and in our legal setting is inherently misleading (see by way of example: Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality [2017] ZASCA 77; [2017] 3 All SA 382 (SCA); 2018 (1) SA 391 (SCA) para 25). 6 These claims were conditional upon any dividend that would be paid to Silostrat by the Trustees. executed. The learned judge held that, in any event, rectification of the cession subsequent to the establishment of the concursus creditorum would place Standard Bank in a stronger position than it occupied at concursus creditorum, to the prejudice of the other creditors. [36] The high court rejected the interpretation of Suidwes’ cessions as evergreen. It found that each cession related to the crop produced in a specific season. As to the Suidwes 2014 cession, the court held that it ranked after the Technichem cession because it was executed later. With regard to the perfected General Notarial Bond, it found that, due to the sale by Suidwes of part of its book debt to the Land Bank, neither entity held any security from Kirsten. [37] Silostrat’s forward agreements were upheld by the high court (in line with the concession made by the Trustees). This meant that Silostrat’s claim would be administered in the insolvent estate. However, as already stated, Silostrat persisted with its conditional counter claims, even on appeal. [38] With regard to its delictual claim against Suidwes, the court found that, contrary to the allegation by Silostrat, Suidwes had not appropriated Kirsten’s maize. Instead, Kirsten had sold the maize to Africum ‘on his own folio number in his own name’. [39] The high court upheld Technichem’s claim, having found that its cession, executed by Kirsten on 5 October 2014, predated the Suidwes cession. It is noteworthy that none of the parties have sought to assail this conclusion on appeal. The court then awarded the costs incurred by Technichem in the application against Suidwes. The Standard Bank appeal [40] I first consider the submission made on behalf of the Trustees and Suidwes/Land Bank that Standard Bank had no cause of action against them. The argument was that, given that the bank had proved its claim against the insolvent estate, its claim in the summons for the same debt against the insolvent estate, Suidwes and Land Bank was unsustainable. [41] The bank did not deny that its cession was in securitatem debiti. It had held the cession pending the repayment of the moneys advanced to Kirsten. Once it had proved its claim against the insolvent estate, it fell upon the Trustees to deal therewith in the course of the administration of the insolvent estate. The claim had clearly not been disputed by the Trustees. The institution of proceedings against the insolvent estate and the other parties was contrary to established principles in the Law of Insolvency. The proceedings instituted by the Trustees against Africum for payment of the same proceeds clearly illustrate this point. [42] Regarding the validity and ranking of its cession, Standard Bank contended that the high court’s interpretation of its cession was unbusinesslike, that it overemphasised the grammatical and objective meaning of the term ‘agricultural producers’ rather than considering the purpose of the cession and the context in which it was executed, and that the court’s interpretation resulted in an absurdity. It was submitted on behalf of Standard Bank that there was no evidence that any income was due to Kirsten from agricultural producers to whom he had sold the maize. The only contemplated sales were to grain dealers, it was argued. Consequently, the interpretation that took into account the reference to agricultural producers in the Standard Bank cession was illogical. [43] The interpretation advanced by the bank runs contrary to the established approach to interpretation of legal documents that has been repeatedly emphasised by our courts. Central to the interpretation of legal documents is the principle that meaning must be attributed to the words used by the parties in the document. Although evidence of context is admissible as an interpretative aid such evidence may not be led to alter the meaning of the clear and unambiguous words used in an agreement.7 The interpretation advanced on behalf of the bank meant that the words used in the cession would have to be disregarded and other words substituted in their place. [44] The bulk of the evidence led on behalf of Standard Bank pertained to the conditions that were stipulated by the bank for the approval of Kirsten’s applications for increased credit facilities. It was not disputed that in some instances the conditions for approval of the credit facilities included that Kirsten would provide, as security for the loans and overdraft facilities, his ‘crop and crop proceeds’. The evidence of Mathee and Ms Winnie Pienaar (Pienaar), the bank’s credit manager who approved Kirsten’s overdraft facility in November 2011, regarding those conditions, was not in dispute. [45] However, that was never included in the cession that was executed by Kirsten in favour of the bank. The Deed of Cession only provided for the cession of Kirsten’s rights: ‘in and to all income and/or moneys due and to become due to the Cedent by agricultural producers (“Producers”) in respect of Maize supplied by the Cedent and/or agricultural produce (“produce”) purchased from Producers and sold to buyers of produce from time to time, upon the terms and conditions set out in this agreement’. (Emphasis added.) [46] There was nothing insensible or unbusinesslike about the limitation of the expected income to that which would be due to Kirsten ‘by agricultural 7 KPMG Chartered Accountants (SA) v Securefin Ltd [2009] ZASCA 7; [2009] 2 All SA 523, 2009 (4) SA 399 (SCA) para 39; Natal Joint Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at 602-610; City of Tshwane Municipality v Blair Atholl Homeowners Association fn 7 above. producers’. The definition of the word ‘produce’ is: ‘make, manufacture or create’; 8 and its derivative, ‘producer’ is defined as: ‘one who produces: especially agricultural products or manufactures crude materials into articles of use’.9 The fact that Kirsten was an agricultural producer in his own right did not render unbusinessslike or absurd the reference to him purchasing maize or agricultural produce from other agricultural producers for the purpose of onselling it. The submission on behalf of Standard Bank that the words used in the cession had to be interpreted to include ‘expressly, impliedly or tacitly, that Kirsten ceded to the bank his entire maize crop and all rights thereto, including the right to the income due or to become due’ was untenable. The high court was correct in its interpretation of the Standard Bank cession. Rectification [47] To meet the onus of proving the alleged mistake common to both parties to the cession, Standard Bank relied on the evidence of Mathee and Pienaar. However, neither of them tendered admissible evidence in support of a case of rectification. Neither of them had the authority to decide on the wording of the cession nor any contract on behalf of the bank. Mathee viewed himself as merely a conduit, who only served to facilitate Kirsten’s signature on the cession. Kirsten did not testify. It is thus difficult to see how, absent his evidence, the bank could establish a mistake common to the parties. According to Mathee, the Deed of Cession was drafted by officials of the Standard Bank legal department in Johannesburg. Neither Kirsten nor Mathee read it before it was signed. Mathee’s insistence that, in as far as it was not recorded in the Deed of Cession that Kirsten had ceded his ‘crop and crop proceeds’, the intention of the contracting parties had not been correctly recorded, was plainly conjecture. 8 Concise Oxford English Dictionary, 2002. 9 Merriam Webster Dictionary. [48] Consequently there was no factual basis to justify rectification. The high court’s dismissal of the application for rectification was correct. And its finding that Standard Bank had no valid cession in respect of Kirsten’s crop income is unassailable. That being so it is unnecessary to consider the issue of rectification post concursus creditorum. [49] In any event, when Standard Bank approved Kirsten’s 2011 production loan and accepted his cession, it was aware of the earlier cession executed by Kirsten in favour of Suidwes, and was also aware that Suidwes had misgivings about the later cession. Hence, Standard Bank had accepted that its cession could only obtain in relation to the Kirsten’s surplus production. Silostrat’s appeal Delictual claim against Standard Bank [50] In Silostrat’s conditional counterclaim, it alleged that the Bank breached a legal duty owed to it. The legal duty, so it was contended, centred on the Bank’s failure to ensure that Kirsten’s 2015 maize crop was unencumbered by the Suidwes cession, thereby preventing Silostrat suffering damages. Silostrat’s conditional counterclaim, which was dependent upon two conditions, was framed as follows: ‘In the event of the Court finding that: (i) [the] rights acquired by [Suidwes] in terms of a Deed of Cession . . . trumped and/or supersede [Standard Bank’s] rights in respect of the Deed of cession [executed by Kirsten in favour of Standard Bank], and (ii) the sale of 35,000 tons of maize by Kirsten to [Silostrat] is unenforceable and/or void ab initio . . .’ [51] The high court found that whilst the first condition was met, the second was not – hence Silostrat’s appeal. Important in this regard, the sale agreements were concluded between Silostrat and Kirsten. Neither Silostrat, nor the Trustees or Kirsten contend that these sale agreements are void and/or unenforceable. Quite the contrary, at the commencement of the trial, and by agreement, the Trustees admitted Silostrat’s claim. Judgment was accordingly granted in favour of Silostrat against the insolvent estate, in the same amount as that claimed against the Bank in the conditional counterclaim. This occurred on the basis that: (i) the three sale agreements were validly concluded; (ii) Kirsten breached the three sale agreements by failing to deliver the 35 000 tons of maize to Silostrat; and (iii) Silostrat suffered damages because of Kirsten’s breach of the three sale agreements. [52 ] Moreover, aside from the agreement reached between the trustees and Silostrat, the evidence of the witnesses for Silostrat established that: (i) the sale agreements were valid and enforceable and Silostrat would not have been entitled to terminate them at any point prior to 31 July 2015, being the last day for delivery by Kirsten; (ii) any assertion that Silostrat could have closed out its position early would have been premature because Kirsten had a contractual right to make delivery up until 31 July 2015. In any event, at all times Silostrat sought specific performance under the three sale agreements and, even after 31 July 2015, it continued to seek delivery, based on Kirsten’s assurances. It follows that the high court cannot be faulted in its conclusion that the second condition had not been met. [53] Insofar as Silostrat’s counterclaim against Suidwes is concerned: the appeal by Silostrat against paragraph 3 of the High Court’s order is conditional upon the success of Standard Bank’s appeal. If Standard Bank’s appeal fails, as I have shown it must, Silostrat’s appeal must follow that result. The Suidwes Appeal [54] The issues that arose in the Suidwes appeal have been considered above. I may only reiterate that in the light of the conclusion that the Standard Bank cession did not relate to the proceeds of Kirsten’s produce, it is unnecessary to determine the ranking thereof as against the Suidwes cession. [55] With regard to the Suidwes and Technichem cessions it is indisputable that the Technichem cession, having been executed on 5 October 2014, predated the Suidwes cession, which was executed on 24 October 2014. It was in this context that Suidwes maintained that its earlier cessions, executed between 2009 and 2013, were evergreen. The finding of the high court that they were not evergreen was not contested. Against the costs order [56] The basis of the Suidwes appeal against the costs order awarded against it was that the dispute between itself and Technichem was limited. Therefore, the order as to costs should have been limited to the third party proceedings only. Also the costs order should have been made against Standard Bank as well, it was argued. [57] However, although the issues between Technichem and Suidwes were limited to the ranking of the respective cessions, Technichem had to participate in all the proceedings in order to protect its interests. The manner in which the litigation unfolded was relevant to the question of costs. The proceedings in the high court started with Standard Bank’s claim against the Trustees and Suidwes together with the Land Bank. However, it became necessary for the court to consider all three cessions. It would appear that although the contest for the primacy of each of the cessions was between the three entities, the fact that Standard Bank had only instituted a claim against the Trustees and Suidwes/Land Bank, and not against Technichem, must have weighed heavily with the court when considering the issue of costs. Hence there was no costs order against the bank. [58] It was Technichem that had instituted proceedings against Suidwes insofar as the ranking of the cessions was concerned. After Silostrat had been joined by agreement between the two parties it (Silostrat) counterclaimed against the Trustees, Standard Bank and Suidwes. The trial lasted 10 days. As stated, Techichem had to be present throughout the proceedings in the high court to protect its interests. There is no valid basis on which this Court can interfere with the exercise of the high court’s discretion in awarding costs against Suidwes in these circumstances. [59] In the result: The appeal in each instance by: (i) the first appellant, Silostrat (Pty) Ltd, against paragraphs 2 and 3; (ii) the second appellant, Standard Bank, against paragraph 1; and (iii) the third appellant, Suidwes Landbou (Pty) Ltd, against paragraph 6; of the order of the court below is dismissed with costs, including those of two counsel where so employed. _________________________ DAMBUZA N JUDGE OF APPEAL Appearances: For the First Appellant: J G Bergenthuin SC with B Bergenthuin Instructed by: Basson Olivier & Coetzee Attorneys, Pretoria Du Plooy Attorneys, Bloemfontein For the Second Appellant: K W Lüderitz SC with G W Amm Instructed by: Norton Rose Fulbright South Africa Inc, Sandton Webbers Attorneys, Bloemfontein For the Third Appellant: J P Daniels SC with J Smit Instructed by: Cliffe Dekker Hofmeyr Inc, Sandton Pieter Skein Attorneys, Bloemfontein For the First Respondents: F H Terblanche SC with H Fourie SC and M G Mokwena Instructed by: Loubser & Loubser Attorneys, Pretoria EG Cooper Majiedt Inc, Bloemfontein For the Second Respondent: MP van der Merwe SC with N Komar Instructed by: Ningiza Horner Inc, Petoria Matsepes Inc, Bloemfontein For the Third Respondent: J J Pretorius Instructed by: Gerrit Coetzee Inc, Potchefstroom Horn and Van Rensburg Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OFSOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED FROM The Registrar, Supreme Court of Appeal DATE 25 JUNE 2021 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Silostrat (Pty) Ltd & Others v Pieter Hendrik Strydom N. O. & Others (case no 845/2019 and 898/2019) [2021] ZASCA 93 (25 June 2021) MEDIA STATEMENT Today the Supreme Court of Appeal dismissed an appeal against an order of the Gauteng High Court, Pretoria which dismissed an application by the Standard Bank, for payment of money by the trustees of the insolvent estate of Mr Frederick Christoffel Kirsten, a farmer from the North West Province. In the high court the Standard Bank and four other entities: Silostrat (Pty) Ltd, Suidwes Landbou (Pty) Ltd, Technichem Osbeskerming (Pty) Ltd and the Land and Agricultural Development Bank of South Africa, were competing for payment to them of the funds that were realised by the trustees from Mr Kirsten’s 2015 maize harvest. Prior to the sequestration in 2016, Kirsten had been a widely respected and seemingly successful maize and farmer in the region of Makwassie in the Northwest. He had, however, accumulated enormous amounts of debt with Standard Bank and Suidwes for loans he had obtained and with Technichem for agricultural products he had bought on credit. During the period starting from 2009 to 2014 he had been executing annual cessions in favour of Suidwes as collateral for the moneys advanced to him. In the cessions he ceded to Suidwes moneys that he would be receiving from his farming activities. In November 2011 he had executed a cession in favour of the Standard Bank. In October 2014 he had executed a cession in favour of Technichem. In 2015 his farming enterprise collapsed. When his estate was sequestrated in 2016 Standard Bank launched court proceedings against the trustees of his insolvent estate and Suidwes, claiming the moneys realised from Kirsten’s 2015 maize harvest and relying on the cession that Kirsten had executed in its favour in 2011. Later Silostrat, a grain trader, and Technichem also entered the fray because of their interest in moneys realised from Kirsten’s maize produce. Silostrat’s claim arose from events that took place in 2014, when Kirsten secured the last of his numerous loans from Standard Bank. To ensure that the Standard Bank money would be paid, Kirsten sold his then anticipated 2015 maize harvest to Silostrat, in three forward contracts concluded in December 2014 and January and February 2015. However, after harvest, he sold and delivered the same produce to Africum, a subsidiary of Suidwes. Consequently, because Kirsten did not honour his obligations under the forward contracts he had concluded with Silostrat, the latter had to buy maize to honour contracts it had concluded with third parties in anticipation of the maize it would be receiving from Kirsten. Silostrat’s claim related to damages it had suffered as a result of Kirsten’s failure to deliver the maize bought from him in terms of the forward contracts. The high court found that the cession executed by Kirsten in favour of Standard Bank did not relate to the proceeds of his maize produce whereas the cessions he had executed in favour of Suidwes and Technichem did. For that reason Standard Bank’s claim was dismissed. The bank had, however, proved its claim in the sequestration proceedings. The high court then found that Technichem’s cession superseded Suidwes’ cession because it was executed earlier. It also found that Silostrat had a valid claim against the insolvent estate as a result of Kirsten’s breach of the forward contracts. However, a counterclaim by Silostrat against Standard Bank for damages for breach of an alleged legal duty on Standard Bank to ensure payment to Silostrat in the event of a breach by Kirsten was dismissed. So was a claim by Silostrat against Suidwes for damages allegedly caused by the latter’s receipt of moneys realised from the maize delivered to Africum. In both instances the court found that there was no such legal duty on Standard Bank and Suidwes. On appeal the Supreme Court of Appeal confirmed the findings of the high court, including an order that Suidwes should pay the costs incurred by Technichem. --- ends --

2786

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 455/11 Reportable In the matter between: MOHAMMED CASSIMJEE Appellant and THE MINISTER OF FINANCE Respondent Neutral citation: Cassimjee v Minister of Finance (455/11) [2012] ZASCA 101 (1 June 2012) Coram: Mthiyane DP, Brand and Cachalia JJA, Southwood and Boruchowitz AJJA Heard: 22 May 2012 Delivered: 1 June 2012 Summary: Procedure – inordinate delay in prosecuting claim – inherent power of the court to prevent abuse of its process – whether discretion properly exercised to dismiss action for want of prosecution. _________________________________________________________________________ ORDER __________________________________________________________________ On appeal from: KwaZulu-Natal High Court, Durban (Seegobin AJ sitting as court of first instance): The appeal is dismissed with costs. _________________________________________________________________ JUDGMENT _________________________________________________________________ BORUCHOWITZ AJA (MTHIYANE DP, BRAND and CACHALIA JJA, SOUTHWOOD AJA concurring) [1] This is an appeal against the decision of a high court to dismiss an action for want of prosecution. The order was granted by the KwaZulu-Natal High Court, Durban (Seegobin AJ) on 29 July 2010 and the appeal is with leave of that court. [2] On 23 March 1977 officers of the Department of Customs and Excise seized two tankers from the appellant who operated a transport business. On 16 November 1977 the appellant instituted an action against the Commissioner for South Africa Revenue Service (the Commissioner) in the then Durban and Coast Local Division of the Supreme Court in which he claimed return of the tankers that had been seized, alternatively, a sum of money which then represented their value. In addition, the appellant sought payment of an amount as damages representing the loss of the use of the tankers from the date of their seizure on 23 March 1977. [3] Over 32 years have passed between the date of the institution of the action and the delivery of the judgment appealed against. What transpired during the intervening period is largely common cause and can be briefly stated. The Commissioner delivered a request for further particulars to the summons on 25 January 1978 and the appellant furnished a response thereto on 13 October 1978. On 2 May 1979 the Commissioner delivered its plea and a claim in reconvention. The reconventional claim was for the payment of duty in respect of diesel oil that the appellant had supplied to certain unidentified persons during the period 6 May 1976 to June 1977. A request for further particulars to the plea and claim in reconvention were thereafter delivered, and on 31 March 1980 an application was brought to compel the furnishing of the further particulars. The particulars were furnished on 23 July 1980. The Commissioner took no steps to secure the delivery of a plea to the counter-claim and the pleadings were never closed. On 27 January 1981 the appellant delivered a notice calling upon the Commissioner to produce certain documents referred to in the plea and counter-claim but this request elicited no response. [4] A period of some 20 years then elapsed during which no steps were taken by either party to advance the action. On 27 November 2001 a firm of attorneys placed themselves on record for the appellant and gave notice purporting to place the matter on the awaiting trial roll. In the absence of a plea to the claim in reconvention the placement on the trial role was premature. In consequence this step did nothing to bring the matter nearer to completion. In February 2002 the state attorney specifically enquired from the appellant’s then attorneys ‘is your client serious in pursuing this matter’, whereupon the appellant’s attorney confirmed in April 2002 that he was. A further four-year period was permitted to elapse during which neither party took steps to advance the action. [5] On 11 August 2006 a new firm of attorneys placed themselves on record on behalf of the appellant and a notice of intention to amend the particulars of claim was delivered. On the same day the Commissioner delivered a notice of objection to the proposed amendment which notice, it is common cause, did not comply with the provisions of rule 28(3) of the Uniform Rules of Court. On 3 September 2006 the appellant issued a notice in terms of rule 30(2)(b) to set aside the respondent’s notice of objection as an irregular proceeding. The appellant then brought an application in terms of rule 30 to set aside the objection as an irregular proceeding. [6] On 28 November 2006, the Commissioner delivered an application in which the following relief was claimed: that the Commissioner for South African Revenue Service be substituted for the Minister of Finance (the respondent); that the application to set aside the notice of objection as an irregular step be dismissed with costs; that both the action and claim in reconvention in the main action be dismissed and that the appellant pay the costs of the application. [7] The dismissal of the appellant’s action was sought on the ground that it had been dormant since 1981 and that to permit its revival would give rise to irremediable prejudice amounting to an abuse of the process of court. The appellant’s answering affidavit to this application was filed 18 months later in June 2009. [8] The high court has the inherent power, both at common law and in terms of the Constitution (s 173), to regulate its own process. This includes the right to prevent an abuse of its process in the form of frivolous or vexatious litigation (see Western Assurance Co v Caldwell’s Trustee 1918 AD 262 at 271; Corderoy v Union Government (Minister of Finance) 1918 AD 512 at 519; Fisheries Development Corporation of SA Ltd v Jorgensen & another 1979 (3) SA 1331 (W) at 1338F-G; Beinash & another v Ernst & Young & others 1999 (2) SA 116 (CC) paras 10 and 17). [9] Section 34 of the Constitution provides that everyone has the right to have a dispute that can be resolved by the application of law decided by a court or tribunal in a fair public hearing, but a limitation of the protected right is permissible provided that such limitation is reasonable and justifiable. The right of a high court to impose procedural barriers to litigation on persons who are found to be vexatious was recognised in Beinash (supra para 17). In that matter it was held that restricting access to vexatious litigants was indispensable to protect and secure the rights of those with meritorious disputes and necessary to protect bona fide litigants, the processes of the courts and the administration of justice. Compare also Giddey NO v JC Barnard and Partners 2007 (5) SA 525 (CC) paras 15-18. The same considerations, I believe, would apply to an abuse of court procedures. [10] An inordinate or unreasonable delay in prosecuting an action may constitute an abuse of process and warrant the dismissal of an action. See, Verkouteren v Savage 1918 AD 143 at 144; Schoeman & andere v Van Tonder 1979 (1) SA 301 (O) at 305C-E; Kuiper & others v Benson 1984 (1) SA 474 (W) at 476H-477B; Molala v Minister of Law and Order 1993 (1) SA 673 (W) at 676B-679I; Bissett & others v Boland Bank Limited & others 1991 (4) SA 603 (D) at 608C-E; Sanford v Haley NO 2004 (3) SA 296 (C) para 8; Gopaul v Subbamah 2002 (6) SA 551 (D) at 558F-J; Golden International Navigation SA v Zeba Maritime Co Ltd; 2008 (3) SA10 (C) Zakade v Government of the RSA [2010] JOL 25868 (ECB). [11] There are no hard and fast rules as to the manner in which the discretion to dismiss an action for want of prosecution is to be exercised. But the following requirements have been recognised. First, there should be a delay in the prosecution of the action; second, the delay must be inexcusable and, third, the defendant must be seriously prejudiced thereby. Ultimately the enquiry will involve a close and careful examination of all the relevant circumstances, including, the period of the delay, the reasons therefore and the prejudice, if any, caused to the defendant. There may be instances in which the delay is relatively slight but serious prejudice is caused to the defendant, and in other cases the delay may be inordinate but prejudice to the defendant is slight. The court should also have regard to the reasons, if any, for the defendant’s inactivity and failure to avail itself of remedies which it might reasonably have been expected to do in order to bring the action expeditiously to trial [12] An approach that commends itself is that postulated by Salmon LJ in the English case of Allen v Sir Alfred McAlpine & Sons Limited; Bostic v Bermondsey & Southwark Group Hospital Management Committee. Sternberg & another v Hammond & another [1968] 1 All ER 543 (CA), where the following was stated at 561e-h: ‘[A] defendant may apply to have an action dismissed for want of prosecution either (a) because of the plaintiff's failure to comply with the Rules of the Supreme Court or (b) under the Court's inherent jurisdiction. In my view it matters not whether the application comes under limb (a) or (b), the same principles apply. They are as follows: In order for such an application to succeed, the defendant must show: (i) that there has been inordinate delay. It would be highly undesirable and indeed impossible to attempt to lay down a tariff - so many years or more on one side of the line and a lesser period on the other. What is or is not inordinate delay must depend on the facts of each particular case. These vary infinitely from case to case, but it should not be too difficult to recognise inordinate delay when it occurs. (ii) that this inordinate delay is inexcusable. As a rule, until a credible excuse is made out, the natural inference would be that it is inexcusable. (iii) that the defendants are likely to be seriously prejudiced by the delay. This may be prejudice at the trial of issues between themselves and the plaintiff, or between each other, or between themselves and the third parties. In addition to any inference that may properly be drawn from the delay itself; prejudice can sometimes be directly proved. As a rule, the longer the delay, the greater the likelihood of serious prejudice at the trial.’ [13] At issue in the appeal is whether the court below had properly exercised its discretion to dismiss the appellant’s claim for want of prosecution. This in turn depends on the factual question whether the delay was so unreasonable or inordinate as to constitute an abuse of the process of court. [14] The appellant has advanced two principal reasons for the delay. First, that he had problems with the attorneys he had instructed in the matter, and second, that he had experienced health problems which prevented him from properly dealing with the matter. The appellant has explained that from the inception of the matter the various attorneys and counsel that he instructed were unable to make any progress. In 1992, one of his attorneys died while another was struck off the roll in 1997. One of the several advocates instructed on his behalf simply left without anything being done in the matter, and repeated inquiries regarding any progress elicited no satisfactory responses. The appellant went from one attorneys’ firm to another with no real progress being made. Eventually in 2001 the firm of attorneys instructed by him succeeded in placing the matter on the awaiting trial roll but this was done prematurely. Their mandate was subsequently terminated and another firm was instructed. Due to a lack of progress this firm’s mandate was terminated on 11 August 2006 and on the same day a new firm was appointed. The latter firm of attorneys filed the rule 28 notice purporting to amend the particulars of claim but when no further progress was made in the appellant terminated their mandate and appointed his current attorneys. [15] From about 1998 the appellant claims to have suffered extensive health problems. He claims that he has cardiac problems and suffers from hypertension and in 1998 he suffered a stroke and was diagnosed with Type II Diabetes Mellitus. In 2000 he underwent a coronary bi-pass and in 2000 underwent a second operation. He asserts that as a result of his poor health and repeated admissions to hospital it was not possible for him to properly attend to the litigation. [16] The appellant’s inactivity especially during the 20 year period from 1981 has not been adequately explained. Since 27 January 1981, when the notice to produce certain documents was filed and until 2001, the appellant and his legal representative appear to have taken no steps whatever to prosecute the action. The premature placement of the matter on the awaiting trial roll on 27 November 2001 did little to advance the action and the further five year delay until August 2006 is not explained. The appellant fails to explain what steps he personally took to expedite the matter and what enquiries he made of his attorneys. It is difficult to accept that he could not during the long passage of time have taken steps to insist his legal representatives to bring the matter to finality. His alleged health condition is not properly substantiated, but even if one were to accept that he suffers from ill health it is difficult to believe that he was unable to communicate with and give instructions to his legal advisers. In any event, the problems regarding the appellant’s health only surfaced in 1998 some twenty years after the action was instituted. [17] The appellant’s version is characterised by a profound absence of detail. The court below rightly observed that the appellant has not produced a shred of evidence to substantiate any of the allegations made by him. He claims not to have had access to the files that were in his attorneys’ possession but has failed to explain what attempts were made to obtain such access. In my view, nothing the appellant has said properly explains or excuses his inactivity. The inference is irresistible that the appellant had decided for some unexplained reason not to proceed with the action or to advance it expeditiously to trial. [18] That, however, is not the end of the enquiry. The court is required to consider whether the delay has occasioned prejudice to the respondent. The court must also consider, in this regard, if there was any delay on the respondent’s part and whether the respondent has availed itself of the remedies which it might reasonably have been expected to do in order to bring the action expeditiously to trial. [19] That the respondent had taken a conscious decision not to actively prosecute the action is common cause. The respondent has explained that at the time of the seizure of the tankers and for some time thereafter the conventional thinking had been that any breach of regulation 410.04.04(a) promulgated under the Customs and Excise Act 91 of 1964 automatically constituted a contravention of the Act, and could lead to a seizure of the vehicles used in such contravention. The regulation provided, inter alia, that any seller of fuel under rebate had to obtain a declaration from his purchasers that they would use the rebated fuel in accordance with the regulations. This approach to matters of this nature was altered by the judgment of this court in the case of BP Southern Africa (Pty) Ltd v Secretary for Customs and Excise & another 1985 (1) SA 725 (A) where it was held that a failure to obtain such a declaration did not automatically disentitle the seller (or the purchaser, as the case may be) to the rebate. It was only if the fuel was in fact not used for the purposes of the regulations that a rebate could not be claimed. The effect of the judgment in BP Southern Africa supra was that the respondent could no longer rely solely on the failure to obtain the declaration as a cause for the seizure of the tankers, but would have to go further and establish that the persons to whom the appellant supplied diesel were not entitled to the rebate. The main question which will arise in the action, should it be allowed to proceed, is whether the appellant sold diesel under rebate to persons who were not entitled thereto. This will entail an examination of approximately 180 transactions and would require the respondent to interview and take statements from the many unidentified persons to whom the appellant sold diesel. In view of these evidential difficulties, a decision was taken by the respondent in 1985 ‘not to force the pace of the action’. [20] To permit the appellant an opportunity to revive the action, whether in an amended form or otherwise, would in my view be extremely prejudicial to the respondent. A number of officials who were tasked with investigating the matter are now deceased or cannot recall the events in question. The relevant invoices which are necessary for the purpose of preparing for trial have been mislaid, and to complicate matters further, the seized tankers are no longer available for inspection. Counsel for the appellant also conceded that the proposed amended claim is ill conceived and that a new notice of amendment will have to be prepared. [21] It was further argued on behalf of the appellant that any prejudice to the respondent was of its own making and a consequence of its decision not to force the pace of the action. I do not agree. Although the respondent’s conduct is a factor that must be taken into account, its conduct cannot be viewed in isolation from the appellant’s failure to expeditiously prosecute the action. In this regard the following remarks of Diplock LJ in his separate judgment in Allens supra (at 556g) are apposite: ‘Since the power to dismiss an action for want of prosecution is only exercisable on the application of the defendant his previous conduct in the action is always relevant. So far as he himself has been responsible for any unnecessary delay, he obviously cannot rely on it. Moreover, if after the plaintiff has been guilty of unreasonable delay the defendant so conducts himself as to induce the plaintiff to incur further costs in the reasonable belief that the defendant intends to exercise his right to proceed to trial notwithstanding the plaintiff’s delay, he cannot obtain dismissal of the action unless the plaintiff has thereafter been guilty of further unreasonable delay. For the reasons already mentioned, however, mere non-activity on the part of the defendant where no procedural step on his part is called for by the rules of court is not to be regarded as conduct capable of inducing the plaintiff reasonably to believe that the defendant intends to exercise his right to proceed to trial. It must be remembered, however, that the evils of delay are cumulative, and even where there is active conduct by the defendant which would debar him from obtaining dismissal of the action for excessive delay by the plaintiff anterior to that conduct, the anterior delay will not be irrelevant if the plaintiff is subsequently guilty of further unreasonable delay. The question will then be whether as a result of the whole of the unnecessary delay on the part of the plaintiff since the issue of the writ, there is a substantial risk that a fair trial of the issues in the litigation will not be possible.’ [22] Applying the approach postulated by Diplock LJ to the facts of the instant case, the conclusion must inevitably be reached that it is the appellant’s failure to expeditiously prosecute the action that is the primary cause of the respondent’s prejudice. Should the appellant be given leave to reinstate the action there is a substantial risk that a fair trial of the issues will not be possible. [23] The appellant has failed to demonstrate that the discretion exercised by the court below – which is a discretion ‘in a strict sense’ was not judicially exercised or was based upon a wrong principle of law or wrong facts. (See Kini Bay Village Association v Nelson Mandela Metropolitan Municipality & others 2009 (2) SA 166 (SCA) para 11 and cases there cited.) I am therefore satisfied that the court below correctly exercised its inherent power to dismiss the appellant’s action and that it also correctly dismissed the rule 30 application. Consequently the appeal cannot succeed. Though the respondent asked for the costs of two counsel, I do not believe that such order is justified. [24] The following order is therefore made: The appeal is dismissed with costs. __________________________ P BORUCHOWITZ ACTING JUDGE OF APPEAL Appearances: For Appellant: J A Julyan SC Instructed by: Gounder & Associates, Durban Claude Reid Incorporated, Bloemfontein For Respondent: C J Pammenter SC (with him M Ngqanda) Instructed by: The State Attorney, Durban The State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 1 June 2012 STATUS: Immediate Mohammed Cassimjee v Minister of Finance (455/11) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal (the SCA) today dismissed an appeal with costs from the KwaZulu-Natal High Court, Durban. The appellant, Cassimjee, operated a transport business and his tankers were seized by officers of the Department of Customs and Excise in 1977. The reason for this seizure was an allegation against the appellant for selling fuel under rebate to people that did not qualify for rebate. The plaintiff issued summons in 1977 and the exchange of pleadings carried on till 1981. From 1981 till 2001, there was no activity in the case till a firm of attorneys pre-maturely placed the matter on the awaiting trial roll. Again, nothing happened for five years until in 2006 when the appellant attempted to amend its particulars of claim. Respondent opposed this amendment with a defective notice that did not set out the grounds for the opposition. The application before the high court was in terms of Rule 30 to set aside the objection as an irregular proceeding. The respondent submitted a counter-application for a dismissal of the main action. At issue in the appeal was whether the high court had properly exercised its discretion to dismiss the appellant’s claim for want of prosecution which depended on the factual question whether the delay was so unreasonable or inordinate as to constitute an abuse of the process of court. The SCA held that there are no hard and fast rules as to the manner in which the discretion to dismiss an action for want of prosecution is to be exercised but listed the following recognised requirements which includes delay in the prosecution of the action; the delay must be inexcusable and, the defendant must be seriously prejudiced. The SCA stated that the enquiry will involve a close and careful examination of all the relevant circumstances, including, the period of the delay, the reasons and the prejudice, if any, caused to the defendant. In conducting the factual inquiry, the SCA identified two principal reasons advanced by the appellant for the delay which includes problems in instructing attorneys in the matter, and health problems suffered by the appellant. The SCA held however that the appellant’s inactivity during the 20 year period from 1981 was not adequately explained and was characterised by a profound absence of detail. The SCA also considered whether the delay would cause prejudice to the respondent, if there was any delay on the respondent’s part and whether the respondent availed itself of the remedies which it might reasonably have been expected to do in order to bring the action expeditiously. The SCA held that to permit the appellant an opportunity to revive the action would be extremely prejudicial to the respondent since among other facts, a number of officials who were tasked with investigating the matter were deceased or could not recall the events in question. The SCA held that the conclusion must inevitably be reached that it is the appellant’s failure to expeditiously prosecute the action that is the primary cause of the respondent’s prejudice and there was a substantial risk that a fair trial of the issues will not be possible. The SCA held that appellant had failed to demonstrate that the discretion exercised by the court below which is a discretion ‘in a strict sense’ was not judicially exercised or was based upon a wrong principle of law or wrong facts. The SCA consequently dismissed the appeal with costs. -- ends --

2549

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 366/2013 Reportable In the matter between: ROYAL SECHABA HOLDINGS (PTY) LTD Appellant and GRANT WILLIAM COOTE First Respondent DANIEL ELARDUS ENGELBRECHT Second Respondent Neutral citation: Royal Sechaba v Coote (366/2013) [2014] ZASCA 85 (30 May 2014) Coram: Lewis, Bosielo, Theron and Willis JJA and Legodi AJA Heard: 15 May 2014 Delivered 30 May 2014 Summary: Res Judicata – Issue estoppel – same parties requirement – privity of interest not established – rule not immutable but no reasons advanced for relaxation or extension of the rule. Same relief – some issues determined in earlier arbitration while other issues not adjudicated upon – respondents not entitled to rely on defence of issue estoppel. _________________________________________________________________ ORDER _________________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Vorster AJ sitting as court of first instance): 1 The appeal is upheld with costs. 2 The order of the high court is set aside and in its stead is substituted the following order: „The special plea is dismissed with costs‟. 3 The matter is referred back to the high court for adjudication on the particulars of claim and the substantive defence. _________________________________________________________________ JUDGMENT _________________________________________________________________ Theron JA (Lewis, Bosielo, Theron and Willis JJA and Legodi AJA concurring): [1] The appellant, Royal Sechaba Holdings (Pty) Ltd (Royal Sechaba), instituted action against the respondents, Mr Grant William Coote (Coote), and Mr Daniel Elardus Engelbrecht (Engelbrecht), the first and second respondents, respectively, in the North Gauteng High Court for payment of damages of R13 122 516 alternatively R4 140 000, for an alleged breach, by them, of their fiduciary duties. The respondents raised a special plea of issue estoppel. The high court (Vorster AJ) upheld the special plea and dismissed Royal Sechaba‟s claim with costs. This appeal is against that judgment, with the leave of the high court. [2] In order to determine whether the special plea was properly upheld, it is necessary to examine the factual background giving rise to this litigation. Coote and Engelbrecht were employees and directors of Royal Sechaba. From February 2007 to September 2009, Coote was the company‟s chief executive officer and Engelbrecht its chief operating officer. On 1 August 2006, Royal Sechaba and Mr Louis Martin Jones (Jones), entered into a written contract of employment in terms of which Jones was appointed by Royal Sechaba as Director of Business Development and which was effective from 1 March 2007. The parties concluded a further agreement which was styled „Addendum to Employment Agreement‟ (the Addendum) and effective from 1 March 2007, in terms of which Jones would be paid commission by Royal Sechaba on every contract he procured for the benefit of Royal Sechaba. In addition, Jones would be paid an incentive commission for managing and overseeing the performance of the contract concerned. In concluding this agreement, Royal Sechaba was represented by Coote, and Jones acted personally. [3] To the extent here relevant, the Addendum provides that Jones would receive commission and incentive payments as follows: „1. … All new customers that have no existing contract with Royal Sechaba, a 9% commission based on the projected nett profit as per feasibility document. The nett profit includes the estimated value of any assets that Royal Sechaba would retain at the end of the contract. The estimated value of these assets would be the purchase price less depreciation allowed by the Receiver of Revenue: Sales Commission Structure:  50% upon starting of the business  A further 25% halfway through the contract  A further 25% upon completion of the contract 2. All new business from existing Royal Sechaba contracts brought in by Mr Louis Jones will attract the same commission structure as all other business. 3. Managing and overseeing the existing Support Services/remote site business and all new business as stipulated in (1) above Louis Jones will be remunerated at 9% operating incentive of actual nett profit achieved. This is calculated and paid quarterly in arrears. 4. All expenses, including commission and admin fee payable to Royal Sechaba will be deducted from the profits. This money will only be payable for the duration of involvement by Louis Jones‟. [4] Jones was extremely successful in procuring new business for Royal Sechaba. It was common cause that Jones was paid an amount of almost R24 million (half of this amount was shared with his management team) over a period of two years from May 2007 to May 2009. All these payments were authorised by Coote and Engelbrecht, among others. During July 2009 these payments were the subject of an investigation conducted by an auditor, Mr André Dames, at the instance of Royal Sechaba. Dames came to the conclusion that the payments made to Jones were incorrectly calculated on gross profit, rather than net profit, as provided for in the Addendum. He also found that Jones had received payments before he had become entitled thereto in terms of the payment schedule in clause 1 of the Addendum and that Jones had claimed and received commission on „new business‟ which had not been procured by him. [5] On 30 September 2009, Coote and Engebrecht were dismissed by Royal Sechaba, for among other things, authorising payments to Jones to which he was not entitled. During the course of the investigation, Jones as well as Coote and Engelbrecht, disputed that Jones had been overpaid. According to them the phrase „net profit‟ as used in the Addendum meant „net contract contribution‟ which differs from net profit in the ordinary accounting sense. They also alleged that all the payments received by Jones had been due to him. Even though the payment schedule provided for in clause 1 of the Addendum was not adhered to, the respondents alleged that they entered into an oral agreement with Jones in terms of which Jones was entitled to receive his full sales commission prematurely (up- front) if cash flow permitted. [6] The disputes between Royal Sechaba and Jones eventually culminated in the cancellation of both Jones‟ employment contract and the Addendum. Their disputes were subsequently referred to arbitration. The arbitrator was called upon to determine various disputes between the parties, including the interpretation of the Addendum, whether the Addendum was varied by way of a further oral agreement and whether Jones had been overpaid. The arbitration was protracted, lasting six weeks. Jones called some 19 witnesses, including nine experts. The respondents were key witnesses who testified on behalf of Jones. [7] The arbitrator found, inter alia, that reference to „actual net profit‟ in clause 3 of the Addendum, read with clause 4 thereof, meant net profit in the accounting sense of the phrase, namely, net profit after all expenses had been taken into account. The arbitrator also found that Jones did not procure a particular contract in respect of the Ingula Dam for Royal Sechaba and that he was not entitled to commission in respect thereof. [8] Jones appealed against the arbitrator‟s award to an arbitration appeal tribunal (the Tribunal) comprising Kriegler J, Blieden J and Suttner SC. Royal Sechaba also cross-appealed against certain of the arbitrator‟s findings. The Tribunal upheld the appeal, dismissed Royal Sechaba‟s cross-appeal and substituted the arbitrator‟s award with one in terms of which Royal Sechaba was ordered to pay Jones an amount of R 1 673 608, 55 plus interest and the costs of the arbitration. [9] The Tribunal found, inter alia, that the term „net profit‟ in clauses 1 and 3 of the Addendum meant net contract contribution as contended by Jones and the respondents. The Tribunal also found that the parties had concluded a further oral agreement in terms of which it was agreed that Jones would be paid prematurely and not in tranches as provided in the Addendum, provided Royal Sechaba had sufficient cash resources. Royal Sechaba instituted a review application in terms of s 33(1) of the Arbitration Act 42 of 1965 in the North Gauteng High Court, for the setting aside of the appeal tribunal award. The application was dismissed with costs. [10] In this appeal, Royal Sechaba contended that the plea of issue estoppel had been wrongly upheld by the high court on two main grounds. First, it argued that the „same person‟ requirement had not been met in that the respondents were not parties to the Jones arbitration. In reply, the respondents alleged that they were privies of Jones. Secondly, it contended that the „same cause‟ requirement had not been satisfied as the issues which would arise in Royal Sechaba‟s claim against the respondents were not the same as those determined in the arbitration. I shall deal with each of these grounds in turn. [11] The requisites of a valid defence of res judicata in Roman Dutch law were that the matter adjudicated upon must have been for the same cause, between the same parties and that the same thing must have been demanded.1 Voet, Commentarius ad Pandectas 44.2.3 (as translated in Bertram v Wood 1893 (10) SC177 at 18) wrote: „under no other circumstances is the exception allowed than where the concluded litigation is again commenced between the same parties, in regard to the same thing, and for the same cause of action, so much so, that if one of these requisites is wanting, the exception fails‟.2 1 Simply stated the requirements are eadem persona (same person), eadem causa pretendi (same cause) and eadem res (same right). National Sorghum Breweries Ltd (t/a) Vivo African Breweries v International Liquor Distributors (Pty) Ltd 2001 (2) SA 232 (SCA); Bafokeng Tribe v Impala Platinum Ltd & others 1999 (3) SA 517 (BH). 2 See African Wanderers Football Club (Pty) Ltd v Wanderers Football Club 1977 (2) SA 38 (A) at 45E-F. [12] The expression „issue estoppel‟ is a convenient description of instances where a party may succeed despite the fact that the classic requirements for res judicata have not been complied with because the same relief is not claimed, or the cause of action differs, in the two cases in question.3 The common law requirements of same thing and same cause (eadem res and eadem petendi causa) have been relaxed by our courts in appropriate circumstances. As was pointed out by Lewis JA in Hyprop Invesments Ltd v NSC Carriers and Forwarding CC & Others,4 the relaxation and the application of issue estoppel effectively started in Boshoff v Union Government, where it was held that the strict requirements for a plea of res judicata (eadem res and eadem petendi causa) should not be understood literally in all circumstances and applied as inflexible or immutable rules.5 Despite some debate as to the approach of Greenberg J in Boshoff, Botha JA in Kommissaris van Binnelandse Inkomste v Absa Bank Bpk confirmed the correctness of the approach and added that in particular circumstances these requirements may be adapted and extended in order to avoid the unacceptable alternative that the courts would be obliged: „om met letterknegtige formalisme vas te klou aan stellings in die ou bronne, wat onversoenbaar sou wees met die lewenskragtige ontwikkeling van die reg om te voorsien in die behoeftes van nuwe feitelike situasies.‟6 [13] Following the decisions in Boshoff and Kommissaris, Scott JA in Smith v Porritt summarised the development of the law in this regard: „… the ambit of the exceptio rei judicata has over the years been extended by the relaxation in appropriate cases of the common-law requirements that the relief claimed and the cause of action be the same (eadem res and eadem petendi causa) in both the case in question and the earlier judgment. Where the circumstances justify the relaxation of these requirements those that remain are that the parties must be the same (idem actor) and that the same issue (eadem 3 Kommissaris van Binnelandse Inkomste v Absa C Bank Bpk 1995 (1) SA 653 (A) at 670I-671B; Smith v Poritt & others 2008 (6) SA 303 (SCA) para 10. 4 [2014] 2 All SA 26 (SCA) para 14. 5 Kommissaris van Binnelandse Inkomste, supra, at 669F-H. 6 Supra. To cling to doctrines of old authorities with literal formalism is irreconcilable with the development of the law to provide for requirements of new factual situations. (My translation.) quaestio) must arise. Broadly stated, the latter involves an inquiry whether an issue of fact or law was an essential element of the judgment on which reliance is placed. Where the plea of res judicata is raised in the absence of a commonality of cause of action and relief claimed it has become commonplace to adopt the terminology of English law and to speak of „issue estoppel‟. But, as was stressed by Botha JA in Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1) SA 653 (A) at 669D, 670J - 671B, this is not to be construed as implying an abandonment of the principles of the common law in favour of those of English law; the defence remains one of res judicata. The recognition of the defence in such cases will however require careful scrutiny. Each case will depend on its own facts and any extension of the defence will be on a case-by-case basis. (Kommissaris van Binnelandse Inkomste v Absa Bank (supra) at 670E - F.) Relevant considerations will include questions of equity and fairness not only to the parties themselves but also to others. As pointed out by De Villiers CJ as long ago as 1893 in Bertram v Wood (1893) 10 SC 177 at 180, 'unless carefully circumscribed, [the defence of res judicata] is capable of producing great hardship and even positive injustice to individuals.‟7 [14] It was contended by Royal Sechaba that one of the essential requirements for a successful reliance on either res judicata or issue estoppel, that the parties must be the same (idem actor), was not proven by the respondents. It is accepted that the idem actor requirement does not mean identical parties but that „same parties‟ for the purposes of res judicata and issue estoppel include their privies. The principle that a party‟s privies may also rely on an earlier judgment to found a defence of res judicata or issue estoppel originated from a statement in Voet‟s Commentarius ad Pandectas 44.2.5 where various illustrations are given of those who are „deemed‟ to be the „same person‟ or who are identified with one another for the purposes of res judicata, such as a deceased and his heir, a principal and his agent, a person under curatorship and his curator, a pupil and his tutor, a creditor and debtor in respect of a pledged article if the debtor gave the article in pledge after losing a suit in which a third party claimed it, a purchaser and seller, if the seller has won or lost the action.8 7 Smith v Poritt & others 2008 (6) SA 303 (SCA) para 10. 8 This list is set out in Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 654. [15] In Ferreira v Minister of Social Welfare, it was noted, with reference to the illustrations listed by Voet, that the persons who are „deemed‟ to be the same as the persons concerned in the previous action all derive their interest in the later action from the parties to the original action.9 In Ferreira, the mother of a child, who alleged that the appellant was the father, had obtained a judgment by default against the appellant for maintenance. She later issued summons for maintenance for a later period. The appellant filed a plea contesting the allegation of paternity. The mother, relying on the effect of the earlier judgment, objected to the appellant leading evidence in support of his plea and this objection was upheld on an application of the principle res judicata. On appeal, the court held that the order in the original action was designed to determine the amount of liability between the spouses inter se, and that the mother was there exerting a right of her own and not of the child. The court concluded that the right to a contribution order arose from the provisions of the Children‟s Act 31 of 1937 and that the right to claim such contribution was not „derived‟ from the mother in the sense necessary to establish the applicability of the principle of res judicata.10 [16] The basis of the respondents‟ special plea in this case is that: „The defendants [respondents] in this matter are parties associated with the parties in the arbitration, alternatively their privies, rendering the arbitration proceedings a final adjudication between the plaintiff and the defendants by arbitration of competent jurisdiction.‟ In support of their contention that they were privies of the parties in the arbitration, the respondents rely on the following: (1) at all material times Coote was the chief executive officer and Englebrecht, the chief financial officer, of Royal Sechaba; (2) at all material times both respondents were directors of Royal Sechaba; (3) both respondents were actively involved in the negotiations that led to the conclusion of the Addendum; (4) they represented Royal Sechaba in these 9 Ferreira v Minister of Social Welfare 1958 (1) SA 93 (E) at 95H-96A. 10 Section 60 of the Act provided that a contribution order may be made against a respondent, who is defined as a person legally liable to maintain or to contribute towards the maintenance of a child. negotiations with Jones; (5) Coote executed the Addendum; (6) from May 2007 to May 2009, both respondents were actively involved in the execution of the Addendum in the form of the verification of Jones‟ incentives and commissions; (7) both respondents were called as witnesses to the interviews relating to Jones‟ commission while they were still employees of Royal Sechaba, and (8) both respondents played an active role in the arbitration. [17] This court in Shokkos v Lampert NO11 held that to establish the relationship of „party and privy‟ the privy must „derive title‟ from the party.12 Similarly in Rail Commuters Group & others v Transnet Limited & others,13 it was held that for a plea of res judicata to succeed, the parties concerned in both sets of proceedings must either be the same individuals or „persons who are in law identified with those who were parties to the proceedings.‟ On the other hand, in Man Truck & Bus SA (Pty) v Dusbus Leasing CC & others,14 Rabie AJ stated that the list of privies should: „… not be limited only to those listed by Voet. The question as to whether a person should be so regarded, should depend upon the facts of each particular case and should not only apply to the specific person or persons against whom judgment had been obtained.‟ In Man Truck it was held that the sole members and controlling minds of two close corporations who had bound themselves as sureties for and co-principal debtors with their close corporations were bound by a court decision in earlier proceedings against the said close corporations, even though they were not themselves parties to that litigation.15 11 Shokkos v Lampert NO 1963 (3) SA 421 (W) 425H- 426A. 12 See also Cassim v The Master & others 1960 (2) SA 347 (D) at 355A-D. 13 Rail Commuters Group & others v Transnet Limited & others 2006 (6) SA 68 (C) at 82H-83A. 14 2004 (1) SA 454 (W) para 34. Man Truck & Bus was followed in Kruger & another v Shoprite Checkers (65/05) [2006] ZANCHC 114 (26 May 2006) where a close corporation and its sole member were found to be privies. 15 Brand JA in Prinsloo, did not find it necessary to decide whether the principle, as endorsed in Man Truck, that a privy included the sole member of a close corporation, was correct. [18] The respondents were not „in law identified‟ with either Jones or Royal Sechaba and neither did they „derive title‟ from these parties. All they had in common with Jones is that they were former employees of Royal Sechaba and they were all witnesses in the arbitration. Jones‟ success or failure in the outcome of the arbitration would have no effect whatsoever on their personal rights and obligations. There is no basis upon which this court can find that the respondents were privies of the parties in the arbitration. The respondents had no control over Jones and neither did he represent them in the arbitration. They had no legal or beneficial interest in the arbitration. They undoubtedly had an interest in or concern with the outcome of the arbitration, but that is not sufficient to establish the requisite privity. On the facts of this case, they were not privies to the arbitration in the manner in which the concept of being a privy has been interpreted by our courts. [19] It is, however, the view of this court that the „same parties‟ requirement is not immutable and may in appropriate cases and in line with this court‟s duty to develop the common law, be relaxed or adapted in order to address new factual situations that a court may face. There is no reason in principle, why a court cannot relax the same person requirement for the very reasons why the two other requirements have, over time, been relaxed. In Prinsloo NO & others v Goldex 15 (Pty) Ltd & another, Brand JA put the matter thus: „In our common law the requirements for res iudicata are threefold: (a) same parties, (b) same cause of action, (c) same relief. The recognition of what has become known as issue estoppel did not dispense with this threefold requirement. But our courts have come to realise that rigid adherence to the requirements referred to in (b) and (c) may result in defeating the whole purpose of res iudicata. That purpose, so it has been stated, is to prevent the repetition of law suits between the same parties, the harassment of a defendant by a multiplicity of actions and the possibility of conflicting decisions by different courts on the same issue (see eg Evins v Shield Insurance Co Ltd 1980 (2) SA 815 (A) at 835G). Issue estoppel therefore allows a court to dispense with the two requirements of same cause of action and same relief, where the same issue has been finally decided in previous litigation between the same parties.‟16 [20] Most recently, in Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC & others, Wallis JA stated that it was not clear that Voet confined „same person‟ narrowly to those who „derived their rights from a party to the original litigation‟ and continued: „[I]t may be that the requirement of “the same person” is not confined to cases where there is an identity of persons, or where one of the litigants is a privy of a party to the other litigation, deriving their rights from that other person. Subject to the person concerned having had a fair opportunity to participate in the initial litigation, where the relevant issue was litigated and decided, there seems to me to be something odd in permitting that person to demand that the issue be litigated all over again with the same witnesses and the same evidence in the hope of a different outcome, merely because there is some difference in the identity of the other litigating party.‟17 [21] In order to develop the common law, by either relaxing or extending the „same person‟ requirement, persuasive reasons must be placed before the court for doing so. If fairness and equity dictate a development of the law, and to do otherwise would defeat the very purpose of the defence, consideration should be given to allowing issue estoppel as a defence even where there is not, strictly speaking, identity of parties. The doctrine of res judicata is founded on the policy considerations that there should be finality in litigation and an avoidance of a multiplicity of litigation or conflicting judicial decisions on the same issue or issues.18 As Brand JA in Prinsloo said, our courts have recognised that rigid adherence to the requirements of same cause of action and same relief would defeat the purpose of res judicata.19 There is no reason why a similar approach 16 [2012] ZASCA 28 para 23. See also the comments made by Botha JA in Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1) SA 653 (A) at 676B-E, referred to in para 26 above. 17 Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC & others 2013 (6) SA 499 (SCA) para 43. 18 Ibid para 2. Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning and Local Government 2009 (3) SA 577 (SCA). 19 Para 23. should not be adopted to the same parties requirement. But in this matter, it was not argued why the requirement should be relaxed or extended, since counsel for the respondents persisted with the contention that the respondents were privies of the parties to the arbitration. He also disavowed any suggestion that the institution of action against the respondents amounted to an abuse of the court‟s processes. [22] The high court correctly concluded that the same parties requirement was not established but nevertheless, and without any analysis, went on to find that it was „appropriate to extend the application of res judicata to the facts in the instant case‟. The only reason advanced by the high court for extending the rule in this manner was that „the identities of the defendants in this matter as the persons who agreed and authorized the payments of commissions to Jones are inextricably linked to Jones as the receiver of those payments‟. That, in my view, was not sufficient to allow the court to extend the principles governing issue estoppel. [23] I turn now to deal with the second ground of appeal relied on by Royal Sechaba, that the same cause of action requirement has not been satisfied in that the issues determined by the Tribunal are not the same as those to be determined in this action although the relief sought was identical (the amount of the damages claim). The respondents, on the other hand, and in terms of their special plea, have alleged that the issues which will arise in this action are the same as those which have already been determined in the arbitration, and Royal Sechaba is accordingly precluded from proceeding against them on a basis inconsistent with the findings of the Tribunal. They do not plead res judicata, but issue estoppel. Thus, while the breach of a fiduciary duty complained of in the action against the respondents is different from the cause of action in the arbitration, the issues, the respondents argue, are the same. This enquiry requires an examination of the Tribunal‟s award as well as the pleadings. [24] It was common cause that Royal Sechaba‟s claim against the respondents for overpayment of commission based on the interpretation of clauses 1 and 3 the Addendum had been determined by the Tribunal. This portion of the claim is pleaded as follows: „[In breach of their fiduciary duties, the respondents] calculated the commissions and operating incentives paid to Jones and the designated employees on the basis of a measure referred to by them as “net contract contribution” (essentially gross profit), instead of net profit, as provided for in the addendum …‟. This was the main issue decided by the Tribunal. [25] It was, however, contended that there were other issues between the parties and articulated in the particulars of claim which were not covered by, and adjudicated upon their merits, in the arbitration. One such issue was whether the respondents had breached their fiduciary duties to Royal Sechaba in that they had: „Authorised and/or approved a payment of sales commissions to Jones and designated employees despite the fact that such sales commissions and operating incentives had not yet become due and payable in terms of the Addendum‟. The alleged improper behaviour related not to the conclusion of the Addendum, but the implementation thereof, more particularly whether the respondents, in agreeing to pay commission prematurely, had breached their fiduciary duties and not acted with the degree of skill, care and diligence that could reasonably be expected of a director. The issue of a „breach of fiduciary duty‟ was not determined by the arbitration. [26] The argument by Royal Sechaba that some of the issues were not decided by the Tribunal is correct. The Tribunal, for example, was called upon to determine whether Jones was entitled to commission in respect of the Ingula Dam contract. In terms of the Addendum, Jones was entitled to commission on contracts concluded for the benefit of Royal Sechaba and which he had secured. There was a dispute whether Royal Sechaba had concluded a contract in respect of Ingula Dam. The Tribunal held: „The defendant [Royal Sechaba] represented by Coote and Engelbrecht agreed on the payment to the claimant [Jones], and the evidence indicates that the contract has been continued albeit on a monthly basis. Once the claimant and the defendant, represented by its officials, agreed that the claimant was entitled to be paid, there is no reason to set aside this agreement‟. (Emphasis added.) It was common cause that although there had been reciprocal performance in respect of Ingula Dam, no formal contract had been concluded. It is therefore, at the very least, arguable whether Jones is, in terms of the Addendum, entitled to commission in respect of Ingula Dam. [27] In these circumstances, I am inclined to agree with Royal Sechaba that while the issues to be determined between Royal Sechaba and the respondents are largely the same as the issues determined in the arbitration, there are issues which were not adjudicated upon in the arbitration. [28] For these reasons, the appeal must be upheld. 1 The appeal is upheld with costs. 2 The order of the high court is set aside and in its stead is substituted the following order: „The special plea is dismissed with costs‟. 3 The matter is referred back to the high court for adjudication on the particulars of claim and the substantive defence. ______________ L V THERON JUDGE OF APPEAL APPEARANCES For Appellant: J A Van der Westhuizen Instructed by: Weavind &Weavind, Pretoria Matsepes, Bloemfontein For Respondents: W J De Bruyn Instructed by: Cowan-Harper Inc, Johannesburg Lovius Block Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: May 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. ROYAL SECHABA HOLDINGS (PTY) LTD v GRANT WILLIAM CLOOTE & DANIEL ELARDUS ENGELBRECHT The Supreme Court of Appeal (SCA) today, upheld an appeal against the order of the North Gauteng High Court, Pretoria, who upheld a special plea of Res Judicata and dismissed the Appellant’s claim. The underlying dispute between the parties relates to whether the plea of res judicata was rightly upheld by the high court. The factual background which gives rise to this matter is as follows: Coote and Engelbrecht, the respondents, were employees and director of Royal Sechaba. In August 2006, Royal Sechaba and a certain Mr Jones, entered into a written employment contract in terms of which Jones was appointed by Royal Sechaba as Director of Business Development. The parties concluded a further agreement which was styled ‘Addendum to Employment Agreement’ (the Addendum) which was effective from March 2007, in terms of which Jones would be paid commission by Royal Sechaba on every contract he procured for the benefit of Royal Sechaba. In addition, Jones would be paid an incentive commission for managing and overseeing the performance of the contract concerned. In concluding this agreement, Royal Sechaba was represented by Coote, and Jones acted personally. In September 2009, Coote and Engebrecht were dismissed by Royal Sechaba, for among other things, authorising payments to Jones to which he was not entitled. During the course of the investigation, Jones as well as Coote and Engelbrecht, disputed that Jones had been overpaid. According to them the phrase ‘net profit’ as used in the Addendum meant ‘net contract contribution’ which differs from net profit in the ordinary accounting sense. They also alleged that all the commission and incentives received by Jones had been due to him. The disputes between Royal Sechaba and Jones eventually culminated in the cancellation of Jones’ employment contract and the Addendum. These disputes were subsequently referred to arbitration. The arbitrator was called upon to determine various disputes between the parties, including the interpretation of the Addendum, whether the Addendum was varied by way of a further oral agreement and whether Jones had been overpaid commission and incentive payments. The arbitrator found against Jones in all material respect. Jones appealed the arbitrators decision with an arbitration appeal tribunal. The tribunal upheld the appeal. Royal Sechaba then sought to reclaim a portion of the monies they had paid to Jones from Cloote and Engelbrectht, who in return plead the special defence of res judicata. This special plea was upheld by the court below who found that the issues sought to be determined n an action against Cloote and Engelbrecht had already been finally decided by the tribunal. (Issue Estoppel/ res judicata) On appeal in this court, Royal Sechaba contended that the plea of issue estoppel had been wrongly upheld by the high court on two main grounds. First, it argued that the ‘same person’ requirement had not been met in that the respondents were not parties in the Jones arbitration. In reply, the respondents alleged that they were privies of Jones. Secondly, it contended that the ‘same cause’ requirement had not been satisfied as the issues which will arise in Royal Sechaba’s claim against the respondents were not the same as those determined in the arbitration. This court restated that the requisites of a valid defence of res judicata in Roman Dutch law were that the matter adjudicated upon must have been for the same cause, between the same parties and that the same thing must have been demanded. And in the circumstances of this matter, the court was inclined to agree with Royal Sechaba, that while the issues to be determined between Royal Sechaba and the respondents were largely the same as the issues determined in the arbitration, there are issues which were not adjudicated upon in the arbitration. For these reasons, the appeal was be upheld.

1900

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 574/10 In the matter between: SHEREEN CASSIM First Appellant NEILOPAHR CASSIM Second Appellant and VOYAGER PROPERTY MANAGEMENT (PTY) LTD First Respondent BELLAIR MANAGEMENT SERVICES t/a BMS ESTATE AGENTS Second Respondent DEON J J STRAUSS N O Third Respondent JUAN LE FEVRE N O Fourth Respondent In Re: SHEREEN CASSIM First Plaintiff NEILOPAHR CASSIM Second Plaintiff and ST MORITZ BODY CORPORATE First Defendant VOYAGER PROPERTY MANAGEMENT (PTY) LTD Second Defendant BELLAIR MANAGEMENT SERVICES t/a BMS ESTATE AGENTS Third Defendant DEON J J STRAUSS N O Fourth Defendant JUAN LE FEVRE N O Fifth Defendant VERONICA SWANEPOEL N O Sixth Defendant Neutral citation: Cassim v Voyager Property Management (Pty) Ltd (574/10) [2011] ZASCA 143 (23 September 2011) Bench: CLOETE, PONNAN, SHONGWE, LEACH and SERITI JJA Heard: 30 AUGUST 2011 Delivered: 23 SEPTEMBER 2011 Summary: Sectional title scheme – locus standi of unit owner to institute proceedings on behalf of body corporate – s 41(1) of the Sectional Titles Act 95 of 1986 – owner obliged to apply for a curator ad litem to investigate grounds and desirability of instituting proceedings. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: KwaZulu-Natal High Court (Durban) (Van der Reyden J sitting as court of first instance): (a) The appeal is dismissed. (b) The first respondent’s application to supplement the record is dismissed with costs. (c) Brink Property Administration is directed to reimburse the appellants for such portion of the costs incurred by the appellants as relate to the procuring of an additional copy of the appeal record. (d) The appellants are ordered to pay the costs of the appeal save for those costs referred to in paragraphs (b) and (c). ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN JA (CLOETE, SHONGWE, LEACH and SERITI JJA concurring): [1] During 1992 the sisters Cassim - Shereen, the first appellant and Neilopahr, the second appellant – together with their now deceased mother, purchased three sectional title units in what they believed was a prestigious block of flats known as St Moritz, which is located at the corner of John Milne and West Streets in Durban. The building which consists of 88 flats and three shops appealed to them because of its three street frontages, proximity to shops, restaurants, the beach and the bus route. [2] By 2001, however, the appellants, who lived in Johannesburg and who had purchased their units as an investment, started to become concerned at what they perceived to be mismanagement of the building. When their endeavours at securing information from the managing agent of the building and its body corporate came to nought they launched a series of applications in the Durban High Court. Of a veritable avalanche of court applications only three, by way of background, are alluded to. The first application sought an order against the St Moritz body corporate that it hold an annual general meeting (the AGM) on 13 November 2004 to be chaired by a person to be agreed by the parties or, failing agreement, to be appointed by the President of the Law Society of KwaZulu-Natal. The second sought an order that the appellants be entitled to be nominated as trustees and to vote at that meeting. What prompted the second application was an alleged dispute between them and the body corporate as to whether they were in default with the payment of their levies in respect of their units. If so, so contended the body corporate, they were precluded in terms of the body corporate rules from participating in the AGM. The third application sought an order that an administrator be appointed to the body corporate in terms of s 46 of the Sectional Titles Act 95 of 1986 (the Act) with such powers as were to include the power to appoint a registered auditor to conduct a forensic audit and to scrutinise the books and financial affairs of the body corporate from June 1999. [3] On 13 November 2004 and pursuant to an order of court the AGM of the body corporate was held. It was chaired by an attorney, Mr Lomas-Walker. That meeting came to be adjourned to 29 January 2005. On the latter date both appellants were elected as trustees of the St Moritz body corporate. The others who also came to be elected members were Mr J J Strauss, Mr J Le Fevre and Ms V Swanepoel. [4] On 26 April 2005 the three applications were consolidated and referred to trial with the notice of motion in each case to stand as the summons. In due course a declaration came to be filed in the consolidated action. The declaration cited the St Moritz Body Corporate (the Body Corporate) as the first defendant, Voyager Property Management (Pty) Ltd (Voyager) as the second defendant, the managing agent of the building, Bellair Management Services (Bellair) as the third defendant and Strauss, Fevre and Swanepoel, the other three trustees aside from the appellants elected at the AGM, as the fourth, fifth and sixth defendants, respectively. [5] Of the seven claims advanced in the declaration, only three, namely claims C, D and E are relevant to this appeal. To the extent here relevant, they read: ' 7. CLAIM C 7.1 Both in terms of the Sectional Titles Act and Management Rule 35(2), the Fourth, Fifth and Sixth Defendants are obliged to make all or any of the books of account and records of the First Defendant available for inspection to owners. 7.2 At the Annual General Meeting of the First Defendant on 29 January 2005, the First and Second Plaintiffs were appointed as trustees. 7.3 Management Rule 35(1) and the Sectional Titles Act obliges the trustees to cause proper books of account and records to be kept so as fairly to explain the transactions and financial position of the First Defendant including:- (a) a record of the assets and liabilities of the First Defendant. (b) a record of all sums of money received and expended by the First Defendant and the matters in respect of which such receipt and expenditure occurred. 7.4 In order to comply with their obligations referred to in paragraph 8.3 above, the Plaintiffs during the period from 2 February 2005 requested the Defendants to furnish them with copies of the documents referred to in . . . in order to comply with their obligations as trustees. 7.5 In spite of such requests, the Defendants have to date failed and/or refused to furnish Plaintiffs with copies of the documents referred to in Schedule "A". 8. CLAIM D . . . 8.5 Without the knowledge of, consultation with and approval of approximately 32 owners and members of the First Defendant including the Plaintiffs and on 2 March 2004, the Fourth and Fifth Defendants entered into a loan agreement with the Second Defendant, in terms of which agreement, the Fourth and Fifth Defendants allegedly borrowed undisclosed sums of monies on behalf of the First Defendant from the Second Defendant. 8.6 As at 2 March 2004, the Fifth Defendant was not a trustee duly appointed at an Annual General Meeting and consequently he had no authority to enter into the loan agreement on behalf of the First Defendant nor could he bind the First Defendant thereto. 8.7 In terms of the Loan Agreement, . . . the Second Defendant continues to advance monies to the First Defendant on a monthly basis to the prejudice of 32 of the members of the First Defendant including the Plaintiffs. 8.8 The Loan Agreement concluded between the First and Second Defendants on 2 March 2004 is invalid and of no force and effect, alternatively void for vagueness, further alternatively, voidable at the instance of the First Defendant and falls to be set aside on the grounds as appear in paragraphs 8.9.1 to 8.14 inclusive hereunder. . . . 9. CLAIM E 9.1 (i) Every owner is a member of the First Defendant by virtue of the provisions of Section 36 of the Act. (ii) By virtue of the provision of Regulation 35(i) of the Act read with the Management Rule 35(i), the trustees shall cause proper books of account and records to be kept so as fairly to explain the transactions and financial position of the Body Corporate including:- (a) A record of the assets and liabilities of the Body Corporate. (b) A record of all sums of money received and expended by the Body Corporate and the matters in respect of which such receipt and expenditure occur. (iii) The Plaintiffs were appointed trustees at the AGM of 29 January 2005 and are both owners and members of the First Defendant. (iv) On 2 March 2004 the Second Defendant concluded the Loan Agreement with the First Defendant. (v) Plaintiffs as trustees and in compliance with their duties of a fiduciary nature, are obliged to take this action on behalf of the First Defendant and pursuant to the provisions of both Sections 35 and 41 respectively of the Act. (vi) By virtue of the unlawful and irregular conduct on the part of the Fourth and fifth Defendants as referred to in paragraph 11 hereunder, the Plaintiffs as trustees are obliged to act in the absence of the full board of trustees. 9.2 As owners and trustees and members of the First Defendant, the Plaintiffs are entitled to statements of accounts with supporting documentation in respect of all the financial transactions for the period of 2 March 2004 to date of trial, in terms of the Loan Agreement concluded between the First Defendant and Second Defendant including . . . WHEREFORE the Plaintiffs pray for orders as follows:- . . . CLAIM C 3. Compelling the Second, Third, Fourth, Fifth and Sixth Defendants to furnish the Plaintiffs with access to copies of the documents listed in Schedule "A" annexed hereto. CLAIM D 4.1 Declaring that the Loan Agreement concluded between the First and Second Defendants on 2 March 2004 is invalid and of no force and effect. 4,2 Cancelling the Loan Agreement concluded between the First and Second Defendants on 2 March 2004. 4.3 The First and Third Defendants be interdicted from paying any monies over to the Second Defendant and the Second Defendant be interdicted from receiving any monies from the First or Third Defendants. 4.4 Interdicting and restraining the Second Defendant from advancing and or lending any further monies to the First Defendant in terms of the Loan Agreement concluded between the parties on 2 March 2004 and interdicting and restraining the First Defendant from receiving any further loan and/or monies from the Second Defendant. CLAIM E 5. Compelling the First and Second Defendant to render a statement of account with supporting documentation to the Plaintiffs in respect of all the financial transactions for the period 2 March 2004 to 28 February 2005 in terms of the Loan Agreement concluded between the parties on 2 March 2004, inclusive of all payments of Value Added Tax by Second Defendant to service providers of First Defendant as contemplated in Clause 18.2 of the Loan Agreement and documentation of the proof of such reclaimed VAT estimated to be R400 000-00. . . . 8. Compelling the First, Second, Third, Fourth, Fifth and Sixth Defendants to render a statement of account to the Plaintiffs in respect of:- 8.1 All levies collected for the period July 1999 to date of trial on behalf of the First Defendant in respect of all 88 units in the St Moritz building. 8.2 All payments supported by documentation made to the Municipality in respect of electricity and water accounts on behalf of the First Defendant for the period July 1999 to date of trial. 8.3 All payments supported by documentation made to the Municipality in respect of rates on behalf of the First Defendant for the period July 1999 to date of trial. 8.4 In respect of the Loan Agreement concluded between the First and Second Defendant on 2 March 2004:- (i) All loan amounts and monthly loans advanced by Second Defendant to First Defendant for the period March 2004 to date of trial. (ii) All interest payments made by First Defendant to Second Defendant for the period March 2004 to date of trial. (iii) All levies paid over by First Defendant to Second Defendant for the period March 2004 to date of trial. (iv) All amounts due by First Defendant to Second Defendant as at 13/11/04, 29/01/05 and 08/03/05 inclusive of all charges. (v) Disbursements and/or raising fees and/or administrative fees and/or collection commission paid by the Second Defendant to Third Defendant for the period March 2004 to date of trial. (vi) All amounts paid by Second Defendant to Fourth and Fifth Defendants in respect of interest referred to in Clause 1.1.5 of the Loan Agreement dated 2 March 2004. (vii) All VAT recovered from service providers acting on behalf of First Defendant such as rates, electricity, classic decorations, plumbing, Titan Lifts etc.' [6] In its plea to the declaration Voyager denied that the appellants had locus standi to institute the proceedings in their capacity as trustees of the body corporate. It asserted, in the alternative, that to the extent they may have had locus standi when they had commenced the proceedings, that changed on the 29 August 2005 when by order of court the entire board of trustees was suspended. [7] The appellants' declaration also elicited a special plea from the third, fourth and fifth defendants in these terms: ‘ . . . 2. The said Defendants plead that the Plaintiffs are non suited in this matter on the grounds that 2.1 The Plaintiffs cite themselves in their personal capacities in their numerous applications and actions. 2.2 Accordingly the Plaintiffs were bound to take action against the said Defendants in terms of Section 41 of the Sectional Titles Act No. 96 of 1986, but failed to do so. 3. The Plaintiffs claim in their Amended Declaration that they acted as trustees but such averment does not assist them, because 3.1 the Plaintiffs acted as trustees for the seven month period 29 January 2005 to 29 August 2005 only and the majority of their legal challenges occurred outside this period of time. 3.2 the Plaintiff failed to plead that in acting as trustees they obtained the authority of the majority of trustees to so act in terms of Section 22 of the Management Rules. 4. The Plaintiffs claim in their amended Declaration that they in their capacity as trustees, were obliged to launch the actions and application they did, on behalf of the Body Corporate, the First Defendant. 5. Since it is evident that the Plaintiffs acted in their personal capacities they were obliged to comply with section 41 of the Sectional Title Act but failed to do so and in addition contrary to the requirements of Section 41 of the Act, they proceeded to sue the Body corporate and claim costs against it, the very body they claim to protect. . . . 8. In the premise the Plaintiffs do not have the locus standi to bring their several legal challenges against the Defendants. 9. WHEREFORE the Third, Fourth and Fifth Defendants pray that the Plaintiffs several actions and application be dismissed with costs.' [7] The consolidated applications proceeded to trial before Van der Reyden J. On 7 August 2007 Voyager successfully applied as a matter of urgency for the issue of the appellants’ locus standi to be adjudicated as a separated issue in terms of Rule 33(4). After certain other legal skirmishes, none of which are relevant for present purposes, the learned judge held on 11 June 2010: '1. The First and Second Plaintiffs lack locus standi in respect of all claims in which they were obliged but failed to follow the procedure provided for in section 41 of the Sectional Titles Act and more specifically lack locus standi in respect of Claims C, D and E. 2. The First and Second Plaintiffs are to pay the Second, Third, Fourth and Fifth Defendants' costs pertaining to the Rule 33(4) application and the hearing of argument on the issue of locus standi.' Voyager opposed the appeal as did Strauss and Le Fevre. Ms Swanepoel took no part in the proceedings either in this court or the one below. A further party, Brink Property Administrators (Brink), who had been appointed as the managing agent of the body corporate on 12 March 2006, also sought to oppose the appeal. I shall revert to Brink and its participation in this appeal later in this judgment. [8] The present appeal with the leave of the learned trial judge seeks to assail the conclusion that the appellants lacked locus standi in respect of claims C, D and E. In my view, for the reasons that follow, it is unassailable. [9] Each of the appellants only served as a trustee of the body corporate for a fairly brief period from 29 January 2005, when they were elected to that office, until 29 August 2005, when by order of the high court all of the trustees (including the appellants) were suspended from continuing in office. That order still remains extant. Once it issued, each could no longer thereafter act qua trustee. The effect was that they could not thereafter prosecute the action that had been instituted to finality in that capacity. To the extent that they persisted in the action each could only have done so in her capacity as an owner of a unit in the sectional title scheme. Indeed that was the thrust of the argument advanced before this court. It is thus necessary to consider whether they could have done so qua owner. [10] Section 41 of the Act, headed: 'Proceedings on behalf of bodies corporate’, provides: '(1) When an owner is of the opinion that he and the body corporate have suffered damages or loss or have been deprived of any benefit in respect of a matter mentioned in section 36(6), and the body corporate has not instituted proceedings for the recovery of such damages, loss or benefit, or where the body corporate does not take steps against an owner who does not comply with the rules, the owner may initiate proceedings on behalf of the body corporate in the manner prescribed in this section. (2)(a) Any such owner shall serve a written notice on the body corporate calling on the body corporate to institute such proceedings within one month from the date of service of the notice, and stating that if the body corporate fails to do so, an application to the Court under para (b) will be made. (b) If the body corporate fails to institute such proceedings within the said period of one month, the owner may make application to the Court for an order appointing a curator ad litem for the body corporate for the purposes of instituting and conducting proceedings on behalf of the body corporate. (3) The Court may on such application, if it is satisfied— (a) that the body corporate has not instituted such proceedings; (b) that there are prima facie grounds for such proceedings; and (c) that an investigation into such grounds and into the desirability of the institution of such proceedings is justified, appoint a provisional curator ad litem and direct him to conduct such investigation and to report to the Court on the return day of the provisional order. (4) The Court may on the return day discharge the provisional order referred to in ss (3), or confirm the appointment of the curator ad litem for the body corporate, and issue such directions as it may deem necessary as to the institution of proceedings in the name of the body corporate and the conduct of such proceedings on behalf of the body corporate by the curator ad litem.' [11] The jurisdictional facts provided for in s 41(1) are that an owner be of the opinion that he, she or it and the body corporate ‘have been deprived of any benefit in respect of a matter mentioned in s 36(6)’. Section 36(6) provides: 'The body corporate shall have perpetual succession and shall be capable of suing and of being sued in its corporate name in respect of - (a) any contract made by it; (b) any damage to the common property; (c) any matter in connection with the land or building for which the body corporate is liable or for which the owners are jointly liable; (d) any matter arising out of the exercise of any of its powers or the performance or non-performance of any of its duties under this Act or any rule; . . . ' [12] In Wimbledon Lodge (Pty) Ltd v Gore NO & others 2003 (5) SA 315 (SCA) Schutz JA stated (para 13): ‘The jurisdictional facts that an owner must establish in order to entitle him to apply for the appointment of a curator are set out in s 41(1). They are: 1. The owner must hold an opinion. 2. The opinion must be either (a) that he and the body corporate have suffered damages (again sic) or loss or (b) that he and the body corporate have been deprived of a benefit in respect of a matter mentioned in s 36(6). 3. The body corporate has not instituted proceedings for recovery.’ The first two requirements proved uncontentious. In argument before us it was accepted that the appellants held the opinion that they and the body corporate had suffered damage or loss in consequence of the matters complained of by them. That leaves the third requirement. That it should be a requirement is a necessary counterpart to the sections of the Act divesting individual owners of control and vesting it in the body corporate (Wimbledon Lodge para 14). The enquiry envisaged is a purely factual one. On the facts here present the body corporate has not instituted the proceedings. That one would have thought would be the end of the enquiry. But, says the appellants, that requirement could not be met: first, because the appellants and the other trustees fell into two divergent camps who were at loggerheads with each other, accordingly, so the argument went, it could hardly be expected of the appellants in those circumstances to call upon the body corporate to institute the proceedings; and, second, the body corporate is for all practical purposes an empty shell. [13] As to the first: it appears to me that the section finds application precisely when there is disharmony and disunity in the body corporate. The more dysfunctional the body corporate, the greater, I dare say, the need for a curator. On the view that I take of the matter, the argument advanced by and on behalf of the appellants misconstrues the section. The section does not require an owner to cause the body corporate to act in a particular way if the latter is unwilling to do so. All that is envisaged is for an owner to effect service of a notice on the body corporate calling upon it within the stated period to institute the contemplated proceedings. Should it fail to do so the envisaged remedy available to the owner is not to compel compliance with the notice but rather to approach the court for the appointment of a curator ad litem for the purposes of instituting and conducting the proceedings on behalf of the body corporate. [14] As to the second: in terms of s 36(6) of the Act the body corporate has perpetual succession. And whatever its current limitations, at the time that the proceedings commenced it was fully functional and there was therefore no impediment to service of the notice being effected upon it. It follows that there was no permanently existing impossibility then in relation to calling upon it to carry out such obligations and duties as were imposed upon it by the Act. That may have changed with the grant of the order suspending all of the trustees from office. Since then the body corporate has been dormant and therefore unable to act. In those circumstances there is much to be said for the suggestion that there would be little point in calling upon the body corporate to institute the proceedings. Were that to be the case the maxim lex non cogit ad impossibilia (the law does not compel the performance of impossibilities) could be invoked (Montsisi v Minister van Polisie 1984 (1) SA 619 (A) at 634E – 635A). There is authority for the proposition that the maxim is applicable even in relation to the performance of statutory requirements (Ex Parte Mackenzie NO 1960 (1) SA 793 (W) at 796E-F). It follows that in those circumstances applicants in the position of the appellants can be authorised by a court to dispense with the notice requirement. [15] The last string to counsel’s bow on this aspect of the case was the following statement from Wimbledon Lodge (para 14): ‘If the body corporate is seen not to do its duty, then an individual's powers may, to an extent, be restored’. Plainly what Schutz JA intended to convey was this: an individual’s powers may to the extent provided for in s 41 be restored. Indeed, as Schutz JA pointed out (para 18), that accords with the general principle at common law that where a wrong is done to it, only the company (in this case the body corporate) and not the individual members may take proceedings against the wrongdoers (Foss v Harbottle (1843) 2 Hare 461 (67 ER 189)). Schutz JA’s statement thus affords no authority for the proposition that owners who find themselves in the position of the present appellants are exempt from the provisions of s 41. The conclusion that I therefore reach is that s 41 finds application to the appellants. [16] Were that conclusion to be reached, submitted the appellants, their right of access to court guaranteed by the s 38 of the Constitution would be infringed. Our Constitution enjoins us to adopt a broad approach to standing. That serves to ensure that constitutional rights enjoy the full measure of protection to which they are entitled (Ferreira v Levin NO & others 1996 (1) SA 984 (CC) para 165). I, however, do not see s 41 as imperilling or negating the right. On the contrary, s 41 provides a comprehensive statutory right to an owner of a sectional title unit aggrieved at the failure of the body corporate to act in respect of a matter mentioned in s 36(6). The relief available to an owner in the position of the appellants is to approach the court for the appointment of a curator ad litem to the body corporate, so that he or she may investigate the events complained of and, if so advised, take action aimed at somehow remedying the position. [17] The substance of the matter according to Schutz JA (Wimbledon Lodge para 21) is that 'the body corporate is little more than the aggregation of all the individual owners. Their good is its good. Their ill is its ill. The body corporate is not an island, whatever the law of persons may say.' Section 41 is an important component of that structural scheme. On the one hand it filters out unmeritorious claims by over zealous individuals. On the other it ensures that individuals complaining should have the advantage of the information and the funds of their corporation in pursuing legitimate claims. As to whether a curator ought to be appointed, Schutz JA expressed himself thus: ‘the court has a discretion under s 41(3), having regard to whether it is satisfied that the body corporate has not sued . . ., that there are prima facie grounds for such proceedings . . . and that an investigation into the desirability of instituting proceedings is justified’ (Wimbledon Lodge para 26). [18] No doubt a curator ad litem would obtain proper advice and properly investigate the facts before taking any further legal steps. Even then he or she would have to first report to the court, which may issue such directions as to it seems meet (s 41(4); see Meridian Bay Restaurant (Pty) Ltd & others v Mitchell NO 2011 (4) SA 1 (SCA)). The facts of this case illustrate why a filter mechanism is indeed necessary. At an annual general meeting of the body corporate held on 13 November 2004 the appellants proposed to the meeting that it adopt a resolution that the Voyager contract be terminated. The motion was put to the floor. It failed - the vote being three (including the two appellants) ayes and fifteen nays with five abstentions. Despite failing by a substantial margin to carry the day at the meeting the appellants thereafter approached the high court seeking amongst others precisely the selfsame relief. Fairly serious allegations were levelled by them against the previous trustees of the body corporate. It was suggested that the Voyager agreement was a collusive transaction that fell to be set aside. At that stage those allegations, notwithstanding the vehemence with which they were asserted by the appellants, remained precisely that – untested allegations. One imagines that is precisely where a curator ad litem would prove invaluable. To the curator would fall the task of separating the wheat from the chaff. [19] The real difficulty for the appellants in this case, however, is that they did not impugn the constitutionality of s 41 or any other provision of the Act. Accordingly, to borrow from Mokgoro J in Du Toit v Minister of Transport 2006 (1) SA 297 (CC) para 29: ‘in these circumstances, and in the circumstances of this case, the Act cannot be bypassed’. Section 41 read with s 36(6) plainly encompassed within its scope the three claims in respect of which the appellants came to be non-suited by Van den Reyden J. It follows that the conclusion of the learned judge cannot be faulted and in the result the appeal must fail. [20] There remains the question of costs. The appellants submit that the lack of locus standi defence should have been raised by the respondents by way of exception. Accordingly, so the submission went, the respondents should only be entitled to costs as on exception. In Algoa Milling Company v Arkell and Douglas 1918 AD 145, Innes CJ stated: 'The declaration as drafted disclosed no cause of action, and should therefore have been excepted to. Had that been done, there would have been a speedy end of the litigation and the heavy costs subsequently incurred would have been unnecessary. The defendants, therefore, will be entitled to such costs in the court below as would have been incurred had they excepted to the declaration.' But as Greenberg JA made plain in Cohen v Hayward 1948 (3) SA 365 (A) at 374: 'I do not think, however, that it was the intention of the Court in the cases quoted to lay down an inflexible rule which deprive the Court of its discretion in regard to costs and disentitle it, in a proper case, from departing from the rule.' [21] However, as the following excerpts from the record reveal, responsibility for the failure to expeditiously dispose of the matter on the preliminary point of locus standi, must regrettably be laid squarely at the door of the learned trial judge. 'My personal view is this application for the removal of [the appellants] on the basis of lack of locus standi is that it's absolutely a waste of time. If at the end of the day there is sufficient indication that they never had locus standi then obviously the Court can make an appropriate costs order. . . . [A]nd I made it quite clear to all the litigants that I am going to see this case through right till the end, and I made it quite clear that my aim in this case is to see what can be done to put St Moritz on an even keel again. If after the conclusion of this case St Moritz still goes under, well, that's beyond my control. I've also made it quite clear that the only people who were prepared to take up the cause of St Moritz were [the appellants], the two Cassim sisters. . . . [T]his is a sincere call on the parties to reconsider this application based on lack of locus standi. I don't see any point in finding in the second defendant's favour because it's just going to delay the outcome of this case. . . . The issue is really ― it has been put on the back-burner and it will be decided at the conclusion of this trial. I am not in position to grant an order against any of the parties at this stage. I will be in the best position to decide what costs order I should make at the conclusion of the trial. I am not even going to call on the other side. I am going to reserve costs. . . . I am the person responsible for delaying this decision on the issue of locus standi. It's not a decision of any of the parties. I had a look at the papers again. I reconsidered the situation and I made the declaration in court and I had reaction to that. So on what basis can I at this stage penalise any of the parties with a costs order if the initiative came from me?' There is thus no warrant for limiting the respondents’ costs to only those as on exception. In any event the appellants opposed the rule 33(4) application for the issue of their locus standi to be decided preliminarily and separately from any other issue. They must accordingly bear the consequences. [22] The issue on appeal is a narrow one. The learned judge in the court below cautioned: ‘the record that goes up to the Court of Appeal . . . must be absolutely material, crisp and to the point’. That notwithstanding, the record that served before this court consisted of 20 volumes running to 1727 pages. It was replete with all manner of irrelevant material. Before us Voyager objected to the record. It sought, moreover, to supplement the record. Its application together with the proposed supplementary pages ran to 128 pages. In short the additional material sought to be placed before us was irrelevant to the adjudication of the issue that served before us on appeal. Properly analysed Voyager’s complaint amounted to this: the appellants have included irrelevant material in the record and we (Voyager) will be prejudiced unless we are given an opportunity to likewise file irrelevant material. That proposition merely has to be stated to be rejected. It follows that Voyager’s application must fail and notwithstanding the outcome of the appeal it is appropriate that Voyager bear the costs of that application. [23] I come now to Brink. On 29 August 2005 and pursuant to an application to court by the first appellant, it was appointed as the interim administrator of the body corporate. On 12 May 2006 on the application of both appellants Brink was released from its duties as interim administrator and appointed the managing agent of the body corporate. During July 2007 both appellants launched contempt of court proceedings against Brink. That application was postponed from time to time and eventually postponed sine die on 23 May 2008. Brink was not a Defendant in the main trial before Van der Reyden J, nor was it a respondent in the locus standi proceedings. No relief had been sought against it as the managing agent in the high court and that which had been sought against its predecessor had fallen away. That notwithstanding, its attorney, who also represented Strauss and Le Fevre, insisted that Brink was a party to the appeal and demanded on Brink’s behalf an additional copy of the appeal record. Brink plainly had no interest in the appeal. Brink was represented in this court by the same counsel who represented Strauss and Le Fevre. Thus the fact that Brink chose to oppose the appeal when it was not entitled to do so has in truth occasioned no real extra costs to the appellants, save for the additional record that had to be procured by them. It follows that Brink should be directed to reimburse the appellants by paying to them the costs of that additional record. [24] In the result: (a) The appeal is dismissed. (b) The first respondent’s application to supplement the record is dismissed with costs. (c) Brink Property Administration is directed to reimburse the appellants for such portion of the costs incurred by the appellants as relate to the procuring of an additional copy of the appeal record. (d) The appellants are ordered to pay the costs of the appeal save for those costs referred to in paragraphs (b) and (c). _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES: For 1st Appellant A J H Bosman SC Instructed by: Fathima Karodia Attorneys Durban Naudes Bloemfontein For 2nd Appellant N Cassim (in person) c/o Fathima Karodia Attorneys Durban Naudes Bloemfontein For 1st Respondent: D G Tobias Instructed by: Du Toit Havemann & Lloyd Durban Bezuidenhouts Inc Bloemfontein For 2nd Respondent: No appearance For 3rd and 4th Respondents and E Levin Brink Property Administration Instructed by: Chelin & Associates Glenwood Bezuidenhouts Inc Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 23 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. Cassim v Voyager Property Management (Pty) Ltd (574/10) [2011] ZASCA 143 (23 September 2011) Media Statement Today the Supreme Court of Appeal (SCA) dismissed an appeal by the appellants, the sisters Cassim – Shereen and Neilophar, against an order of the KwaZulu-Natal High Court (Durban) that they lacked locus standi to prosecute certain claims on behalf of the St Moritz Body Corporate. The facts of the case are briefly as follows. In 1992, the appellants, together with their mother, purchased three sectional title units in what they thought was a prestigious block of flats known as St Moritz, which is located at the corner of John Milne and West Streets in Durban. By 2001, however, the appellants had become concerned at what they perceived to be mismanagement of the building. They instituted a series of high court applications. Those applications were consolidated and referred to trial. In their declaration the appellants advanced seven claims. Only three were relevant to the appeal. The first sought information pertaining to the affairs of the body corporate. The second sought to set aside a loan agreement that had been concluded by the body corporate with one of the other respondents and the third sought a statement of account in respect of financial transactions of the body corporate for a specified period. The respondents denied that the appellants had the necessary locus standi to institute those proceedings. The trial judge upheld the respondents’ plea which was decided preliminarily as a separated issue in terms of high court rule 33(4). It is against that conclusion that the appellants appeal. Section 41 of the Sectional Titles Act states that when an owner is of the opinion that he, she or it and the body corporate have been deprived of any benefit in respect of certain matters mentioned in s 36(6) of the Act and the body corporate has not instituted proceedings for the recovery of such damages, loss or benefit, the owner may institute proceedings on behalf of the body corporate in the manner provided in the section, namely the owner must first serve a notice on the body corporate calling upon it to institute the proceedings in question, and if it fails to do so, the owner may make an application to court for the appointment of a curator ad litem for the body corporate for the purposes of instituting and conducting the proceedings on behalf of the body corporate. The SCA held that as the appellants’ three claims were encompassed by s 36(6), they were obliged to follow the procedure set out in s 41. Not having done so, they lacked locus standi to institute the proceedings. The SCA accordingly dismissed the appeal. --- ends ---

1867

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 454/10 In the matter between: JOHANNES HENDRICUS TRUYENS Appellant v THE STATE Respondent Neutral citation: Truyens v The State (454/2010) [2011] ZASCA 110 (1 June 2011). Coram: Cloete and Cachalia JJA and Meer AJA Heard: 26 May 2011 Delivered: 1 June 2011 Summary: Foreman on a farm convicted of theft of 48 cattle in terms of s 11 of the Stock Theft Act, 57 of 1959. The motive for the theft was to sell the cattle for money to pay for medical expenses related to the terminal illness of the appellant’s children. A magistrate imposed a sentence of four years’ imprisonment under s 276(1)(i) of the Criminal Procedure Act 51 of 1977, which was increased on appeal to an effective sentence of eight years’ imprisonment by a provisional division. The Supreme Court of Appeal set aside the sentence imposed by the high court and reinstated the sentence originally imposed by the magistrate. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: North West High Court, Mafikeng (Hendricks and Gura JJ sitting as court of appeal): The following order is made: (1) The appeal is upheld; (2) the order of the court below is set aside; (3) the sentence imposed by the regional magistrate is reinstated. ________________________________________________________________ JUDGMENT ________________________________________________________________ CACHALIA JA (Cloete JA and Meer AJA concurring): [1] The appellant, Mr Johannes Hendrikus Truyens, was convicted for the theft of 48 head of cattle in contravention of section 11 of Act 57 of 1959 by a Regional Court, sitting at Koster in the North West Province. He initially tendered a plea of not guilty, but changed his plea to guilty after three state witnesses had testified. After considering the testimony and a pre-sentencing report prepared by a forensic criminologist, Dr Irma Labuschagne, the trial court (Mr C P Nel), sentenced the appellant to four years’ imprisonment in terms of s 276(1)(i) of the Criminal Procedure Act 51 of 1977 (the Act). This meant that he would have to serve a minimum period of eight months’ imprisonment before being considered for placement under correctional supervision.1 He appealed to the North West High Court, Mafikeng. [2] The judges to whom the matter had been allocated (Hendricks and Gura JJ) notified counsel for both the state and the appellant that they were considering increasing the sentence. After hearing argument, they increased his sentence to 12 years’ imprisonment and suspended four years. The appellant was therefore sentenced effectively to eight years’ imprisonment.2 The high court refused him bail and leave to appeal further, but this court granted the necessary leave. The appellant has been in custody for just over two years since he began serving his sentence on 30 April 2009. [3] There were three grounds upon which the appellant sought leave to appeal against the sentence. First, that the high court committed an irregularity by failing to ask the magistrate for additional reasons for the sentence that he imposed, before it decided to increase the sentence. Second, that it was irregular for the court not to have informed the appellant personally in writing that the court was considering increasing the sentence. In this regard the appellant sought to lead further evidence before this court to show that had he been so informed, he would have sought advice with a view to bringing a formal application to withdraw his appeal. Third, that the effective sentence imposed on the appellant was excessively harsh. [4] Ms Zwiegelaar, who appeared for the appellant, did not press either of the first two grounds with any confidence. Regarding the first ground, it has long been the law that though it is desirable for an appeal court, before increasing a sentence, to request reasons from the magistrate for having imposed the sentence, this is not a hard and fast rule and a failure to do so does not in any 1 Section 73(7)(a) of the Correctional Services Act 111 of 1998. 2 Unreported case no. CA 95/07. case amount to a misdirection.3 In this case the learned magistrate had given a detailed and carefully reasoned judgment on sentence. So it would not have served any purpose for the high court to have asked for further reasons to be furnished. In any event, the learned magistrate at the request of this court did respond by stating briefly that in retrospect he would have imposed the same sentence, but without reference to s 276(1)(i) of the Act. [5] The second ground, that the appellant should have been informed personally that the high court was considering increasing the sentence, also has no merit. The appellant’s counsel and attorney of record were informed, albeit not in writing, of the high court’s view. They were given sufficient time to, and did, prepare submissions on this question. Once the appellant appointed legal representatives to conduct his defence and his appeal, it would have been irregular for the court or state counsel to communicate directly with him without reference to his lawyers. If the appellant has any complaint, it is with his lawyers – not the court – who he says did not properly advise him that the sentence could be increased. [6] I turn to consider the merits of the appeal. The facts are these. The appellant was employed as the foreman on a cattle farm and thus occupied a position of trust. He stole his employer’s cattle – 48 in total – valued at the time at between R105 000 and R120 000. The theft occurred on three occasions between April and May 2005. He thereafter sold the cattle for a total amount of R83 000. [7] The appellant’s personal circumstances were set out comprehensively in the pre-sentencing report. In summary, the appellant’s age was 46 when he committed the offences and 48 when he was sentenced. He is now 51. He is married with four children born of the marriage, respectively in 1986 and 1989 (both sons) and twin girls in 1990. At the time of his trial he was employed as a 3 R v Swanepoel 1945 (AD) 444 at 451. contractor in Iraq at a salary, in rand terms, of R43 000 per month. His wife earned R12 000 per month as a credit manager at a commercial bank. [8] The older son and the twin girls suffer from a rare condition called cystic fibrosis, which is a genetic disease that attacks the lungs. The family has been advised that the life expectancy of the ‘children’ affected is only between 25 and 30 years, although some patients have been known to live longer with proper medical care. The older son was, at the time of the trial, on a waiting list for a heart and lung transplant. When the matter was argued before us we were informed that he was 25 years old and had been admitted to hospital to undergo the operation. [9] The children are unable to live normal lives and are largely dependent upon their parents. The family is thus under great stress, which is exacerbated by the considerable medical costs that treatment of this condition demands. The family has medical aid, but it does not cover all their costs. The family is therefore also under severe financial pressure. [10] The learned magistrate found that the motive for the theft was to meet these medical costs and to ameliorate the difficult circumstances of the children. The money was not spent on luxuries. In this regard he accepted the criminologist’s assessment that this crime was one of need and not of greed. [11] It must be emphasized that the motive for the crime – what the accused believed and intended – is the central enquiry when deciding, for the purposes of sentence, whether the moral blameworthiness of an accused has been reduced.4 The learned magistrate found, correctly in my view, that the circumstances here provided a compelling case for such a reduction. 4 S v Ferreira 2004 (1) SACR 454 (SCA) para 44. [12] I should mention that the trial court was aware, and took account of dicta in this court to the effect that personal economic necessity, including having to meet the costs of high medical expenses, cannot condone theft or fraud of some magnitude when committed by design over a period.5 It is however, a mitigating factor in reducing the extent of censure that may be appropriate for the commission of a crime.6 [13] Also counting in the appellant’s favour, the trial court considered, was that the appellant was contrite. In this regard the learned magistrate said that even though the appellant initially pleaded not guilty and conducted his own defence, when he was able to obtain legal assistance after three witnesses had testified for the state, he changed his plea to guilty. More importantly, he did not put up a false version in an attempt to evade responsibility, which indicates contrition. On the contrary, in a letter to his employer before first appearing in court, he confessed fully to the charges and expressed the hope that he now had a chance to change his life. He also promised to compensate his employer for his loss. Between December 2005 and January 2006 he paid R20 000 in two instalments of R10 000 each. The first was paid before his arrest on 22 December 2006. Dr Labuschagne observed that this conduct is consistent with remorse because it demonstrated the appellant’s insight into the damage he had caused. [14] The trial court correctly considered that the appellant was employed in a position of trust, which he abused by committing the crime, as an aggravating factor. Furthermore, it observed, the crime was planned and took place on three occasions over two months. He could have stopped after the first, or even the second time, but he persisted. In effect, said the trial court, he committed three separate crimes but was charged with only one. 5 S v Lister 1993 (2) SACR 228 (A) at 233e-f. 6 Cf S v Kearns 1999 (2) SACR 660 (SCA) at 663g-h. [15] The appellant had three previous convictions for theft, housebreaking and fraud. These had occurred almost 30 years ago. The trial court took them into account, but properly accorded little weight to them. [16] The pre-sentencing report ruled out direct imprisonment for the appellant because of the strong mitigating factors in this case. However, the difficulty with a sentence of correctional supervision, Dr Labuschagne said, was that it could not be properly monitored because the appellant worked overseas. She thus recommended a fine together with a suspended sentence. This sanction would allow him to work so that he can provide for his family and would also have a deterrent effect. [17] From his judgment it is apparent that the learned magistrate grappled with the difficult question of what an appropriate sentence would be in the unusual circumstances of this case. The appellant’s financial circumstances, the magistrate said, was not a matter about which the court could do anything. And even though the magistrate expressed sympathy for the appellant’s personal circumstances, especially the severe health needs of his children, he came to the view that a wholly suspended sentence did not commend itself. In this regard the abuse of the employer’s trust weighed heavily with him. He thus decided that a sentence of four years’ direct imprisonment would be appropriate, but considered that he should impose it in terms of s 276(1)(i) of the Act.7 [18] In deciding to employ this provision the learned magistrate relied on two recent decisions of this court. The first was S v Scheepers,8 which held that: ‘When the sentencer considers that a custodial sentence is essential, but the nature of the offence suggests that an extended period of incarceration is inappropriate’ the s 276(1)(i) option ‘should always be in the foreground.’ The second was S v Oosthuizen,9 which reiterated this approach. 7 Cf S v Wimpie Barnard 2004 (1) SACR 191 (SCA) where this court imposed a sentence of five years’ imprisonment under s 276(1)(i) for the appellant’s theft of R30 069 from his employer over a period of 15 months. The appellant had abused his position of trust. 8 S v Scheepers 2006 (1) SACR 72 (SCA) para 10. [19] Against this background the question that arises is whether the court below was correct to have interfered with the sentencing magistrate’s exercise of his discretion. In S v Wimpie Barnard10 this court cautioned that: ‘A Court sitting on appeal on sentence should always guard against eroding the trial court’s discretion in this regard, and should interfere only where the discretion was not exercised judicially or properly. A misdirection that would justify interference by an appeal Court should not be trivial but should be of such a nature, degree or seriousness that it shows that the court did not exercise its discretion at all or exercised it improperly or unreasonably.’11 [20] Where there is no clear misdirection by the trial court to justify interference by an appeal court, the remaining question, as this court said in S v Whitehead,12 is: ‘. . . (W)hether there exists such a striking disparity between the sentences passed by the learned trial Judge and the sentences which this Court would have passed – or, to pose the enquiry in the phraseology employed in other cases, whether the sentences appealed against appear to this Court to be so startlingly or disturbingly inappropriate – as to warrant interference with the exercise of the learned Judge’s discretion regarding sentence.’(Internal references omitted.)13 [21] The court below felt itself at liberty to interfere on two grounds. First, the appellant’s previous convictions, ‘though it happened long before, indicates that he has a propensity to steal’. Second, it compared the sentence the court imposed in S v Hendrik Tiro Lephoro14 – also involving stock theft – with this case and concluded that the sentence of four years under s 276(1)(i) was ‘shockingly light and totally disproportionate to the gravity of the seriousness of the offence . . .’.15 In Lephoro several accused were sentenced to 10 years’ 9 S v Oosthuizen 2007 (1) SACR 321 (SCA) para 11. 10 469/2002. 11 2004 (1) SACR 191 (SCA) para 9. 12 1970 (4) SA 424 (A). 13 Ibid at 436C-E. 14 Unreported case no CA 28/2006 (Bophuthatswana Provincial Division). 15 See n1 above para 22. imprisonment, three of which were suspended, making the effective term of imprisonment seven years. [22] With regard to the first ground, the previous convictions, it is difficult to understand how the high court came to this conclusion in the face of the careful reasoning by the learned magistrate. Some of those offences were committed during the appellant’s adolescence, and others when he was 21 years old. The appellant committed the present offence as a middle aged adult, under unique circumstances. This is hardly evidence of a predatory predilection. [23] Concerning the second ground – the reliance on the Lephoro case – there were fundamentally different circumstances present there. Several accused, working in concert, stole eight head of cattle valued at R21 000. They committed the crime in the Taung area where the population relies on their livestock as their main source of income. Most importantly, that case involved a crime of greed, not one of need, as was the case here. And there was no suggestion that the accused had shown any sign of remorse. Again, this is an important difference. [24] There is another reason why the reliance on a case or cases involving stock theft is not appropriate here. Stock theft is a sensitive issue in many farming communities. This is because it is difficult for farmers to prevent the crime and equally difficult for perpetrators to be apprehended and prosecuted. Cattle farmers are therefore particularly vulnerable to this type of crime. The courts have reflected these concerns by progressively imposing tougher sentences – usually direct imprisonment – on offenders. [25] But I do not think that the circumstances of this case warrant comparison with typical stock theft cases. The appellant is not a cattle rustler. He stole his employer’s cattle so that he could raise money to meet the desperate medical needs of his children. Furthermore, his employer is not reliant on his cattle as his main source of income and that is why he did not seek a compensatory order. In this regard, his employer testified that the main reason that he pressed charges in this case was because he wanted to see justice done. [26] So, it is not surprising that Mr Jacobs, who appeared for the state, had difficulty defending the reasoning of the court below. This brings me to whether there was any proper basis to interfere with the sentence imposed by the trial court. In my view once the learned magistrate came to the view that custodial sentence was the only appropriate sentence, but that a sentence in excess of five years was not called for, he was not only entitled to apply the s 276(1)(i) sentencing option but, on clear authority from this court, obliged to consider whether its application was suitable. Whether direct imprisonment – not in terms of s 276(1)(i) – was too lenient a sentence in these circumstances is a matter on which there may well be divergent views. But it would not be justified for an appeal court to interfere with the sentence imposed by the trial magistrate after his sensitive and careful reasoning. In my view, the sentence of four years’ imprisonment in terms of s 276(1)(i) was in any event ‘not shockingly inappropriate’. The fact that the learned magistrate in retrospect is of the view that a sentence of four years’ direct imprisonment may have been more appropriate does not detract from my conclusion, or his, that the original sentence was not unduly light. [27] I should add that there is a misconception that a sentence under s 276(1)(i) of the Act is a softer option than an ordinary sentence of direct imprisonment. It is not. It merely grants the Commissioner the latitude to consider an early release under correctional supervision – after a sixth of the sentence is served – and only if the personal circumstances of the offender warrant it. The Commissioner in any event has the authority under s 276A(3)(a) of the Act to apply to the sentencing court to reconsider a sentence not exceeding five years’ imprisonment, or exceeding five years’ imprisonment where the date of release is no more than five years hence. [28] For these reasons I would set aside the sentence imposed by the court below and reinstate the sentence of the trial court. The following order is made: (1) The appeal is upheld; (2) the order of the court below is set aside; (3) the sentence imposed by the regional magistrate is reinstated. _________________ A CACHALIA JUDGE OF APPEAL APPEARANCES APPELLANTS: C J Zwiegelaar Instructed by Grobler Levine Soonius, Mafikeng Naudes Inc, Bloemfontein RESPONDENT: D G Jacobs Instructed by Director of Public Prosecutions, Mafikeng Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 June 2011 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Truyens v The State (454/2010) [2011] ZASCA 110 (1 June 2011). The Supreme Court of Appeal (SCA) upheld an appeal by Mr Johannes Hendrikus Truyens against an effective sentence of eight years’ imprisonment which the North West High Court, Mafikeng imposed upon him two years ago. Truyens was convicted in the regional court of the theft of 48 head of cattle in contravention of section 11 of the Stock Theft Act 57 of 1959. The magistrate initially imposed a sentence of four years’ imprisonment under s 276(1)(i) of the Criminal Procedure Act 51 of 1977. This meant that the appellant would have to serve a minimum period of eight months’ imprisonment before being considered for placement under correctional supervision. On appeal the high court increased his sentence. The appellant was employed as the foreman on a cattle farm and thus occupied a position of trust. The appellant is the father of four (4) children, three (3) of whom suffer from a rare condition called cystic fibrosis, which is a genetic disease that attacks the lungs. This has led to considerable medical costs which has placed the family under severe financial pressure. The court accepted that the appellant’s motive for the crime was to raise money for his childrens’ desperate medical needs. In this regard the learned magistrate accepted the criminologist’s assessment that this crime was one of need and not of greed. The SCA found that the magistrate grappled with the difficult question of what an appropriate sentence would be in the unusual circumstances of this case. The appellant’s financial circumstances, the magistrate said, was not a matter that the court could do any about. And even though the magistrate expressed sympathy for the appellant’s personal circumstances, especially the health needs of his children, he came to the view that a wholly suspended sentence did not commend itself. In this regard the abuse of the employer’s trust weighed heavily with him. He thus decided that a sentence of four years’ direct imprisonment would be appropriate but considered that he should impose it in terms of s 276(1)(i) of the Act, so that Mr Truyens could be considered for release on correctional supervision after serving eight months. The question before the SCA was whether the high court was correct in interfering with the sentencing magistrate’s exercise of his discretion. The court held that an appeal court should only interfere with this discretion where there was a clear misdirection by the trial court or where the sentences appealed against appear to the trial court to be so startlingly or disturbingly inappropriate as to justify interference. The SCA held that once the learned magistrate came to the view that custodial sentence was the only appropriate sentence, but that a sentence in excess of five years was not called for, he was not only entitled to apply the s 276(1)(i) sentencing option but, on clear authority from the SCA, obliged to consider whether its application was suitable. In the circumstances of this case the SCA thus found no reason to interfere with the learned magistrate’s sensitive and careful reasoning and ordered the high court’s sentence to be set aside and the sentence imposed by the regional magistrate to be reinstated. The effect of the judgment therefore is that Mr. Truyens may be considered for immediate release under correctional supervision.

3218

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 293/06 NOT REPORTABLE In the matter between: G A STRYDOM FIRST APPELLANT W D LA GRANGE SECOND APPELLANT v B J LIEBENBERG RESPONDENT Coram: Scott, Cachalia JJA et Kgomo AJA Heard: 13 September 2007 Delivered: 25 September 2007 Summary: Vindicatory action for return of game over which plaintiff claimed ownership. Plaintiff’s properties but not the game thereon sold to private persons. Held plaintiff entitled to claim the game, but not its value as it was not possible to apportion the value of the game between the purchasers of the properties. Neutral citation: This judgment may be referred to as Strydom v Liebenberg [2007] SCA 117 (RSA) CACHALIA JA [1] The respondent instituted a vindicatory action in the Pretoria High Court against the first and second appellants for the return of a quantity of different species of game alleged to be on their properties or payment of the value of the game from the appellants jointly and severally. The High Court (De Vos J) ordered the appellants to return to the respondent all game on their properties and did not deem it necessary to deal with the respondent’s claim for payment of their value. The appeal and cross- appeal, with the High Court’s leave, is against this order. It will be convenient to refer to the parties as they were during the trial, as plaintiff and defendants. [2] The relevant facts for the determination of this appeal are briefly the following. The plaintiff was the original owner of portions 11 and 14 of the farm Blaauwbank. He was also the sole shareholder and director of the company, Klein Bokkeplek Boerdery (Pty) Ltd, which owned portions 7 and 2 of the farm. The four portions are adjacent to each other. The plaintiff erected ‘game proof’ fencing around its perimeter thus creating since 1997 a 140 hectare rectangular unit. A cattle fence (non- game proof) divided the plaintiff’s portions from those of the company. [3] The plaintiff purchased a variety of species of game for the farm. This included ‘rooibokke, waterbokke, blesbokke and rooihartebeeste’. He thus owned the game, valued in his February 2000 financial statement at R250 000. He conducted a game-hunting business through the company but retained ownership of the animals. He also hunted on the farm with his family and occasionally with his friends. The game roamed freely over the four portions and through a cattle gate on the cattle fence. [4] In 2001 the plaintiff placed the company in liquidation following its financial difficulties. The liquidator sold portions 2 and 7 to the first and second defendants respectively in November. It is clear from the plaintiff’s evidence, and that of the auctioneer who conducted the sale, that the game was not included in the sale. And before us counsel for the defendants eschewed any suggestion that they had purchased any game as part of the agreement. Shortly after the defendants had taken occupation of the two portions the first defendant erected a fence between portions 2 and 7, effectively preventing the plaintiff any access to the game on portion 2. The second defendant also denied the plaintiff access to portion 7 thereby cutting him off from access to his game there as well. [5] It was contended on behalf of the defendants that on the company’s liquidation, and the liquidator’s assumption of control over portions 2 and 7, the plaintiff lost ownership of the game because he no longer exercised control over the game there. The game thus, so they contended, became res nullius (ownerless). This contention is without merit. The game remained confined within the four portions that had been fenced and did not revert to their natural state. The liquidator made no claim to the game. And the fact that the plaintiff pledged the game as security for a loan of R500 000 from Absa Bank is the clearest indication that he did not relinquish ownership of the game. [6] I return to the facts. During August 2003 the plaintiff sold his two portions (11 and 14) to Willem and Rudolf Brits. The agreement stated that they would assume ownership on the 15th; that the game currently on those portions would form part of the sale and that the plaintiff would erect, at his own expense, a game fence which would separate portion 11 from the second defendant’s property, portion 7. The plaintiff, however, erected the fence only afterwards. [7] The significance of the date of delivery is this: If it occurred on the 15th as the defendants contend it did, then the game on portions 14, 11 and 7 would have intermingled and none could be identified as the plaintiff’s. This is because the game roamed freely on these portions and through the cattle gate between portions 11 and 7 and it would thus not be possible to distinguish the game that remained on portion 7 from that on portions 14 and 11. If, however, delivery occurred at a later date, that is when the plaintiff erected the fence, he could distinguish the game of which the Brits’s became owners from that which remained on portion 7 over which, he asserts, he never relinquished control. The plaintiff testified that he and the Brits’s had agreed that delivery would take place when the fence was erected and it was accepted by them that the game they acquired pursuant to the sale was the game on portions 11 and 14 following the erection of the fence. [8] In my view there is no basis for going behind the plaintiff’s evidence on this aspect because the erection of the fence was the only practical way of effecting delivery of the game to the Brits’s. The defendants argue that the plaintiff’s evidence should have been disregarded because of its inadmissibility under the parol evidence rule. But this argument overlooks that the evidence relates to the issue of delivery, ie the passing of the ownership, not the enforcement of a contract. The plaintiff therefore remained the owner of the game on portion 7 after the fence was erected. [9] The defendants contend, in the alternative, that they were bona fide possessors and were therefore entitled to the game’s progeny after the erection of the two game fences between portions 2 and 7 and portions 7 and 11. And the fact that, so they contend, the progeny is not capable of being distinguished from the original game also means that the plaintiff cannot succeed with its vindicatory action. The plaintiff’s evidence, however, shows quite clearly that both defendants were aware that he had never relinquished ownership over the game. In the case of the first defendant this was made clear to him during the negotiations preceding his purchase of portion 2, and in the case of the second defendant when the game fence was being erected between portions 2 and 7. It is also improbable that the defendants could have believed that they had acquired ownership of the game by the simple expedient of purchasing their respective properties. They knew they had not purchased the game. They were aware, too, of its considerable value and the plaintiff’s claim to ownership. In my view the evidence shows them not to have been bona fide possessors. [10] In prayer 1 of the particulars of claim the plaintiff claimed delivery of the game referred to in para 4. Counsel for the defendants submitted that in the event this court upholds the plaintiff’s right to vindicate his property the order of the court below must be amended to order the defendants to return only the specific game claimed in para 4 of the particulars of claim. I cannot agree with this submission. As the court below pointed out, prayer 1 was clearly a mistake. Paragraph 4 must be read with paras 8 and 10 of the particulars and with the evidence.1 Read 1‘4. Te alle relevante tye was die eiser die eienaar van die volgende diere met die volgende markwaardes: 4.1 12 Roohartebeeste teen R3,000 stuk R 36,000.00 4.2 8 Blesbokke teen R700 stuk R 5,600.00 4.3 100 Rooibokke teen R500 stuk R 50,000.00 4.4 10 Koedoes teen R1,500 stuk R 15,000.00 4.5 35 Waterbokke teen R6,000 stuk R210,000.00 4.6 4 Volstruise teen R1,500 stuk R 6,000.00 thus it is clear from the particulars of claim that the plaintiff’s action was aimed at securing from the defendants the return of all game on portions 7 and 2, not only those mentioned in para 4. The case was quite clearly conducted on this basis. The court below was therefore correct to make the order it did. [11] In the cross-appeal the plaintiff asks for the value of the game based on an estimate of the number of game that is likely to be on the defendants’ properties. The estimate was based on the plaintiff’s records and expert testimony of the projected number of game on the two farms. The plaintiff’s insurmountable difficulty is that neither he nor his expert provided any indication as to the exact numbers or even proportion of game on each of the two portions. The defendants do not own the portions jointly and can thus not be jointly liable for the value of any unreturned game. In these circumstances a court cannot apportion between the defendants any value for the game. The cross-appeal must therefore also fail. TOTALE WAARDE: R322,000.00 5. . . . 6. . . . 7. . . . 8. Sedertdien het die eerste verweerder geen verdere diere van voormelde aard na Gedeelte 2 van die Plaas Blaauwbank gebring en vrygelaat nie, en die tweede verweerder het geen verdere diere van voormelde aard na Gedeelte 7 van die Plaas Blaauwbank geneem en vrygelaat nie. 9. . . . 10. In die vooropstelling is die eiser teenoor elkeen van die verweerders geregtig op lewering van alle diere van voormelde aard wat tans voorkom op gedeeltes 2 en 7 van die Plaas Blaauwbank 241, JQ Noordelike Provinsie.’ [12] The following order is made: The appeal and cross-appeal are dismissed with costs. ______________ A CACHALIA JUDGE OF APPEAL CONCUR: SCOTT JA KGOMO AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA ALERT – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA ALERT – G. A. Strydom and another v B. J. Liebenberg From: The Registrar, Supreme Court of Appeal Date: 25 September 2007 Status: Immediate Please note that the media alert is intended for the benefit of the media and does not form part of the judgement of the Supreme Court of Appeal The Supreme Court of Appeal today dismissed an appeal against the judgment of the Pretoria High Court ordering the appellants (Gustav Andries Strydom and Willem Daniël Le Grange) to return a quantity of different species of game on their properties to the respondent (Benjamin Jacobus Liebenberg). The SCA also dismissed a cross- appeal by Liebenberg for the value of any unreturned game. (The game was valued at approximately R600 000.) The facts briefly were these: Liebenberg was the owner of portions 11 and 14 of the farm Blaauwbank in the Brits District and also the sole shareholder and director of the company, Klein Bokkeplek Boerdery (Pty) Ltd, which owned portions 7 and 2 of the farm. ‘Game proof’ fencing was erected around its perimeter creating a unit. He purchased a variety of species of game and conducted a game-hunting business through the company but remained owner of the game. The four portions are adjacent to each other. The game roamed freely over the four portions. In 2001 Liebenberg placed the company in liquidation following its financial difficulties. The liquidator sold portions 2 and 7 respectively to Strydom and Le Grange. The game was not included in the sale. Shortly after taking occupation of the two portions, they denied Liebenberg access to their properties thereby cutting him off from access to his game. The SCA rejected their argument that once the liquidator had taken control of portions 2 and 7, Liebenberg lost ownership of the game because he no longer exercised control over the properties and the game thereon. The court stated that the clear indications that Liebenberg remained the owner of the game on the two portions were that the property remained fenced, that the liquidator of the company have made no claim to the game and that Liebenberg had pledged the game as security for a loan of R500 000 from ABSA bank. On 15 August 2003 Liebenberg sold his remaining portions (11 and 14) to Willem and Rudolf Brits together with the game that was currently on those portions. At the time of the sale the game on portions 11 and 14 intermingled with the game on Le Grange’s property. The appellant’s argued that because the animals on those portions had intermingled, none could be identified as belonging to Liebenberg. In rejecting this argument the SCA held that Liebenberg’s erection of a game fence between portions 7 and 11 distinguished the game on the Brits’s property from that on portion 7, which Liebenberg owned. The court also rejected their argument that they possessed the game in good faith and were therefore entitled to its progeny. The SCA said that they had not purchased the game and that they were aware not only of Liebenberg’s claim to ownership but also of the game’s considerable value. They could thus not claim that they had possessed the game in good faith. The court, however, rejected Liebenberg’s claim for the payment for the value of the game not returned to him because he had not proved what number of game was respectively on Strydom’s and Le Grange’s properties.

3394

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 717/2019 In the matter between: MMEREKI WELCOME MATHEKGA FIRST APPELLANT JOHANNES THULANI MNGOMEZULU SECOND APPELLANT and THE STATE RESPONDENT Neutral citation: Mathekga And Another v S (Case no 717/2019) [2020] ZASCA 77 (30 June 2020) Coram: CACHALIA, MOCUMIE, MAKGOKA, MOKGOHLOA AND DLODLO JJA Heard: This appeal was disposed of without an oral hearing in terms of s19 (a) of the Superior Courts Act 10 of 2013 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 delivered at 09h45 on 30 June 2020. Summary: Criminal law and procedure – murder – intent to kill – dolus directus – whether present – onus to prove the protection of s 49(2) of the Criminal Procedure Act 51 of 1977 (the CPA) – whether appellants’ objectively and/or subjectively believed their actions to be justified by s 49(2) of the CPA – Sentence – whether appellants ought to have known that the deceased was a police officer, for sentencing to be brought within the purview of s 51(1) of the Criminal Law Amendment Act 105 of 1997 – whether 15 years’ imprisonment appropriate. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Smith AJ, sitting as court of first instance): 1 The appeal on the conviction on murder in respect of both appellants is dismissed. 2 The appeal on sentence in respect of each appellant succeeds to the extent indicated hereunder. 3 The order of the high court is set aside and substituted with the following: ‘In respect of murder, each accused is sentenced to thirteen (13) years’ imprisonment.’ JUDGMENT Mocumie JA (Cachalia, Mokgohloa and Dlodlo concurring): [1] This appeal concerns two police officers, the appellants, who, armed with an R5 assault rifle and Z88 9 mm pistol, respectively, opened fire on two other police officers clad in civilian clothing. The two officers clad in civilian clothing had been pursuing a suspect on foot for having shot their colleague. One of the civilian clad police officers, Constable Tshomela, was fatally wounded and the other, Constable Khumalo, was seriously injured. A bystander was also injured from a gunshot. Three minibus taxis and two motor vehicles, which were parked at a taxi rank where the incident occurred, were badly damaged by bullets. Twenty-nine spent cartridges were found on the scene in the aftermath of the shooting. [2] The first and second appellants, Constables Mmereki Welcome Mathekga and Johannes Thulani Mngomezulu respectively, appeared in the Gauteng Division of the High Court, Johannesburg (the trial court). They were convicted of murder, two counts of attempted murder and malicious damage to property. They were each sentenced to 15 years’ imprisonment on the murder charge and on the attempted murder of one of the bystanders to five years. In respect of the attempted murder charge relating to Constable Sidwell Khumalo, the first appellant was sentenced to seven years’ imprisonment. All the sentences, were ordered to run concurrently with the sentence imposed on count one. In effect both appellants were sentenced to 15 years’ imprisonment. The appeal is with the leave of the trial court. [3] It is common cause that on 14 January 2013, at around 13h45, the appellants, who were based at Jeppe police station at the time, as well as other police officers in the area of Hillbrow, Johannesburg, received a back-up-call from Constable Daniel Ndima, reporting that he had been shot while on duty. The suspect had apparently fled the scene and was being pursued on foot by two of his colleagues, Constable Khumalo and Constable Tshomela. In response to the back-up-call, the appellants drove to Claim Street next to a taxi rank, in the city centre. As they approached the taxi rank, they saw two men holding firearms in their hands walking at a rapid pace. These two men disappeared behind a line of taxis. The appellants started shooting in their direction. The bullets went through the windows of the minibus taxis and the motor vehicles parked alongside the pavement. [4] From the moment the shooting commencement until it had stopped, everyone, including the two police officers and taxi commuters, had attempted to hide to avoid being shot. Some fled into the taxis and others out of them. One of the street vendors hid underneath a mini bus taxi. The first appellant used an R5 assault rifle and the second appellant a Z88 9mm pistol.1 By the time the shooting had stopped, Constable Tshomela had been fatally wounded. He had sustained gun wounds to the head, the neck, the chest and the back, whilst Constable Khumalo sustained wounds to his leg and both hands. The first appellant found Constable Khumalo inside a nearby shop into which he had fled for cover. It was only then that he had realised that Constable Khumalo was a police officer after he had identified himself. [5] With ample justification, the trial court found that: (a) the two appellants did not attempt to arrest the suspect; (b) they had no reasonable suspicion to think that Constable Khumalo and the deceased had committed any offence relating to the shooting of Constable Ndima; (c) it could not have been clear to Constable Khumalo and the deceased that there was an attempt to arrest them or has been made to arrest them; (d) there was no attempt to resist or to flee by the two; (e) there was no threat of serious violence to the ‘arrestor or any other person’ and (f) that they had not been trying to overcome any resistance from the two (Constable Khumalo and the deceased). It also found that, objectively viewed, the two appellants were not protected by s 49(2) of the Criminal Procedure Act 51 of 1977 (the CPA) and therefore, their acts were unlawful. 1 An expert, Cees Clover, Equity International at the Marikana Commission of Inquiry (February 2013 to October 2014) stated that a shot fired from an R5 assault rifle at close range at centre body mass, abdomen or legs produces horrific injuries – death is virtually inevitable. [6] Lastly, on whether the appellants subjectively believed that they were justified to act as they did and have the protection afforded by s 49(2), the trial court found that both appellants were experienced police officers. They had been trained extensively as established by their testimony. It was reiterated that they knew exactly what the requirements of s 49(2) were as they, from time to time during their testimony, used the words and phraseology of s 49(2), such as ‘imminent danger’ and ‘we thought that we were going to be attacked’. On the strength of S v De Blom,2 the trial court held that a person who works in a particular sphere of activity, ought to know what the law relating to that activity is, that they could not have subjectively believed at all or knew that their actions were covered by s 49(2). It is these factual findings that the appellants are attacking on the basis that another court may find differently. [7] Three issues arise for determination: (i) Whether the appellants objectively and/or subjectively believed that their actions were justified by s 49 of the CPA as amended. (ii) Whether the appellants were aware that the deceased was a police officer in order for the provisions of s 51(1) of the Criminal Law Amendment Act 105 of 1997 (CLAA) to apply on sentencing, and (iii) Whether an effective sentence of fifteen years’ imprisonment imposed on the appellants was appropriate in the circumstances. [8] Section 49(2) (Use of force in effecting arrest) of the CPA provides: ‘If any arrestor attempts to arrest a suspect and the suspect resists the attempt, or flees, or resists the attempt and flees, when it is clear that an attempt to arrest him or her is being made, and the suspect cannot be arrested without the use of force, the arrestor may, in order 2 S v De Blom 1975 (3) SA 513 (A). to effect the arrest, use such force as may be reasonably necessary and proportional in the circumstances to overcome the resistance or to prevent the suspect from fleeing, but, in addition to the requirement that the force must be reasonably necessary and proportional in the circumstances, the arrestor may use deadly force only if – (a) the suspect poses a threat of serious violence to the arrestor or any other person; or (b) the suspect is suspected on reasonable grounds of having committed a crime involving the infliction or threatened infliction of serious bodily harm and there are no other reasonable means of effecting the arrest, whether at that time or later.’3 (Emphasis added.) [9] Dealing with the issue of the use of force in effecting arrest, referring to the case of this Court, in Govender v Minister of Safety and Security,4 the Constitutional Court in Ex parte: Minister of Safety and Security: In re S v Walters5 citing the judgment of the United States Supreme Court in Tennessee v Garner6 – in the context of the history of police violence and brutality from which South Africa emerged – stated ‘[o]ur Constitution demands respect for the life, dignity and physical integrity of every individual. Ordinarily this respect outweighs the disadvantage to the administration of justice in allowing a criminal to escape’. Section 49 was thereafter amended by aligning the words of the proviso, ie the criteria as to when deadly force may be used in order to effect arrest of a suspect, with the criteria tabulated in Walters.7 These 3 Section 49 was substituted by s 7 of the Judicial Matters Second Amendment Act 122 of 1998 and by s 1 of the Criminal Procedure Amendment Act 9 of 2012. 4 Govender v Minister of Safety and Security 2001(2) SACR 197 (SCA). 5 Ex Parte: Minister of Safety and Security and Others: In re S v Walters 2002 (2) SACR 105 (CC) with reference to S v Makwanyane 1995 (3) SA 391 (CC); 1995 (6) BCLR 665 (CC). 6 Tennessee v Garner, 471 US 1 (1985). 7 The nine guiding principles are: (a) The purpose of arrest is to bring before the court for trial persons suspected of having committed offences. (b) Arrest is not the only means of achieving this purpose, nor always the best. (c) Arrest may never be used to punish a suspect. (d) Where arrest is called for, force may be used only where it is necessary in order to carry out the arrest. (e) Where force is necessary, only the least degree of force reasonably necessary to carry out the arrest may be used. (f) In deciding what degree of force is both reasonable and necessary, all the circumstances must be taken into account, including the threat of violence the suspect poses to the arrestor or others, and the nature and circumstances of the offence the suspect is suspected of having committed, the force being proportional in all these circumstances. (g) guidelines were also adopted by the South African Police Service under s 13(3)(b) of the South African Police Service Act 68 of 1995. [10] The Constitutional Court stated in Walters para 47: ‘The observation in Olmstead v United States referred to by Langa J in the passage quoted above from his judgment in Makwanyane also needs to be repeated and underscored: “Our Government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example.” We have a history of violence – personal, political and institutional. Our country is still disfigured by violence, not only in the dramatic form of murder, rape and robbery but more mundanely in our homes and on our roads. This is inconsistent with the ideals proclaimed by the Constitution. The state is called upon to set an example of measured, rational, reasonable and proportionate responses to antisocial conduct and should never be seen to condone, let alone to promote, excessive violence against transgressors. Its role in our violent society is rather to demonstrate that we are serious about the human rights the Constitution guarantees for everyone, even suspected criminals. An enactment that authorises police officers in the performance of their public duties to use force where it may not be necessary or reasonably proportionate is therefore both socially undesirable and constitutionally impermissible.’8 [11] The trial court was satisfied that the State had succeeded in proving the case against the appellants beyond a reasonable doubt. With regard to the murder count, the trial court found that the appellants had the direct intention to kill the deceased.9 The appellants maintained that they did not have such Shooting a suspect solely in order to carry out an arrest is permitted in very limited circumstances only. (h) Ordinarily such shooting is not permitted unless the suspect poses a threat of violence to the arrestor or others or is suspected on reasonable grounds of having committed a crime involving the infliction or threatened infliction of serious bodily harm and there are no other reasonable means of carrying out the arrest, whether at that time or later. (i) These limitations in no way detract from the rights of an arrestor attempting to carry out an arrest to kill a suspect in self-defense or in defence of any other person. (see also Burring and Reddi, ‘Section 49, lethal force and lessons from the De Menezes shooting in the United Kingdom’ 2013 (46) De Jure 928 at 943 citing the work of Bruce ‘Killing and the Constitution – Arrest and the use of lethal force’ (2003) SAJHR 430 at 442). 8 Footnote 5 above. 9 Commonly referred to as intent in the form of dolus directus. Dolus directus, also called actual intention, is present, when a person directs his or her will to bringing about the prohibited act or consequence and intention. They asserted that their conduct was only negligent because they had acted unreasonably. Thus at worst, on count one, they were guilty of culpable homicide not murder. [12] The appellants’ reliance on s 49(2) must be considered against the following facts. Firstly, in their defence, the appellants stated that they had responded to a backup call from Constable Ndima that he had been shot. They immediately proceeded in a police marked motor vehicle to a street in the city centre near a taxi rank. There they saw two men briskly walking with firearms in their hands amongst commuters and street hawkers on the side of the pavement. They believed that the men were the suspects who had shot Constable Ndima. They identified themselves as police officers and ordered them to stop and drop their weapons. But they ignored them and continued walking. The first appellant fired a warning shot prompting the two men to take cover behind the minibus taxis. [13] Second, they alleged that the intention to fire the warning shot was to alert the two men to their presence and that they should come out of their cover and surrender themselves so that they could be arrested. They did not fire intentionally at any person. As the trial Judge correctly found, if there was any such warning given by either of the appellants, the probabilities show that the two would have noticed them as they were in full police uniform. Or at the very least Constable Khumalo or the deceased would have reacted, because they were expecting other police officers to arrive after the back-up call was made. The trial Judge also found, which I agree with, that: (a) there was no evidence to support the version of the appellants; (b) their evidence deliberately accomplishes what he or she actually intended and desired to accomplish. See Snyman Criminal Law 6 ed (2015). See also S v Pistorius [2015] ZASCA 204; 2016 (2) SA 317 (SCA). created doubt that a warning was given; (c) on the evidence supported by independent witnesses – the civilians at the taxi rank – who were close to them when they started to shoot, the appellants had not issued any warning to their colleagues before they opened fire on them. Furthermore, the appellants were unable to explain why they fired twenty-nine bullets directly at the two men when they had posed no threat. Their suggestion that the two men were seen carrying firearms was of no consequence because the evidence established that neither of them had had their firearms in their hands at the crucial moment when they were shot at. Their firearms were in their holsters. [14] It is trite that a court of appeal is bound by the factual findings of the trial court except where these findings are wrong or not borne out by the record. This is especially when the findings are dependent on the credibility of the witnesses who testified.10 The trial court cannot be faulted for having found that the force the appellants used was not reasonably necessary and proportional in the circumstances to overcome the resistance or to prevent the purported suspects from fleeing. That excessive force was used is evident from the fact that Constable Khumalo too was shot on the leg and both hands with an R5 assault rifle even as he tried to flee from the scene, visibly, without a firearm in his hands. The deceased was shot directly multiple times, which shots hit him in the head, neck, chest and back, fired by both the appellants with an R5 assault rifle and a Z88 9mm pistol which, as testified to by experts, are both lethal weapons.11 This on its own, supported by the expert medical evidence and ballistic reports, led the trial court to conclude that, in respect of 10 See Liesching and others v S [2018] ZACC 25; 2019 (1) SACR 178 (CC) para 94 where the Constitutional Court held that ‘[t]his Court held in Makate that appeal courts are generally reluctant to interfere with factual findings made by trial courts, more particularly if the factual findings depended upon the credibility of the witnesses who testified at the trial’ (Footnotes omitted.). See also Modiga v The State [2015] ZASCA 94; [2015] 4 All SA 13 (SCA) para 23. 11 Captain Sereo, supported by the evidence of the first appellant described the R5 assault rifle as a high caliber firearm. the murder, when the appellants shot the deceased, the deceased was clearly visible to both of them and thus they intended to kill him. [15] Taking all the evidence into account, it is clear that the two appellants, who were trained police officers, armed with lethal weapons, made no attempt to arrest the two police officers they thought were suspects. This is evidenced by the testimony of all witnesses, corroborated to a certain degree by the evidence of the appellants that they opened fire on the two immediately upon their arrival on the scene, without any interruption or pause. 12 The first appellant did not even wait for the second appellant to properly park the police vehicle they were travelling in. He emerged from the vehicle with an R5 assault rifle and started to shoot continually, joined on beat and without fail by the second appellant, with a Z88 9mm pistol. They came out of the police vehicle guns blazing with the clear intent to kill the persons that had taken refuge behind the minibus taxis. Regardless of who was behind the minibus taxis, ie regardless of the identity of those persons – with little or no regard to the danger they were putting the civilians in and their behavior was not indicative of people who feared retaliation from criminals. Their conduct subsequent to getting the report about the shooting of Constable Ndima was beyond doubt unreasonable. Had they made the basic yet critical enquiry before they proceeded to the scene, they would have established that they were in pursuit of one suspect, not two, as described by Constable Ndima, who had seen the suspect when he was shot. Constable Ndima would have also told them, as he had told other colleagues who came to enquire from him, that two of his colleagues were on foot pursuing the suspect. This would have alerted 12 The witnesses said this happened immediately upon the arrival of the two appellants. The two said, they shouted first and simultaneously started to shoot when they received no response. them to the fact that there were two plain clothed police officers in pursuit of the suspect. [16] In sum, there was no justification for the appellants to have used deadly force because: (a) the apparent suspects did not pose any threat to the appellants or to any other person; (b) they were not suspected, on reasonable grounds, of having committed a crime involving the infliction or threatened infliction of serious bodily harm; and (c) It has not been shown by the appellants, on whom the onus rested, that although the identity of the suspect that had shot Constable Ndima was unknown, it could not have been established through a basic enquiry , before resorting to the use of deadly force. [17] On a conspectus of all the evidence, I have no doubt that objectively and subjectively the appellants acted outside the scope of s 49(2) of the CPA. I therefore find that there is no merit in the contention that they were justified in their conduct. There is consequently, no basis to interfere with the findings of the trial court in this regard. The appeal on the convictions of murder and attempted murder cannot succeed. It remains to deal with the appellants’ submission that, at worst, they should have been convicted of culpable homicide. [18] There is no merit in this submission. Once the trial court concluded, correctly so, that they had fired directly at their colleagues with intent to kill and that their actions fell outside the ambit of s 49 of the CPA, there was no room for a finding that they were merely negligent. [19] I turn next to the question of sentence. It is trite that a court exercising appellate jurisdiction cannot, in the absence of material misdirection by the trial court, assess the appropriateness of the sentence as if it were the trial court and then alter the sentence arrived at by that court, simply because it disagrees with it.13 To do so would be to usurp the sentencing discretion of the trial court. But where material misdirection has been demonstrated, an appellate court is not only entitled, but is also duty-bound, to consider the question of sentence afresh to avoid an injustice.14 [20] The appellants were charged with murder read with the provisions of s 51(1) of the CLAA. For s 51(1) of the CLAA to be applicable, the State must prove that the offence for which the appellants have been convicted, falls within Part I of Schedule 2. Section 51, titled ‘Minimum sentences for certain serious offences’, provides that: ‘(1) Notwithstanding any other law but subject to subsections (3) and (6), a High Court shall, if it has convicted a person of an offence referred to in Part I of Schedule 2, sentence the person to imprisonment for life. (2) Notwithstanding any other law but subject to subsections (3) and (6), a regional court or a High Court shall– (a) if it has convicted a person of an offence referred to in Part II of Schedule 2, sentence the person in the case of– (i) a first offender, to imprisonment for a period not less than 15 years;’ . . . Provided that 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. (3)(a) If any court referred to in subsection (1) or (2) is satisfied that substantial and compelling circumstances exist which justify the imposition of a lesser sentence than the 13 See S v Bogaards [2012] ZACC 23; 2013 (1) SACR 1 (CC) para 41. 14 See S v Phillips [2016] ZASCA 187;2017(1) SACR 373 (SCA) para 5. sentence prescribed in those subsections, it shall enter those circumstances on the record of the proceedings and may thereupon impose such lesser sentence.’ [21] This Court in S v De Beer15 stated: ‘It is a truism that the Criminal Law Amendment Act 105 of 1997 introduced far-reaching changes to our sentencing regime. As a reaction to the escalating levels of serious crime, the Legislature introduced mandatory sentences for certain specified offences. There is some measure of uncertainty, regarding the correct approach as to the proper application of minimum sentences prescribed by the CLAA. Some courts have held that the minimum prescribed sentence must be applied as a matter of course as soon as an accused is convicted of an offence falling within the various categories of the CLAA, unless the circumstances of the appellant are shown to be exceptional. This approach is wrong. The correct approach was adumbrated as follows in S v Vilakazi 2009 (1) SACR 552 (SCA) at 566A-D: “The court was required to apply its mind to the question of whether the sentence was proportional to the offence....” The court proceeded at 559e-562d to hold that: “It was accordingly incumbent upon a court to assess whether the prescribed sentence was indeed proportionate to a particular offence. If any circumstances were present that would constitute weighty justification for the imposition of a lesser sentence. Thus, a prescribed sentence could not be assumed a priori to be either proportionate to the offence, or, indeed, constitutionally permissible. Proportionality was to be determined on the circumstances of a particular case.” [22] It is clear in the judgment of the trial court that it convicted and sentenced the appellants on the basis of s 51(1) read with Part I of Schedule 2 where the victim was a law enforcement officer performing his or her functions. The provision requires that the law enforcement officer must be performing his or her functions as such. Such actions will alert the offender to 15 S v De Beer [2017] ZASCA 183; 2018 (1) SACR 229 (SCA). the fact that the person is a law enforcement officer.16 Where the offender was not aware that the person was a law enforcement officer, the offender cannot reasonably be expected to know that the victim was a law enforcement officer, the provisions of s 51(1) do not apply. On the facts, this murder was one in circumstances other than those referred to Part 1. It automatically, fell within the ambit of s 51(2) read with Part II of Schedule 2, in terms whereof the prescribed minimum sentence is 15 years’ imprisonment. [23] The trial court, found, erroneously so, that the murder fell within the ambit of s 51(1). It went further and found that compelling and substantial circumstances contemplated in s 51(3)(a) existed which justified a deviation from the prescribed minimum sentence of life imprisonment, but the lesser sentence of 15 years’ imprisonment. On that basis alone, it misdirected itself materially. This obliges this Court to reconsider sentence afresh.17 [24] Having said that, it is proper to refer to the approach this Court has adopted in the application of s 51 as gleaned from a plethora of judgments of this Court.18 But nonetheless requires repetition to serve as a basis for the decision to be reached in this judgment on sentence. Authors in this area of the law state that when dealing with the minimum sentence legislation two important factors must be borne in mind. Firstly, the CLAA creates a minimum sentence with a lower limit, ‘leaving the court with the discretion to impose more’.19 The seriousness and aggravating nature of the offence can lead to the imposition of a higher sentence than the prescribed minimum sentence; 16 SS Terblanche, A guide to Sentencing in South Africa,3 ed (2016) at 61. 17 S v Malgas 2001(1) SACR 469 (SCA) para 33 18 See S v Khoza and Others 2010 (2) SACR 207 (SCA); S v Mathebula and Another 2012 (1) SACR 374 (SCA). 19Khoza, ibid, para 48. because the 15 years is a minimum that a court may impose and not the maximum as ordained in the proviso to s (2) that ‘the maximum sentence that a regional court or high 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.’20 In Khoza,21 the trial court imposed 21 years’ imprisonment for robbery with aggravating circumstances where the prescribed minimum sentence was 15 years. The trial court found that in view of the seriousness and aggravating nature of the offences, a sentence of 15 years would be too lenient and accordingly imposed a higher sentence. This Court confirmed the sentences imposed by the trial court and dismissed the appeal. Secondly, the most important factor to bear in mind is that, substantial and compelling circumstances do not exist in a vacuum.22 The minimum sentence is the bench mark, the starting point. This means, the sentencing court must consider the prescribed minimum sentence as the bench mark – ie the usual sentence it should impose for that offence, where there exist no reasons for it to impose another sentence. [25] Coming back to the appellants, the unfortunate part is that despite the loss of a human life and many years of reflection and introspection, the appellants still took no responsibility for what they had done. They said they were sorry for having killed their colleague. Not another human being which is remarkably different from genuine remorse. There is nothing on record indicating that the two offered their condolences or even reached out to the families of the deceased and Constable Khumalo in any way. Such action would have given room for restorative justice to be considered by the trial 20 Hiemstra’s Criminal Procedure at 28-21 (Service Issue 12) with reference to S v Khoza and others 2010 (2) SACR 207 (SCA) para 88-89. 21 Ibid. 22 In vacuo, in Latin. court and this Court. In fact, it is revealed in the Victim Impact Statement compiled in 2016, three years after the incident, that Constable Khumalo was still emotionally wounded. According to that report, he still remembers how the deceased looked when he fell down after being gunned down by his own colleagues. His own physical injuries were not healed. A bullet that was lodged in his arm still had to be removed. He stated that, ‘he had told both suspects to tell the truth and they failed to do so. . . ’. [26] Furthermore, in the Victim Impact Statement, the deceased’s elder sister stated that the deceased was the sole bread winner of a family of seven siblings with an unemployed elderly mother and no father, and thus his death has had a huge financial impact on their lives. She confirmed that the appellants did not approach her family to apologise for what they had done. They did not contact them in any way. On the question of remorse, the trial court correctly observed that ‘you both expressed your remorse that you are sorry that you killed a colleague but maintained that your killing of the deceased was excusable and therefore not unlawful’. [27] In its reconsideration of sentence, this Court is not bound by the conclusion of the trial court on its findings on what qualifies as compelling and substantial circumstances. However, in my view, the following do qualify as compelling and substantial circumstances. Both appellants are first offenders. They are relatively young and were gainfully employed in the police service with no track record of ill-discipline or misconduct before this fateful day. They spent ten months incarcerated prior to being released on bail. They have families and young children of school going ages who depend on them. The circumstances under which the murder was committed are unusual as depicted in the trial court judgment; although committed with direct intention as this Court found earlier in this judgment. However, particularly because of the unusual circumstances of the case; a measure of mercy, must be filtered into the sentence considered appropriate. All these cumulatively, would justify a deviation from the prescribed sentence of 15 years. [28] Having said that, however, to arrive at a balanced sentence which reflects the triad enunciated in S v Zinn:23 ‘the crime, the offender and the interests of society’, the interests of the victim(s) as part of the broader society should also come into play and be accounted for. In R v Karg,24 five decades ago this Court stated: ‘It is not wrong that the natural indignation of interested persons and the community at large should receive some recognition in the sentences that Courts impose, and it is not irrelevant to bear in mind that if sentences for serious crimes are too lenient, the administration of justice may fall into disrepute and injured persons may incline to take the law into their own hands.’ This Court recognised this approach in Matyityi where it stated:25 ‘An enlightened and just penal policy requires consideration of a broad range of sentencing options from which an appropriate option can be selected that best fits the unique circumstances of the case before court. To that should be added, it also needs to be victim centered. Internationally the concerns of victims have been recognised and sought to be addressed through a number of declarations the most important of which is the UN Declaration of the Basic Principles of Justice for Victims of Crime and Abuse of Power. The Declaration is based on the philosophy that adequate recognition should be given to victims and that they should be treated with respect in the criminal justice system. In South Africa victim empowerment is based on restorative justice. Restorative justice seeks to emphasise that a crime is more than the breaking of the law or offending against the state it is an injury or wrong done to another person. The Service Charter for Victims of Crime 23 S v Zinn 1969(1) SA 239 (A). 24 R v Karg 1961 (1) SA 231 (A) at 236A-C. 25 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA) para 16. in South Africa seeks to accommodate victims more effectively in the criminal justice system.’ [29] In my view, a sentence of 13 years’ imprisonment will be proportionate to ‘the crime, the criminal and the legitimate needs of society’.26 It will remind the members of the police service as the Constitutional Court stated in Walters that ‘the state is called upon to set an example of measured, rational, reasonable and proportionate responses to antisocial conduct and should never be seen to condone, let alone to promote, excessive violence against transgressors.’ A non-custodial sentence in the form of a wholly suspended sentence or correctional supervision in terms of s 276(1)(i) of the CPA as proposed by the appellants would be inappropriate in the circumstances. One of the aggravating circumstances which stood out, was the fact that they did not show any remorse for having killed another human being. That lack of appreciation of having killed another human being, leaves a lasting and unsettling impression that they cannot rehabilitate easily, if given a non- custodial sentence. However, on the above reasons in the preceding paras the appeal on sentence ought to succeed. [30] This judgment must be brought to the attention of those responsible for training the members of the police service so that they begin to train members of the police service appropriately – to reinforce the orders under the Police Service Act 68 of 1995 on the use of force in arresting a suspect(s). [31] In the result, the following order is made: 26 S v Malgas 2001 (1) SACR 469 (SCA). 1 The appeal on the conviction on murder in respect of both appellants is dismissed. 2 The appeal on sentence in respect of each appellant succeeds to the extent indicated hereunder. 3 The order of the high court is set aside and substituted with the following: ‘In respect of murder, each accused is sentenced to thirteen (13) years’ imprisonment’ ________________________ B C MOCUMIE JUDGE OF APPEAL Makgoka JA (dissenting) [32] I have read the main judgment of my colleague, Mocumie JA. I agree with the conclusion that the appeal against the conviction should fail. However, I disagree with the sentence proposed in the main judgment. The court a quo erroneously imposed a sentence of 15 years’ imprisonment because of a misdirection as to the applicability of s 51(1) of the Criminal Law Amendment Act 105 of 1997 (the Act) which aspect I shall consider shortly. The main judgment reduces the appellants’ imprisonment terms from 15 to 13 years on the murder count. After much anxious reflection, and given the very unfortunate and unusual circumstances of the case, I conclude that long term imprisonment is not appropriate. Instead, correctional supervision, as recommended by the probation officers in respect of both appellants, should be given serious consideration. Below I set out the reasons for my conclusion. [33] The facts which led to the conviction of the appellants are fully set out by my colleague, and need no regurgitation here. Briefly, a police officer was shot in downtown Johannesburg on 14 January 2013. The appellants responded to a call to search for the suspect who had shot their colleague. Upon arrival at the vicinity of where the shooting took place, they observed two men in civilian clothes holding firearms, walking briskly. Unbeknown to the appellants, those were also police officers, who too, were on the trail of the suspect. The appellants mistook them for the suspects, and fired several shots in their direction. Constable Tshomela was fatally wounded and his colleague, Constable Nxumalo, and a civilian, were injured. Vehicles in the vicinity were damaged. Only thereafter, it dawned on the appellants that the deceased and Constable Nxumalo were their colleagues. On the evidence before it, the trial court correctly concluded that the appellants had no intention of arresting the suspect, but to kill him in revenge. [34] As explained already, the court a quo’s sentence is based on a misdirection, which is. The appellants were charged, among others, with murder subject to s 51(1) of the Act, which, read with Part I of Schedule 2 of the Act, requires the imposition of a minimum sentence of life imprisonment because the deceased was a law enforcement officer performing his functions as such. The court a quo considered the applicable sentence to be life imprisonment. However, it imposed a lesser sentence of 15 years’ imprisonment, based on its finding, in terms of s 51(3)(a) of the Act, that there existed substantial and compelling circumstances. That sentence was ordered to run concurrently with all other sentences. [35] It is common cause in the present case that the appellants did not know that the deceased was a police officer. They mistook him for a criminal. The court a quo misdirected itself in this regard. It said: ‘[T]he Legislature has not distinguished, as it had done with murder falling under Part 2 of Schedule 2 of the Act, between the fact if the murder of a law officer is committed in a situation where the perpetrator knew that the person he is killing is a police officer or the situation where a perpetrator did not know or ought to have known that it is a police officer that he or she is killing.’ (Emphasis added.) [36] What exactly the court a quo intended to convey by this is unclear. Part II of Schedule 2 of the Act makes no reference to what the learned Judge says it does. The part lists lesser crimes than those mentioned in Part I of the Schedule, eg murder simpliciter, robbery, drug trafficking, firearms smuggling, finance and exchange control crimes, terrorism and mercenary activities. There is no mention at all of killing of a police officer in Part II. That crime is mentioned only in Part I of Schedule 2 of the Act. [37] However, somewhere in the judgment on sentence, the court a quo suggests that irrespective of the fact that the appellants did not know the deceased was a police officer, they nevertheless faced life imprisonment in terms of s 51(1). This is clearly wrong, and a material misdirection. The mischief s 51(1) read with part I(b)(i) of Schedule 2 aims to curb is the intentional and wanton killing of law enforcement officers, in order to impede them in their duties. It is not applicable where the perpetrator has no such knowledge, or could reasonably not be expected to have such knowledge. This is very clear by the use of the words ‘a law enforcement officer performing his or her functions as such’, in relation to the murder victim. [38] It is therefore clear that the court a quo misconceived the import s 51(1) read with Part I(b)(i) of Schedule 2. That led it astray in considering sentence, starting on a wrong footing. The correct starting point ought to have been that, because the appellants did not know that the deceased was a police officer, Part II of Schedule 2 was applicable. The prescribed minimum sentence is 15 years’ imprisonment, in respect of first offenders (which the appellants are) unless the court finds substantial and compelling circumstances in terms of s 51(3)(a) are present to justify a lesser sentence (which the court a quo found). It follows that had the court a quo not misdirected itself as to the applicability of s 51(2), it ought to have imposed a sentence of less than 15 years’ imprisonment. [39] So viewed, the court a quo’s misdirection was undoubtedly material. It had a direct and crucial bearing on the sentence it imposed. It is the type envisaged in S v Pillay 1977 (4) SA 531 (A) at 535E-F as being ‘of such a nature, degree, or seriousness that it shows, directly or inferentially, that the Court did not exercise its discretion at all or exercised it improperly or unreasonably’. [40] This court is therefore at large to consider sentence afresh. The lodestar in considering an appropriate sentence remains the enduring triad – the crime, the offender and the interests of society, as enunciated in S v Zinn 1969 (2) SA 537 (A); [1969] 3 All SA 57 (A) at 540G. Closely allied to these factors, is the impact of the crime on its victims. All these have to be considered bearing in mind the main purposes of punishment, which were reiterated in S v Rabie 1975 (4) SA 855 (A); [1975] 4 All SA 723 (A) 862A-B as being deterrence, prevention, reformation and retribution. [41] The appellants’ personal circumstances, as gleaned from the probation officers’ reports, compiled in respect of both, are briefly the following. The first appellant was 32 years old at the time of sentencing. He had a difficult childhood. As a result of poverty, he and his brother grew up in a place of safety as his unemployed mother could not take care of them. His father died when he was a child. However, he seems to have risen above the adversity, and his difficult childhood does not seem to have had any role in the commission of the offence. He was not married, but was a father of two young children, with different mothers. He joined SAPS as a reservist in 2007, and permanently in 2009. As a result of the incident, he no longer performed duties which required him to constantly carry a firearm. The second appellant was 37 years old at the time of sentencing. He too, grew up without a father figure. He had three minor children with different mothers, one of whom is his wife, who is employed. He completed matric in 2005 and joined SAPS the same year. He was promoted to the rank of sergeant in 2015, after the incident. [42] The crimes which the appellants have been convicted of, are undoubtedly serious. A valuable member of society – a law enforcement officer – was killed on duty. Although the deceased was not married and had no children, his family, especially his elderly mother, has been devastated by the loss. Constable Nxumalo was badly injured and disfigured. There was no formal victim impact reports. However, affidavits deposed to by the deceased’s sister, Ms Zandile Tshomela, and by Constable Khumalo, were handed up by consent. [43] The following appear from the affidavit of Ms Tshomela. The deceased was 32 years old. He joined SAPS in 2008. He had seven siblings. Their father passed on in 2003, and their mother, who was 66 years old, was finding it difficult to come to terms with the deceased’s death. The deceased was not married, and did not have any children. However, he supported the family and his death had a huge impact on them. [44] The family was aggrieved with the appellants pleading not guilty, and ‘not coming clean’ about the shooting of the deceased. Further, the appellants never reached out to the family to apologise or contribute towards funeral costs. The family members were divided as to what type of sentence should be imposed on the appellants. Their mother wished for a long prison sentence, while the siblings wished for ‘some period of imprisonment’. She, Ms Tshomela, on the other hand, after being appraised of the different sentencing options by the prosecutor, felt that correctional supervision was the appropriate sentence. [45] Constable Khumalo, the injured police officer, too, was very aggrieved about the appellants’ failure to ‘tell the truth’ in court about the shooting. He had suffered trauma as a result of the incident, which resulted in him being reluctant to participate in crime prevention operations. He wished for a period of 15 years’ imprisonment to be imposed on both appellants. [46] With regard to the interests of society, it must be considered in the appellants’ favour that they were useful, upright and productive members of society, whose overzealousness overcame them at a crucial moment in the execution of their duties. I do not think society’s interests would be served by subjecting them to lengthy prison terms, with damaging and lasting consequences. While they need to be punished for their conduct, this should not be to the point of breaking them. Although there must be a certain proportionality between punishment and the crime, that does not imply that the punishment be equal in kind to the harm that the offender has caused, as explained in S v Mafu 1992 (2) SACR 494 (A). See also S v Kruger [2011] ZASCA 219; 2012 (1) SACR 369 (SCA) where this court cautioned against viewing punishment of a convicted person as revenge. It must also be borne in mind that long term imprisonment would leave the appellants’ families without financial support. [47] What is more, the appellants’ moral blameworthiness should not be lost sight of. It bears emphasis that their conduct was not pursuant to any greed, personal gain or criminal motive. Furthermore, it should be borne in mind that the appellants have continued their employment with SAPS. The second appellant was even promoted despite the unfortunate incident. This, in my view, is a clear indication that their superiors had accepted their remorse, and continue to regard them as valuable members of the police service. [48] It therefore escapes me what purpose would be served by long imprisonment terms. Certainly not rehabilitation. In S v Khumalo and Others 1984 (3) SA 327 (A); [1984] 2 All SA 232 (A) at 331F it was observed that rehabilitation is generally not served by prolonged imprisonment. The Constitutional Court in S v Williams and Others 1995 (2) SACR 251 (CC); 1995 (7) BCLR 861 (CC) para 65 noted an international gradual shift of emphasis away from the idea of sentencing being predominantly the arena where society wreaks its vengeance on wrongdoers. Sentences have been passed with rehabilitation in mind. [49] As far as the aims of punishment are concerned, it seems that my colleague, like the trial court, overemphasises the deterrent element of sentence over others. In my view, sufficient weight is not accorded to three most important mitigating factors. First, that the appellants’ conduct was not motivated by any personal gain or with a ‘criminal mind’. Second, that the appellants are not a danger to society and there is no prospect that they will reoffend. As pointed out by this Court in S v Ingram 1995 (1) SACR 1 (A); [1995] 3 All SA 121 (A) at 9a-b, this fact is an important factor in mitigation as it means that individual deterrence does not play a major role in the case. While general deterrence remains a relevant factor, an accused should not be sacrificed on the altar of deterrence. See S v Sobandla 1992 (2) SACR 613 (A) 617F-H. Third, the extra-ordinary and unfortunate circumstances of the case and the fact that the appellants have shown remorse for killing their colleague. [50] With regard to remorse, our courts link the presence of remorse with the prospect of the rehabilitation of the offender. S v Ntuli 1978 (1) SA 523 (A) 528B– C; S v Keyser [2012] ZASCA 70; 2012 (2) SACR 437 (SCA) para 29. My colleague considers the fact that the appellants never reached out to the family of the deceased to assist with funeral expenses, nor visited Constable Nxumalo, as an indication of lack of remorse. It does not appear that these were ever raised as discrete issues during the sentencing proceedings, and that the appellants were afforded an opportunity to meaningfully deal with them. As such, one should not, without full facts, conclude that this conduct is indicative of lack of remorse. [51] The main consideration, in my view, should be whether the appellants need to be removed from society. This is where correctional supervision comes in. In S v R 1993 (1) SA 476 (A); [1993] 1 All SA 326 (A) at 488G this Court pointed to the legislature’s intention to distinguish between two types of offenders, namely those who had to be isolated from the community by incarceration and those who were deserving of punishment but not required to be removed from the community. Do the appellants need to be removed from the community? I do not think so. [52] In Williams Langa J lauded ‘[t]he introduction of correctional supervision . . . as a milestone in the process of “humanising” the criminal justice system’. He remarked further: ‘. . . It brought along with it the possibility of several imaginative sentencing measures including, but not limited to, house arrest, monitoring, community service and placement in employment. This assisted in the shift of emphasis from retribution to rehabilitation. This development was recognised and hailed by Kriegler AJA in S v R as being the introduction of a new phase in our criminal justice system allowing for the imposition of finely-tuned sentences without resorting to imprisonment with all its known disadvantages for both the prisoner and the broader community. The development of this process must not be seen as a weakness, as the justice system having ‘gone soft’. What it entails is the application of appropriate and effective sentences. An enlightened society will punish offenders, but will do so without sacrificing decency and human dignity.’27 [53] Lest it be suggested that because of the seriousness of the murder count correctional supervision is a priori, inappropriate, I tabulate below, cases in which this court, and the various divisions of the high court, have considered it suitable for murder. In most of them the death of the victim resulted from abuse, a history of acrimony, assault over a number of years and so-called crimes of passion. I consider the underlying approach apposite. 27 S v Williams and Others 1995 (2) SACR 251 (CC); 1995 (7) BCLR 861 (CC) paras 67 and 68 (footnotes omitted). (a) The appellant in S v Potgieter 1994 (1) SACR 61 (A); [1994] 3 All SA 432 (A) was convicted of murder and was sentenced to seven years’ imprisonment. It was assumed in her favour that over a period of six years, she was subjected to assaults, humiliation and psychological abuse by the deceased. She was 37 years of age, a first offender and the mother of four children. This court set aside the sentence of the trial court of seven years’ imprisonment and remitted the case to the trial court to reconsider the sentence afresh after compliance with the provisions of s 276A(1)(a) of the Criminal Procedure Act 51 of 1977 as amended (CPA). (b) In S v Larsen 1994 (2) SACR 149 (A); [1994] 4 All SA 380 (A) the appellant was sentenced to five years’ imprisonment, half of which was suspended, for shooting and killing her husband. The appellant had been assaulted and abused by the deceased over many years and the marriage was under severe strain in the period leading up to the fatal incident. This court remitted the matter to the trial court for the consideration of the imposition of a sentence of correctional supervision in terms of s 276A(1)(a) of the CPA. (c) In Ingram the appellant was convicted of murder and sentenced to eight years’ imprisonment. The appellant was frequently abused by her husband, the deceased. They were both intoxicated at the time of the shooting. It was held that for a murder such as this, the imposition of appropriate conditions can render the sentence of correctional supervision suitably severe and the sentence of eight years in prison was set aside on appeal. The matter was remitted to the trial court to reconsider the sentence afresh after compliance with the provisions of s 276A(1)(a) of the CPA. (d) In S v Aspeling 1998 (1) SACR 561 (C) the appellant had shot and killed his brother after a long history of acrimony between them. Having regard to the appellant’s personal circumstances and other factors, it was held that it was not necessary for him to be removed from the community for any substantial time. It was held that correctional supervision in terms of s 276(1)(i) of the CPA was appropriate. (e) In S v Romer [2011] ZASCA 46; 2011 (2) SACR 153 (SCA) the respondent had been convicted on one count of murder and two counts of attempted murder under a state of diminished responsibility, though not acting as an automaton, at the time of the shootings. He was sentenced to 10 years’ imprisonment wholly suspended for five years on the usual conditions. In addition, he was sentenced to three years' correctional supervision. In an appeal by the State against the sentence, it was contended that the sentence imposed on the respondent was disturbingly lenient, given the serious consequences of his conduct. This dismissed the appeal, and held, that the deterrence of the respondent, or others, was not an overriding consideration. (f) This court found a sentence of 12 years’ imprisonment for murder strikingly inappropriate in Botha v S [2017] ZASCA 148, given the facts of that case and the mitigating circumstances, which included prolonged abuse of the appellant by the deceased (her husband). This court held that the appellant was not a danger to society. The matter was accordingly remitted to the trial court for reconsideration of sentence in terms of s 276(1)(h) of the CPA. (g) The appellant in S v Mosikili 2019 (1) SACR 705 (GP) had been convicted for killing his disrespectful and abusive son and was sentenced to 12 years’ imprisonment, five years of which were suspended for a period of five years. The appellant was 58-years old, first offender and gainfully employed and supported his family, including the deceased’s son. On appeal, the high court held that the relatively low risk that the appellant would re-offend, combined with his remorse, rendered a sentence of correctional supervision more likely to achieve the goal of rehabilitation than other potential sentencing options. The sentence was accordingly set aside and replaced with a sentence of 36 months' correctional supervision, which included house detention and the performance of free community service. [54] In S v Maritz 1996 (1) SACR 405 (A) and S v Maleka 2001 (2) SACR 366 (SCA) this court decided against a sentence of correctional supervision. So did the high court in S v Zulu 2004 JDR 0434 (W). Like the present case, Maritz involved a police officer in executing his duties. The officer had tied a murder suspect to the front of an armed vehicle and ordered him to run in front of the vehicle. The deceased was pulled under the wheels of the vehicle and was killed. In the trial court the appellant was sentenced to eight years’ imprisonment of which two were suspended. This court held that the case did not only stem from negligence but also from an abuse of power by the appellant and that correctional supervision was therefore not a befitting sentence. Despite that, this court interfered and substituted a sentence of four years’ imprisonment of which two years were suspended. [55] In Maleka the appellant, a teacher, shot and killed a school principal after the latter had severely assaulted him. He was sentenced to 10 years’ imprisonment. On appeal it was held that although many mitigating circumstances were present, the seriousness of the offence made it necessary to send a clear message to the community at large that resort to violence, particularly with firearms, would not be tolerated. It was held that a sentence of correctional supervision would be inappropriate. However, the sentence of ten years’ imprisonment was set aside and replaced with a sentence of ten years’ imprisonment of which five years were suspended for three years. [56] In Zulu the accused had been a victim of an armed robbery and the police station where he had reported the robbery seemed not to care. He took the law into his hands, and killed the robbers. He was convicted of premeditated murder. His conduct of having handed himself over to the police was considered indicative of remorse. He was sentenced to 12 years’ imprisonment of which four years was suspended for three years on suitable conditions. [57] What the above cases demonstrate is this. In murder cases where the moral blameworthiness is reduced because of the unusual, unfortunate or extra-ordinary circumstances such as in the present case, the courts have consistently considered correctional supervision as a suitable sentencing option. Where they found it unsuitable, like in Maritz, Maleka and Zulu, long prison terms were avoided. [58] In the present case, the main judgement reduces the appellants’ prison terms from 15 to 13 years. In an appeal against sentence where it is contended that a sentence imposed by the trial court is either excessive or lenient, interference is justified where there exists a ‘striking’ or ‘startling’ or ‘disturbing’ disparity between the sentence of the trial court and that which the appellate court would have imposed, had it been the trial court. See for example S v Sadler 2000 (1) SACR 331 (SCA); [2000] 2 All SA 121 (A) para 8; S v Cwele and Another [2012] ZASCA 155; 2013 (1) SACR 478 (SCA); [2012] 4 All SA 497 (SCA) para 33. [59] It must be assumed that 13, instead of 15, years’ imprisonment, is a sentence which my colleague would have imposed had she been the trial court. If that be the case, the appeal against sentence must fail because the disparity between the sentence imposed by the trial court and that which she would have imposed, is not so substantial that it can be considered ‘striking’, or ‘disturbing’ as to justify interference. [60] This is because when an appeal against sentence is upheld, that success ought to be meaningful and have practical effect. In my respectful view, the reduction of the appellants’ imprisonment terms from 15 to 13 years is largely symbolic, and does not reflect the success of their appeal against sentence. It is pretextual and renders the success impotent. [61] It must be borne in mind that the trial court moved, albeit on a misdirected basis, from life imprisonment to 15 years’ imprisonment. That is a massive and meaningful reduction. On this basis, it is not unreasonable to infer that had the trial court moved from the correct basis of 15 years’ imprisonment, together with its finding of substantial and compelling circumstances, it most likely would have imposed a sentence in the region of 8 and 10 years’ imprisonment. Viewed in this light, the imposition of 13 years’ imprisonment by this court can conceivably be regarded in real terms, as an increase, rather than a decrease, in their sentences. [62] The fact is that the appellants’ fair trial rights were infringed at the sentencing stage by being subjected to a wrong sentencing regime. It is the duty of this court to correct that. A symbolic reduction of the appellants’ sentences from 15 to 13 years, in my respectful view, does not achieve the purpose of interference. It does not give due regard to the weighty mitigating factors so articulately set out by my colleague in para 27 of the main judgment. Instead, to my mind, the sentence perpetuates, rather than corrects, the injustice committed by the trial court. [63] I turn now to consider what I deem to be an appropriate sentence. As stated already, both appellants are first offenders. In respect of each, the probation officers recommended a sentence of correctional supervision. However, in respect of the second appellant, a pre-sentencing report by another probation officer and a social worker, direct imprisonment was recommended, and correctional supervision was considered not suitable ‘because of the seriousness of the offence’. [64] However, in all the three reports, the appellants were reported to be responsible citizens, with no history of violence or substance abuse. They had stable homes and sufficient family support systems. They both verbalised remorse for their part in killing their colleague and injuring another, which had caused them much anxiety and regret. They were both found to be suitable candidates for a sentence of correctional supervision. [65] The trial court summarily rejected correctional supervision as a sentencing option. It said: ‘(T)he yardstick . . . that the sentence for murder under these circumstances is life imprisonment and the question is, if the substantial and compelling circumstances [are] of such a nature that the court will then only be permitted to impose a sentence of up to three years under correctional supervision in terms of section 267(1)(h) of the Criminal Procedure Act 51 of 1977. The court is humbly of the opinion that this period of three years also does not reflect the seriousness of the offence and the fact that a life has been lost and the absence of true remorse.’ [66] The above passage demonstrates that the court a quo started on the premise that because the appellants had been convicted of serious offences, that in and of itself, rendered correctional supervision inappropriate. As I have attempted to show, this is a wrong premise. As explained in S v D 1995 (1) SACR 259 (A) at 266c-d: ‘In its nature a sentence of correctional supervision is not denunciatory. It does not 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.’ [67] This court has on various occasions stressed that correctional supervision should not, without more, be seen as a light sentence, but as a suitably severe sentence for even a serious crime. See for example S v Ingram at 9e-f; S v Flanagan 1995 (1) SACR 13 (A); [1995] 4 All SA 86 (A); S v Schutte 1995 (1) SACR 344 (C) at 349E. In Potgieter at 88d it was pointed out that the conditions imposed could render the sentence a suitably severe one. [68] In my view, the trial court failed to consider in any meaningful manner, correctional supervision as a sentencing option, as recommended by the probation officers. The learned Judge did not even engage with the reasoning in those reports and set out why she did not agree with the conclusions reached therein. All she mentioned was that correctional supervision was too lenient a sentence for the crimes of which the appellants had been convicted, and moved quickly to the conclusion that a custodial sentence was the only suitable sentence. At the risk of repetition, this is a wrong approach. [69] In conclusion, I make the following observation. The psychological impact which the increasingly brazen killing of police officers by criminals, was not investigated as a possible factor in the conduct of the appellants. One probation officer alluded to it, but did not elaborate further. The trial court made a passing comment about it during sentence. It is unfortunate that the appellants are not wealthy. Had they been, they would have been in a position to afford the services of professional psychologists or psychiatrists to investigate this aspect, compile reports and testify about it. [70] Many of those who have benefitted from the sentence of correctional supervision were able to persuade the courts towards that sentence aided by these professionals. But the services of such professional are costly, and the appellants, being less privileged, clearly cannot afford them. In S v Brown [2014] ZASCA 217; [2015] 1 All SA 452 (SCA); 2015 (1) SACR 211 (SCA) para 121 this court cautioned against creating the impression that there are two streams of justice; one for the rich and one for the poor. One is left to wonder how such evidence would have impacted on sentence in this case. [71] This is a regrettable and most unfortunate case, which makes sentencing even more difficult. The irony of it all is that the appellants are to serve long prison terms, alongside the very criminals whose activities they had dedicated their lives to fighting. In line with the cases I have referred as guidelines, and having considered the nature of the crimes, the complimentary personal circumstances of the appellants, the interests of society and the aims of punishment, I am of the view that a sentence of correctional supervision for each of the appellants is a suitable one, as recommended in the probation officers’ reports. Were I to impose a prison term, it would be for no more than 8 years’ imprisonment, half of which to be suspended. T M MAKGOKA JUDGE OF APPEAL Appearances For First Appellant: M Mzamane Instructed by: Johannesburg Justice Centre Bloemfontein Justice Centre For Second Appellant: M Mkhatswa Instructed by: BDK Attorneys, Johannesburg Symington & De Kok Attorneys, Bloemfontein For Respondent: R Barnard Instructed by: Director of Public Prosecutions, Johannesburg Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Mathekga and Another v S (Case no 717/2019) [2020] ZASCA 77 (30 June 2020) From: The Registrar, Supreme Court of Appeal Date: 30 June 2020 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Today the Supreme Court of Appeal (SCA) dismissed the appellants’ appeal against conviction and sentence per the order of the honourable Smith AJ, sitting as the court of first instance in the Gauteng division of the High Court, Johannesburg. At the heart of the appeal was the pervasive use of lethal force by the police in South Africa. The appellants, who were themselves police officers, armed with an R5 assault rifle and Z88 9mm pistol, shot two police officers and a civilian as well as minibus taxis and motor vehicles parked alongside the pavement in the centre of Johannesburg, Hillbrow at the taxi rank. In the aftermath of the shooting, there were twenty-nine spent cartridges found on the scene which caused the death of one police officer, serious injuries to a second police officer and a bystander and also caused damage to the minibus taxis and motor vehicles. The appellants appeared in the Gauteng Division of the High Court, Johannesburg where they raised the defence of the provisions of section 49(2) of the Criminal Procedure Act 51 of 1977, which grants indemnity for the use of lethal force to effect an arrest. The high court, nonetheless, on the evidence, convicted both appellants for murder, two counts of attempted murder and malicious damage to property and effectively sentenced each to 15 years’ imprisonment. The SCA confirmed the conviction on murder with direct intention in respect of both appellants. In arriving at its decision, the SCA restated the law; referred to decisions of Govender v Minister of Safety and Security (SCA) and Walters v Minister of Safety and Security (CC). In Walters, the Constitutional Court emphasised the duty of the state to lead by example in upholding and protecting the right to life and dignity. In respect of sentence, the SCA unanimously held that the trial court committed a material error in applying s 51 (1) instead of s 51(2). This obliged the SCA to reconsider sentence afresh. It reflected upon the aggravating factors, the appellants as offenders and the victims of the offences as part of society. The majority (Cachalia, Mocumie, Mokgohloa and Dlodlo JJA concurring), imposed thirteen years’ imprisonment in the place of fifteen years’ imprisonment. The minority (Makgoka JA) would have imposed a sentence of correctional supervision. If he were to consider a prison term, he would have imposed between 8 and 10 years’ imprisonment, half of which would be suspended.

3655

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 679/2020 In the matter between: MICHAEL RAJU PADAYACHEE APPELLANT and THE STATE RESPONDENT Neutral citation: Padayachee v The State (679/2020) [2021] ZASCA 115 (16 September 2021) Coram: PETSE AP and MATHOPO, MOCUMIE and MAKGOKA JJA and MOLEFE AJA Heard: 24 August 2021 Delivered: This judgment was handed down electronically by circulation to the parties' legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 16 September 2021. Summary: Criminal procedure – leave to appeal against convictions and sentence refused by regional court and the high court – whether there are reasonable prospects of success on appeal against the conviction and sentence. ________________________________________________________________________ ORDER ________________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Vahed J and Bedderson AJ sitting as court of appeal): The appeal is upheld. The order of the court below, refusing the appellant leave to appeal against his convictions and resultant sentences, is set aside and substituted with the following: ‘The applicant is granted leave to appeal against his convictions and resultant sentences to the KwaZulu-Natal Division of the High Court. ________________________________________________________________________ JUDGMENT ________________________________________________________________________ Mocumie JA (Petse AP, Mathopo and Makgoka JJA and Molefe AJA concurring): [1] This is an appeal against the refusal of condonation and leave to appeal by the KwaZulu-Natal Division of the High Court, Pietermaritzburg (Vahed J and Bedderson AJ) (the Full Court). The appellant, Mr Michael Raju Padayachee, was indicted in the regional Court, Verulam on several charges. He was convicted of rape (count 2); two counts of assault with intent to do grievous bodily harm (counts 3 and 6); and attempted murder (count 7). He was sentenced as follows:(a) count 2 – rape, eight years’ imprisonment; (b) count 3 – the first count of assault with intent to do grievous bodily harm, three years’ imprisonment; (c) count 6 – the second count of assault with intent to do grievous bodily harm, 12 months’ imprisonment; and (d) count 7 – attempted murder, 15 years’ imprisonment, 3 years of which were suspended for five years, conditionally. None of the aforementioned sentences was ordered to run concurrently with the result that the appellant was sentenced to an effective term of 24 years’ imprisonment which he is presently serving. [2] The appellant, aggrieved by this, sought leave to appeal against his convictions and effective sentence. He also sought condonation for the late filing of his application for leave to appeal. On 9 February 2018, the regional court refused the application for condonation and the leave to appeal. The applications to the Full Court for leave to appeal against the refusal of the condonation application, as well as against the convictions and effective sentence in terms of s 309C(2)(a) of the Criminal Procedure Act 51 of 1977 (the CPA) were also refused on 25 June 2019. Subsequently, on 31 July 2020, the appellant applied to this Court in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 for special leave to appeal to this Court against the order of the Full Court. Two judges of this Court considered the application and granted special leave to appeal as sought. The application for condonation for the late filing of the application for special leave to appeal is not opposed by the State. [3] In S v Khoasasa,1 this Court held that the refusal, by two judges of a Division of the High Court, of leave to appeal is a ‘judgment or order’ or ‘a ruling’ as intended in ss 20(1) and 21(1) of the Supreme Court Act 59 of 1959, given by the Division concerned on appeal to it. If the appeal succeeds, this Court would then grant leave to appeal to the appropriate Division of the high court since it is that court that must hear such appeal in terms of s 309(1)(a) of the CPA.2 This means that the merits of the appeal itself, are not before this Court, only the question whether the Full Court ought to have granted leave to appeal on petition to it, against the refusal by the regional court to grant leave. [4] The test in this regard is simply whether there is a reasonable prospect of success in the envisaged appeal against the convictions and the resultant sentences, rather than whether the appeal against the convictions and resultant sentences ought to succeed. I now proceed to consider that question. 1 S v Khoasasa 2003 (1) SACR 123 (SCA) paras 14 and 19-22. 2 See S v Van Wyk and Another v The State and Galela v The State [2014] ZASCA 152; [2014] 4 All SA 708 (SCA); 2015 (1) SACR 584 (SCA). See also S v Tonkin [2013] ZASCA 179; 2014 (1) SACR 583 (SCA); S v Radebe [2016] ZASCA 172; 2017 (1) SACR 619 (SCA); S v Moyo [2018] ZASCA 157; 2019 (1) SACR 605 (SCA). [5] Counsel for the appellant submitted that: (a) there were inconsistencies and contradictions in the evidence of the State witnesses; (b) the State failed to call relevant witnesses who would have clarified crucial aspects of its case; (c) the trial court failed to properly evaluate the evidence of the single witness in relation to the rape and second assault counts. For its part, the State conceded that there are indeed reasonable prospects of success in the envisaged appeal. Having had the benefit of reading the record, I am satisfied on balance that the envisaged appeal would have a reasonable prospect of success. [6] As for the cumulative sentence, as stated earlier, the appellant was sentenced to an effective term of 24 years’ imprisonment. None of the individual sentences was ordered to run concurrently. It is sufficient to say that, there is a reasonable prospect that another court might well consider this to be a misdirection on the part of the trial court. In light of the foregoing, leave to appeal ought to have been granted both in respect of the individual convictions and resultant sentences. [7] In the result the following order is granted: The appeal is upheld. The order of the court below, refusing the appellant leave to appeal against the convictions and resultant sentences is set aside and substituted with the following: ‘The applicant is granted leave to appeal against his convictions and resultant sentences to the KwaZulu-Natal Division of the High Court.’ _________________ B C MOCUMIE JUDGE OF APPEAL APPEARANCES: For Appellant: J E Howse SC Instructed by: RK Nathalal and Company C/o Webber Attorneys, Bloemfontein For Respondent: IP Cooke Instructed by: Director of Public Prosecutions, Pietermaritzburg C/o Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 16 September 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Padayachee v The State (679/2020) [2021] ZASCA 115 (16 September 2021) Today the Supreme Court of Appeal (SCA) upheld the appeal against an order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (Vahed J and Bedderson AJ sitting as court of appeal). This case concerned the leave to appeal against both convictions and sentences refused by the regional court and the high court. The appellant was sentenced to an effective term of 24 years’ imprisonment, which none of the individual sentences was ordered to run concurrently. The question on appeal was whether there were reasonable prospects of success on appeal against the convictions and sentences. The SCA held that there is a reasonable prospect that another court might consider this to be a misdirection on the part of the trial court and there are reasonable prospects of success on appeal. As a result, the SCA upheld the appeal in respect of the convictions and resultant sentences. --------oOo--------

1840

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 411/10 In the matter between: JAMES NKOSI First Appellant ZWELI ALBERT MTHETHWA Second Appellant and THE STATE Respondent Neutral citation: James Nkosi v The State (411/10) [2011] ZASCA 83 (27 May 2011) Coram: PONNAN, MAYA JJA AND PETSE AJA Heard: 17 March 2011 Delivered: 27 May 2011 Summary: Appeal against convictions and sentences – whether appellants ought to have been discharged at close of state case in terms of s 174 of the Criminal Procedure Act 51 of 1977 – whether convictions and sentences imposed appropriate. __________________________________________________________________ ORDER On appeal from: North Gauteng High Court (Pretoria) (Hussain J sitting as court of first instance): The first appellant’s appeal succeeds. His convictions and sentences are set aside. The second appellant’s appeal is dismissed. __________________________________________________________________ JUDGMENT __________________________________________________________________ MAYA JA (Ponnan JA and Petse AJA concurring): [1] In the early hours of 9 September 2004, a gang of heavily armed robbers travelling in a blue Toyota Tazz motor vehicle attacked Fidelity Cash Management Services (Fidelity) security guards who were transporting cash from Boksburg to a Benoni pension pay-point, east of Johannesburg. The attempted cash-in-transit heist occurred on the busy N12 highway between Benoni and the Etwatwa off-ramp, between 06h00 and 07h00, in heavy early morning traffic. The Toyota had been violently robbed at gunpoint from its driver, Mr Joao Ananias Matembu, on the previous evening. [2] Unbeknown to the robbers, Fidelity had received a tip-off of an impending robbery. The police had been duly alerted and strategically positioned themselves along the relevant route. The attack occurred as anticipated. During the course of the attempted robbery, one of the two Fidelity vehicles and a passing motorist, Mr Johannes Hendrik Humphries, were shot by the gang. However, the police were waiting in the vicinity and a gunfight ensued between them and the gangsters who were armed with AK47 assault rifles and semi-automatic 9mm pistols. In the melee, the police shot four men. Two of them died at the scene. The other two, one of them, the second appellant, were arrested and conveyed to hospital. The third man died in hospital on the same day. [3] A Mazda 626 vehicle which had been observed at the crime scene during the commission of the offences was seen driving away. The police gave chase and a similar vehicle was subsequently found at a taxi rank in Daveyton, a township about 30 to 40 kilometres away. Its driver, the first appellant, was arrested. [4] The appellants were subsequently charged (a) on count 1, with robbery with aggravating circumstances of the Toyota; (b) on count 2, with attempted robbery with aggravating circumstances of the Fidelity vehicle, alternatively unlawful conspiracy with Sibanda (an employee of Fidelity who was murdered before the trial) to commit robbery; (c) on count 3, with the attempted murder of Humphries; (d) on counts 4,5 and 6, with the murders of the three would-be robbers Prince Hlophe, Philip Mahlaba and Vunokwakhe Mtshali; (e) on count 7, with unlawful possession of two AK47 rifles (f) on count 8, with unlawful possession of six 9mm pistols and (g) on count 9, possession of 7,62mm, 7,65mm and 9mm calibre ammunition. [5] The appellants pleaded not guilty to all the charges. After hearing evidence, the court below acquitted them in respect of the counts of the robbery of the Toyota (for lack of evidence against them) and the three counts of murder (the court found that the dead gangsters had been lawfully killed by the police acting in private defence). They were, however, convicted on counts 2, 3, 7, 8 and 9. They were then each sentenced to undergo 15 years imprisonment on count 2, seven years imprisonment on count 3, five years imprisonment on count 7, three years imprisonment on count 8 and 2 years imprisonment on count 9. The sentences on counts 7, 8 and 9 were ordered to run concurrently with those imposed on counts 2 and 3. Thus, they were each sentenced to an effective term of 22 years imprisonment. [6] The court below granted both appellants leave to appeal against their convictions and sentences. The state also sought leave to cross-appeal against their acquittals on the murder charges, which was granted, but abandoned its appeal before the hearing. Only the appellants’ appeals remain for adjudication. [7] The state called several witnesses to support its case. The evidence of the first of those witnesses, Matembu, is not relevant for present purposes as it concerned the robbery of the Toyota which is no longer in contention. Humphries, the next witness, testified that he was driving his bakkie along the N12 highway from the Witbank direction on his way to work in Johannesburg at about 06h20. He noticed two Fidelity vehicles approaching from the opposite direction. The one ahead suddenly swerved and turned around towards Johannesburg whilst the other one stopped. There was commotion as traffic halted abruptly and those who could, realizing that something was wrong, turned around to escape. [8] He stopped his bakkie in preparation to turn back. But before he could move, a blue Toyota Tazz came from the opposite direction and stopped in the middle of the highway, about 150 metres from him. A man carrying an AK47 rifle alighted from the vehicle and walked towards him, firing shots directly at his bakkie. One bullet penetrated his vehicle and struck his right shoulder. At that moment, a number of police vehicles swooped and a police helicopter landed behind his vehicle on the highway. His assailant was shot by the police and fell in front of his vehicle. The Toyota sped off pursued by the police who were shooting at it. It swung around and stopped at a nearby field. One of the vehicles that he noticed at the crime scene was a ‘white Mazda 626’ which drove away towards Johannesburg, behind the fleeing Fidelity vehicle, when the trouble started. A policeman assisted him out of his vehicle and he was taken to hospital. [9] One of the police officers monitoring the N12 highway before the incident was Inspector Jacobus Johannes Redelinghuys of the Serious Violent Crime Unit, Pretoria. According to him, members of his unit travelled to the N12 highway early that morning with an order to scout the road for a possible robbery. He travelled with a colleague, Captain Viljoen. They chose a spot along the highway and lay in wait. Not long thereafter, a green Fidelity vehicle drove past slowly towards Witbank followed closely by a ‘gold Mazda 626’ which drove on the yellow line of the road. Behind the Mazda followed another police vehicle from his unit, which was also on the stake-out. They joined the traffic and followed about 100 to 150 metres behind the Mazda, separated from it by one vehicle. At some stage, the Fidelity vehicle and the Mazda drove around a bend and disappeared from their sight momentarily. [10] They saw traffic suddenly turning around and speeding away and heard the sound of gunfire. They drove on and saw a blue Toyota Tazz, which travelled parallel to the highway, drive onto the nearby field, alongside the highway, and stop. The front passenger jumped out of the vehicle before it came to a complete standstill. Redelinghuys jumped out of his vehicle and approached the Toyota. The driver and a left rear passenger who remained in the Toyota alighted and he ordered them to lie on the ground. He confiscated the cellular phones he found upon searching them and noticed that they both had gunshot wounds. The man who jumped out of the Toyota earlier lay about 10 to 20 metres from it and had been apprehended by the other police officers. He was wounded. He searched him and removed his cellular phone. He found a 9mm pistol on the road near the Toyota. A man lay dead in the middle of the road and next to his body was an AK47 rifle. He did not see the Mazda again and had noticed neither its registration details nor its occupants as he had seen it from a distance of about 200 to 250 metres. [11] Captain Johannes Fryer was in one of the police vehicles which lay in wait at various observation points along the N12 highway. He testified that his party received a radio message alerting them to the approach of the Fidelity vehicles. They were shortly passed by one of the vehicles and followed it from behind a large volume of traffic spanning about 200 metres. Sudden gunfire erupted from the opposite direction bringing the traffic to a standstill. They weaved their way through and saw a blue Toyota Tazz parked on the right-hand side of the highway, facing the Witbank direction. Two men stood near it. One carried an AK47 rifle and was shooting at the Fidelity vehicle which tried to turn around towards the direction from which it had come. They could not see what the other man carried in his hands. [12] Superintendent Blom, who drove their vehicle, stopped and activated its blue light. They approached the gunman and ordered him to stop shooting, but he turned around and shot at them. They returned fire and the man dropped to the ground. Inspector Bambeger, one of his crew, approached the injured man to arrest him. Meanwhile, he and Blom pursued the Toyota which was driving away into the field. The vehicle stopped and he saw a man running away from it. He ordered him to surrender and subsequently arrested him. He then handed him to another colleague and left to join the helicopter crew to pursue a brown or beige Mazda 626 which, they were told by radio control, was involved in the offences and was fleeing the crime scene towards Daveyton. However, they were informed shortly after take-off that the Mazda had been apprehended at the Daveyton taxi rank and returned to the crime scene. [13] According to Constable Gaba Magaqa of Daveyton police station, a message came through radio control, reporting a robbery along the N12 highway, some 30 to 40 kilometres away, and that a ‘light brown Mazda 626’ with two occupants had been seen speeding towards Daveyton. He set off in chase with the assistance of a helicopter which flew overhead. He saw the vehicle pass a local college, Isidingo, at high speed and followed it to the local taxi rank for a distance he estimated initially between 200 to 250 metres, then a kilometre to a kilometre and a half and, finally, 40 to 50 metres. Once the vehicle stopped, two people jumped out and ran towards different directions. One of them, the first appellant, went to hide under a parked motor vehicle from which he dragged and arrested him in the presence of other police officers and the helicopter which still hovered above them. [14] A few more witnesses testified briefly on behalf of the state to tidy up some loose ends. Captain Sebola Mampane of the East Rand Services and Violent Crime Unit said that he arrived late at the crime scene, after it had been ‘contained’ and followed up on the whereabouts of the second appellant who was reported to have been arrested there. He found him at Springs Police Station on the following day, wrapped in bandages, and charged him. Inspector Jacobus van der Linde of Fidelity’s Investigations Services Intelligence Unit confirmed receiving a tip-off about a possible robbery. Only the rear wheels of their vehicle were damaged in the incident and its occupants were treated only for shock. Another witness was Mr Lunga Mthombothi, a paramedic of the Etwatwa Fire Department and one of the crew who attended to the injured men at the crime scene, who identified themselves as Dumisani Hlophe and Zweli Mthethwa (the second appellant). He conveyed them to hospital and had them admitted. The last witness was the investigating officer of the case, Inspector Goosen. He confirmed the death of Sibanda who, he said, would have been a key state witness but for his murder. [15] At the close of the state case, the first appellant’s legal representative expressed an intention to apply for his discharge in terms of s 174 of the Criminal Procedure Act 51 of 1977. However, the court below brusquely informed him that to do so would be ‘a waste of court time’ as ‘the practice was not to grant discharges piecemeal where there are multiple accused involved’ although ‘ it would have been a very different matter if [the first appellant] had been on his own’. Thus, the application was aborted. [16] Both appellants then testified in their defence and denied any involvement in the commission of the offences. It emerged from their evidence that they were old friends and that the vehicle driven by the first appellant on the day of the incident, a brown Mazda 626 as he described it, belonged to the second appellant. According to the first appellant, a taxi owner, he had purchased the vehicle on the second appellant’s behalf in December 2003. He borrowed it on the day preceding the incident because his vehicle had broken down. When it transpired during his cross-examination that he owned several vehicles which were in good working order at the material time, he said that he intended to use the Mazda to track down one of his taxis which had been stolen. The taxi rank from which he operated was strictly patrolled on Tuesdays and Thursdays and all taxi owners were expected to be present or face penalties which included a fine. As he would not be able to remain at the taxi rank and the disciplinary committee had already queried his frequent absences, in writing, he used the Mazda to avoid detection by the patrollers when he left because they knew his vehicles. [17] He left his home in Katlehong shortly before 06h00 on the fateful day and drove straight to the taxi rank in Daveyton using the Wattville Road. It appeared that the vehicle’s engine was faulty as it kept ‘cutting’. He thought that it might have run out of fuel and could not rely on its petrol gauge. He parked the vehicle near a public telephone shop and asked around for an empty container in order to buy petrol. Whilst waiting for the container he approached one Bheki Molotwa whom he had asked to repair his cellular phone. The special task force police arrived at that juncture and summarily arrested them together with four or five other people. [18] After being handcuffed, they were handed over to another team of police officers. According to him, Magaqa was not among his arrestors and he recalled being arrested by Inspector Moleka. They were led to the nearby Daveyton police station and, later, were conveyed by car to the Germiston Murder and Robbery Unit. On the following evening he heard Molotwa’s name being called. He did not see him again and when he asked the investigating officer about his whereabouts, he was informed that he had been taken to Rustenberg for another case. He met the second appellant during a subsequent court appearance and learnt that he had also been arrested on the day of his own arrest. He denied travelling on the N12 highway, which he estimated to be about 30 to 40 kilometres from the taxi rank. [19] The gist of the second appellant’s testimony was that he was inadvertently caught in cross-fire between the police and the would-be robbers and that he was arrested whilst on his way to fetch his vehicle from the first appellant in Daveyton. He said that he left home after 05h00 after receiving a telephone call from the first appellant reporting that the Mazda had a fault. The vehicle’s petrol pump was generally not in a sound condition and, as he knew how to fix it, he went to assist the first appellant who advised him to call for directions to his location when he reached Etwatwa. He travelled to Germiston and, from there, caught another taxi to Benoni where he would catch the last taxi to his destination, Daveyton taxi rank. However, upon arrival at the Benoni taxi rank, he found no available transport. He then took a lift in a truck travelling to Middleburg on the N12 road which dropped him off at the Etwatwa off-ramp just as the gunfight started. He was then arrested in the confusion whilst fleeing the scene which he had not even had the opportunity to observe. [20] On the basis of this evidence, the court below found that the state witnesses were credible and that the state version of the events was largely unchallenged. Adverse credibility findings were made against the appellants who were described by the court as very unsatisfactory, evasive and lying witnesses with improbable versions which could not reasonably possibly be true. In the court’s view, the evidence established beyond reasonable doubt that the appellants received information from Sibanda which they used to execute the attempted robbery using the Toyota, in which the second appellant travelled, and the Mazda carrying the first appellant and Sibanda, who fled the scene upon encountering the police but were nonetheless seen and followed to Daveyton where they were arrested. [21] I deal first with the first appellant’s conviction. What linked him to the case is only the fact that he drove a Mazda 626 vehicle belonging to the second appellant on the morning in question. I have a grave difficulty with the description of the Mazda 626 observed at the crime scene. The witnesses variably testified about a ‘white’, a ‘gold’ and a ‘light brown or beige’ vehicle. Humphries and Redelinghuys each saw the same vehicle model but in starkly different colours travelling towards the opposite ends of the highway. Whatever description is accepted, it could hardly be the brown vehicle found subsequently. Significantly, neither witness had observed the ‘white’ or ‘gold’ vehicle being used in a manner which singled it out from the numerous vehicles said to have been on that road, other than following behind the Fidelity vehicle. But then Redelinghuys believed the one he saw to have followed the flow of traffic towards Witbank as he did not see it again. Humphries saw the white one turn around and drive towards Johannesburg behind the Fidelity vehicle as other vehicles did. Neither witness got close to either vehicle sufficiently to see its registration numbers or its occupants. [22] Most importantly, other than the cryptic radio message from a faceless individual mentioned by Fryer and Magaqa, to pursue a ‘light brown or beige’ Mazda believed to be involved in the attempted robbery with no other distinguishing features given, no evidence at all was led to establish that such ‘light brown of beige’ vehicle (a) had been observed at the scene, (b) what rendered it suspicious and (c) if it was the same vehicle seen by Magaqa, some 30 to 40 kilometres away. Magaqa’s evidence that he tracked it with the helicopter’s assistance merely created more uncertainty because Fryer who was in that helicopter (the state led no evidence to show that more than one police helicopter was involved in the incident) said that they abandoned the chase quite early without once sighting the Mazda or going anywhere near Daveyton taxi rank, as Magaqa claimed, because of the radio report that it had already been captured. And, as indicated above, it turned out after some prevarication by Magaqa on this point in his cross-examination that he pursued the vehicle for a negligible distance, a mere 40 to 50 metres. [23] These inconsistencies in Magaqa’s evidence, especially when he was a single witness on this crucial aspect, seem to lend credence to the first appellant’s denial, put to Magaqa during his cross-examination, that he was arrested by someone else – a version which the state surprisingly ignored, despite the fact that the first appellant named the policeman he claimed to have arrested him, and did not call any of the several officers said to have been present during the arrest. But with or without Magaqa’s dubious account of the pursuit of the light brown Mazda and capture of the first appellant, there remains a yawning gap between the seemingly innocent white and gold Mazda 626 vehicles last seen driving towards Johannesburg and Witbank, respectively, without taking any part in the commission of the offences and the light brown one observed by Magaqa hurtling past Isidingo College in Daveyton. [24] As the court below itself seems to have realized, judging from its remarks mentioned in paragraph [15] above, the state had not established any evidence against the first appellant on which a reasonable man could convict him at the end of its case. The court below obviously refused to entertain his application for a discharge in the hope that his co-accused might provide incriminating evidence against him and supplement the state case. By so doing, counsel for the first appellant argued, the court below improperly exercised its discretion and violated his Constitutional right against self-incrimination. [25] In S v Lubaxa,1 this court found it an unlawful breach of an accused’s rights under ss 10 and 12 of the Constitution2 to refuse him a discharge if there is no possibility of a conviction except if he testifies and incriminates himself. But the court held that the same considerations may not arise where the prosecution’s case against one accused might be supplemented by the evidence of a co-accused and 1 S v Lubaxa 2001 (2) SACR 703 (SCA) paras 18 ff. 2 The Constitution of the Republic of South Africa, 1996. explained the basis for the distinction as follows: ‘[20] The prosecution is ordinarily entitled to rely upon the evidence of an accomplice and it is not self-evident why it should necessarily be precluded from doing so merely because it has chosen to prosecute more than one person jointly. While it is true that the caution that is required to be exercised when evaluating the evidence of an accomplice might at times render it futile to continue such a trial (Skeen (op cit at 293)) that need not always be the case. [21] Whether, or in what circumstances, a trial court should discharge an accused who might be incriminated by a co-accused, is not a question that can be answered in the abstract, for the circumstances in which the question arises are varied. While there might be cases in which it would be unfair not to do so, one can envisage circumstances in which to do so would compromise the proper administration of justice. What is entailed by a fair trial must necessarily be determined by the particular circumstances.’3 [26] As I have said, there clearly was no evidence upon which the court below might reasonably have convicted the first appellant at the close of the state case. Neither was there any reasonable basis, in my view, for an expectation that his co- accused might incriminate him. The second appellant had given no plea explanation and no indication whatsoever during the cross-examination of the state witnesses that he might do so. In fact, it did not emerge that the second appellant was ever at the scene until the evidence of Mthombothi and Captain Mampane was led in the late stages of the state case. And even then, there was no hint that he might augment the state case from the very terse and vague cross- examination of these two witnesses. [27] Plainly, the court below failed to properly evaluate the evidence at the end of the state case and wrongly exercised its discretion. The first appellant was entitled to a discharge (which he was not even given a proper opportunity to apply for) and placing him on his defence in these circumstances undoubtedly denied 3 Compare S v Ndlangamandla 1999 (1) SACR 391 (W) at 393f-h; S v Legote 2001 (2) SACR 179 (SCA) para 9. him a fair trial. I should perhaps add briefly that even a consideration of all the evidence, including the defence version, did not warrant his conviction despite the flaws in his own testimony as the critical gap in the evidence remained. The court below misdirected itself in a number of material respects by giving insufficient attention to serious discrepancies in the state version and making findings (for example, that he tried to conceal that he was good friends with the second appellant, fabricated the character of Molotwa and was with Sibanda on the morning of the incident) which were not supported by the evidence on record. [28] The position of the second appellant is, however, an entirely different matter. He was wounded and arrested at the scene of the crimes, a mere 10 to 12 metres from the gangsters’ Toyota. The striking feature of his testimony is his extreme reluctance to reveal his capture at the scene by Fryer and that he had been injured there which he acknowledged only at the very end of his cross- examination. It seems incredible that an innocent bystander wounded by state agents and then, to add insult to injury, wrongly arrested would hide that fact instead of indignantly proclaiming his innocence and perhaps even seeking redress for the injustice. [29] There are other features of the second appellant’s version which cast doubt on its veracity. The first appellant said nothing at all about their alleged arrangement to meet that morning when he testified. Instead, he gave a contrary version during his cross-examination which went as follows ‘After you fetched his motor vehicle, when did you see [second appellant] again? I saw him again at Springs after he was arrested … I was at court where we were all about to appear … Did you ask [second appellant] why he was arrested? … Yes … Did he tell you which place was it where there was shooting? … Yes … Did he perhaps explain to you where he was heading? Yes … he said he was going to fetch his car from me … at Daveyton. And how he was travelling? I did not ask him. I also told him that I did phone him to inform that his car was giving me trouble’. [30] It was never put to Fryer that the second appellant informed him when he was placing him under arrest that he had just alighted from a truck which had given him a lift. And the second appellant could not explain satisfactorily why he ventured on a long and arduous trip at the crack of dawn to fetch (or, irreconcilably, fix as he testified at some stage of his questioning) a car which was mobile, even if faulty, from the first appellant who had several vehicles instead of simply asking him to return it. [31] The court below found it improbable that there would have been no taxis at Benoni taxi rank which is situated near a train station during the morning peak period as the second appellant claimed in an effort to explain his odd presence on the busy highway. I agree with that view. Furthermore, his evidence that he was unfamiliar with that area raises the question how he would have known about the seemingly obscure footpath to Etwatwa which traverses the mealie-field which he said he was planning to follow upon alighting from the truck. [32] It was contended on the second appellant’s behalf that the evidence of Redelinghuys and Fryer which suggested that he emerged from the Toyota was unreliable because the scene was mobile and dusty. I see no reason to doubt the reliability of these witnesses’ observations. Redelinghuys was certain that the man he saw get off the Toyota was the same one they captured shortly thereafter, at no more than 20 metres from that vehicle. Fryer stated that even though it was dusty because of the ploughed field, one could still see clearly. He insisted that he saw no pedestrians in that vicinity and that even though he did not see the passenger get off the vehicle there was nowhere else that he could have come from but the Toyota. Photographs of the crime scene taken directly after the foiled robbery depict a flat, straight strip of a multi-lane road flanked by expanses of recently ploughed fields with no buildings in sight. They show no vegetation or any objects which would have obstructed the view of Redelinghuys or Fryer once they had their sights on the Toyota and make plain the sheer improbability of a pedestrian going unnoticed instead of standing out on the barren terrain, a version which was, in any event, never put to the two policemen. [33] The second appellant’s explanation for his presence at the crime scene simply did not bear scrutiny. The evidence presented by the state established beyond reasonable doubt that he was a passenger in the Toyota. The conclusion that he was one of the gang which set out to commit the foiled robbery is ineluctable in the circumstances. His convictions were, therefore, proper and should not be disturbed. [34] Turning to the question of sentence, it should be reiterated that sentencing is pr-eminently a matter for the discretion of the trial court and that this court does not have an overriding discretion to interfere unless the sentences imposed by the court below are vitiated by irregularity or misdirection or are disturbingly inappropriate.4 Although the appeal had been directed at the sentences imposed on the second appellant as well, his counsel conceded their correctness during the hearing. [35] The concession seems to me proper in view of the judgment of the court below which shows that it carefully considered all the factors relevant in the enquiry – the second appellant’s personal circumstances, the nature of the offences involved and the interests of society. Some of the sentences were, fairly, ordered to run concurrently with the sentences imposed in respect of the main counts. 4 S v Rabie 1975 (4) SA 855 (A). [36] Section 51(1) read with Part I of Schedule 2 of the Criminal Law Amendment Act 105 of 1997 prescribes a minimum sentence of 15 years imprisonment, which was imposed here, for the completed offence of robbery and makes no specific provision for attempted robbery of which the second appellant was convicted on count 2. In my opinion, there is little in the circumstances of this case to distinguish between a completed robbery and the heinous, foiled attempt by the second appellant, who runs a seemingly decent paving business, and his associates, which involved the use of heavy artillery and gratuitous violence with no regard for the safety of innocent civilians or police. The offence of robbery was all but completed and it is a miracle that Humphries survived and more people were not maimed or killed. The offences committed in this case count among the most violent and, unfortunately prevalent in this country. The harshest form of punishment is undoubtedly warranted. [37] I am satisfied in the circumstances that there is no legal basis to interfere with the sentences and they must stand. The following order is accordingly made: 1 The first appellant’s appeal succeeds. His convictions and sentences are set aside. 2 The second appellant’s appeal is dismissed. _____________________ MML Maya Judge of Appeal APPEARANCES APPELLANT: H L Alberts Pretoria Legal Aid Centre RESPONDENTS: KM Mashile Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 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 James Nkosi v The State (411/10) [2011] ZASCA 83 (27 May 2011) The Supreme Court of Appeal today upheld the appeal of Mr James Nkosi but dismissed that of his co-appellant, Mr Zweli Albert Mthethwa, brought against their convictions and sentences imposed by the North Gauteng High Court arising from an attempted cash-in- transit heist of a Fidelity Cash Management Services which occurred on the N12 highway between Benoni and Etwatwa off-ramp in the morning of 9 September 2004. A passing motorist, Mr Johannes Humphries, was shot and injured by one of the would-be robbers, three of whom were killed by the police in the gunfight that ensued at the crime scene. The Supreme Court of Appeal found that there was no evidence implicating Nkosi in the crimes and that he should have been discharged at the close of the State case. The SCA however held that Mthethwa, who was seen jumping out of the gangster’s blue Toyota Tazz and was shot and wounded at the scene, was proper.The sentences imposed, which amounted to an effective term of 22 years imprisonment, were also found proper in view of the seriousness and prevalence of the relevant offences. ---ends---

3367

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 263/19 In the matter between: PHILLIPA SUSAN VAN ZYL NO APPELLANT and THE ROAD ACCIDENT FUND RESPONDENT Neutral citation: Phillipa Susan van Zyl NO v The Road Accident Fund (263/19) [2020] ZASCA 51 (6 May 2020) Coram: MAYA P and ZONDI and MOKGOHLOA JJA and KOEN and EKSTEEN AJJA Heard: 16 March 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 6 May 2020. Summary: Interpretation of statutes – provisions of Prescription Act 68 of 1969 not applicable to claims under the Road Accident Fund Act 56 of 1996 – prescription of such claims regulated by s 23 of Road Accident Fund Act. ORDER On appeal from: Eastern Cape Division of the High Court, Grahamstown (Bloem J, sitting as court of first instance): The appeal is dismissed with no order as to costs. JUDGMENT Zondi JA (Maya P and Mokgohloa JA and Koen and Eksteen AJJA concurring) [1] This appeal concerns the question whether the running of prescription in respect of Mr Koos Jacobs’ claim for damages under the Road Accident Fund Act 56 of 1996 (the RAF Act) is governed exclusively by the provisions of s 23 of the RAF Act, or whether s 13(1) of the Prescription Act 68 of 1969 also applies to the claim. On behalf of Mr Jacobs it was contended that the provisions of s 13(1) of the Prescription Act also apply to his claim for compensation under the RAF Act and that his claim therefore had not become prescribed. The argument on behalf of the Road Accident Fund (the RAF), by contrast, was that the provisions of s 23 of the RAF Act apply to the exclusion of s 13(1) of the Prescription Act. [2] The Eastern Cape Division of the High Court, Grahamstown (Bloem J) held that the provisions of s 23 of the RAF Act apply to the claim to the exclusion of s 13(1) of the Prescription Act, and held that Mr Jacobs’ claim had indeed become prescribed. It accordingly dismissed Mr Jacobs’ claim. The appeal, with leave of the court below, is against this order upholding the special plea. [3] The issue arose in these circumstances. On 1 May 2010 and at Willowmore, Eastern Cape, Mr Jacobs, who was born on 2 November 1972, sustained serious head injuries when a motor vehicle bearing registration number CB 534376, in which he was a passenger, was involved in a collision. His occupational functioning has been adversely affected due to the combination of physical difficulties (left hemiparesis and communication difficulties) and symptoms of Organic Brain Syndrome. The nature and extent of the injuries sustained by Mr Jacobs are set out more fully in the medico-legal report compiled by Dr David Shevel. He lodged a claim with the RAF on 18 January 2017, some seven years after the date of the accident. The RAF repudiated the claim based on prescription. In terms of s 23 of the RAF Act Mr Jacobs’ claim should have been lodged with the RAF by 30 April 2013 and he should have served summons against the RAF by 30 April 2015. He did not do so for the reasons that will become apparent later in this judgment. [4] On 28 November 2017 the appellant was appointed as the curatrix ad litem to Mr Jacobs by order of court. That order placed Mr Jacobs under curatorship. On 8 March 2018 the appellant in her capacity as curatrix ad litem instituted action against the RAF1 in which she claimed damages on behalf of Mr Jacobs. The RAF defended the action and raised a special plea of prescription. It contended that the right to claim compensation under s 17 of the RAF Act had prescribed as it was not lodged within the period of three years from the date of the accident, and that Mr Jacobs did not fall under the categories of persons referred to in s 23(2) of the RAF Act. The persons referred to in s 23(2) are ‘a minor; any person detained as a patient in terms of any mental health legislation; or a person under curatorship’. Subsection (3) provides that once a claim has been lodged in terms of s 17(4)(a) or s 24 of the RAF Act, a claimant gains an additional two years before the claim finally prescribes.2 [5] It is apparent from the facts thus far set out that Mr Jacobs, because of prescription, could not claim compensation under the RAF Act unless the provisions of the Prescription Act also apply to his claim. The appointment of the 1 It is not clear when the summons was served on the RAF. 2 Mr Jacobs was placed under curatorship on 28 November 2017 when his claim had become prescribed under the Act. a curatrix did not render him retrospectively a person under curatorship as contemplated by s 23(2)(c) of the RAF Act. That appointment occurred when his claim had already prescribed. [6] In her replication, the appellant pleaded that although Mr Jacobs did not strictu senso fall within the class of persons referred to in s 23(2) of the RAF Act, he had at all times material hereto, since the incident on 1 May 2010, been of unsound mind and/or was insane and/or unable to manage his affairs and would have qualified for the appointment of a curator ad litem to assist him with the litigation. The alternative reply to the RAF’s prescription plea was pleaded as follows: ‘6. Further in the alternative and in any event, the provisions of sections 12(3) and/or 13(1)(a) of the Prescription Act 68 of 1969 find application, in that the Patient, at all material times hereto: 6.1 has lacked (a) the requisite capacity to institute action, and (b) the ability to gain “knowledge of the identity of the debtor and of the facts from which the debt arises”, as envisaged by section 12(3) of Act 68 of 1969; and/or 6.2 is to be regarded as an “insane” person (i.e. of unsound mind incapable of managing his affairs and with no capacity to institute action) as envisaged by section 13(1)(a) of Act 68 of 1969, read with Road Accident Fund v Smith NO 1999 (1) SA 92 (SCA) and RAF v Mdeyide and another 2007 (7) BCLR 805 (CC) at paragraphs 31 to 40.’ [7] Section 23 of the RAF Act provides: ‘23. Prescription of claim.─(1) Notwithstanding anything to the contrary in any law contained, but subject to subsections (2) and (3), the right claim compensation under section 17 from the Fund or an agent in respect of loss or damage arising from the driving of a motor vehicle in the case where the identity of either the driver or the owner thereof has been established, shall become prescribed upon the expiry of a period of three years from the date upon which the cause of action arose. (2) Prescription of a claim for compensation referred to in subsection (1) shall not run against─ (a) a minor; (b) any person detained as a patient in terms of any mental health legislation; or (c) a person under curatorship. (3) Notwithstanding subsection (1), no claim which has been lodged in terms of section 17(4)(a) or 24 shall prescribe before the expiry of a period of five years from the date on which the cause of action arose.’ [8] The material provisions of s 13(1)(a) of the Prescription Act read: ‘13. Completion of prescription delayed in certain circumstances.–(1) If- (a) the creditor is a minor or is insane or is a person under curatorship or is prevented by superior force including any law or any order of court from interrupting the running of prescription as contemplated in section 15(1)…the period of prescription shall not be completed before a year has elapsed after the day referred to in paragraph (i).’ [9] The special plea was separately adjudicated by the high court and for that purpose the parties agreed that the following facts were common cause between them: ‘1. The patient was involved in a motor vehicle collision on 1 May 2010; 2. The patient’s claim was lodged with the Road Accident Fund on 18 January 2017; 3. The Curatrix Ad Litem was appointed by a court order on 28 November 2017; 4. Purely for purposes of the adjudication of the Special Plea of prescription, the Defendant admits: 4.1 The content of the medico-legal reports of Dr D Shevel and Dr R Melvill; 4.2 That the patient, Mr Koos Jacobs, was rendered of unsound mind and/or non- compos mentis as a result of the injuries sustained in the incident dated 1 May 2010, as described in the Particulars of Claim at paragraph 3. In the event of the Special Plea not being upheld, the Defendant shall not be bound by such admission and reserves its rights to obtain its own expert reports in rebuttal of the views expressed in the reports of Dr Shevel and Dr Melvill. 5. Summons was issued against the Defendant of 8 [March] 2018.’ [10] In upholding the special plea the high court held that s 13(1)(a) of the Prescription Act does not apply to Mr Jacobs’ claim because of the inconsistency between the provisions of that section and those of s 23(2)(b) of the RAF Act. [11] Counsel for the appellant submitted that upholding the high court judgment will result in the exclusion of two classes of persons from protection, namely mentally incapacitated persons, unless they are detained as patients in terms of the mental health legislation referred to under s 23(2)(b) and other mentally disabled unless they are under curatorship as envisaged in s 23(2)(c) of the RAF Act. He argued that the decision of this Court in Road Accident Fund v Smith NO,3 which held that both classes of persons were protected by s 13(1)(a) of the Prescription Act, was not overruled expressly by the Constitutional Court in Road Accident Fund and Another v Mdeyide4 (Mdeyide 2). His alternative argument was that should it be found that Mdeyide 2 impliedly overruled Smith, that Mdeyide 2 was distinguishable, on the facts, from the present matter. This is on the basis that Mdeyide 2 concerned a person who was found to have been of sound mind, not a person under curatorship, with the result that it did not deal, first, with s 13(1)(a) of the Prescription Act; and secondly, with the effect of s 23(2)(b) of the RAF Act on insane persons or persons of unsound mind. [12] In Smith, upon which the appellant placed much reliance, the facts, which bear resemblance to the present case, were that on 27 May 1989 Mr Sibiya sustained bodily injuries in a motor vehicle collision. In terms of the court order dated 14 June 1984, the respondent was appointed as curator ad litem to Mr Sibiya by reason of his mental derangement. Shortly thereafter the respondent , on behalf of Mr Sibiya, lodged a claim for compensation in terms of article 62 of the schedule (the Agreement) to the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989 (the 1989 Act). The claim was lodged with the Multilateral Motor Vehicle Accidents Fund whose rights and obligations subsequently devolved upon the present respondent in terms of s 2(2)(a) of the RAF Act. [13] During September 1995 the respondent (Smith) instituted action against the appellant in the high court in which he claimed compensation on behalf of Mr 3 Road Accident Fund v Smith NO 1999 (1) SA 92 (SCA); [1998] 4 All SA 429 (A). 4 Road Accident Fund v Mdeyide [2010] ZACC 18; 2011 (1) BCLR 1 (CC); 2011 (2) SA 26 (CC). Sibiya. The appellant raised a special plea that the claim had prescribed. It argued that article 56 of the Agreement regulated the running of prescription under the 1989 Act to the exclusion of the Prescription Act and that at the time of the respondent’s appointment as curator ad litem, the claim had already become prescribed. In response thereto the respondent argued (a) that the provisions of the Prescription Act prescription do not run against an insane person or a person under curatorship, and that Mr Sibiya was both insane and a person under curatorship as contemplated in the 1989 Act; and (b) that article 56 of the 1989 Act provides that prescription shall not run against a person under curatorship, and that Mr Sibiya was such person. [14] The high court found that because Mr Sibiya was insane, the period of prescription prescribed by article 55 of the Agreement had not been completed when the action was instituted by the respondent. It accordingly dismissed the appellant’s special plea. [15] On appeal the issue was whether the running of prescription in respect of Mr Sibiya’s claim under the 1989 Act was governed by the provisions of articles 55 and 57 of the Agreement, or whether s 13(1) of the Prescription Act was also applicable. Farlam AJA, who wrote on behalf of the majority, held that the Prescription Act also applied to third party claims under the Agreement. He reasoned that in the common law the principle was accepted that prescription did not run against persons under disability during such disability. The Prescription Act also protects persons under disability (including those who are insane) from the consequences of the running of prescription, no longer by suspending the running of prescription, but by delaying its completion until a year has elapsed since the disability in question has ceased to exist. According to Farlam AJA, if Parliament had intended to deprive persons who had been protected from the running of prescription under the common law and later protected under s 13(1)(a) of the Prescription Act of any protection at all from prescription, he would have expected much clearer language than the language which was used. [16] This was the position regarding the relationship between the RAF Act and the Prescription Act in relation to the prescription of claims under the RAF Act, until the Constitutional Court judgment in Mdeyide 2. [17] In Mdeyide v Road Accident Fund5 (Mdeyide) a blind, illiterate and innumerate man sustained certain bodily injuries in a motor vehicle collision on 8 March 1999. On 17 September 1999 Mr Mdeyide, at his wife’s urging and accompanied by her, visited the offices of the attorneys to obtain advice and assistance. One of the attorneys consulted with him and his wife in preparation for submitting a claim for compensation against the RAF. On 11 March 2002, more than three years from the date of the collision, a claim for compensation was lodged with the RAF on his behalf. [18] On 3 February 2003 the RAF wrote to Mr Mdeyide’s attorney stating that his claim had prescribed, but that it was willing to entertain it provided that an application for condonation was made. [19] Mr Mdeyide’s action for damages flowing from the injuries sustained in the collision was instituted on 27 February 2004. In response thereto the RAF raised prescription in terms of s 23(1) of the RAF Act. Mr Mdeyide replicated. He pleaded that he had no concept of time and space and that his personal circumstances were relevant because they enabled him to rely on s 12(3) of the Prescription Act. This section provides that ‘[a] debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises. . . .’ [20] The matter was heard by Notshe AJ. He concluded that s 23(1) of the RAF Act applied to Mr Mdeyide’s claim and that his claim had prescribed in terms of that section. Notshe AJ found that s 23(1) of the RAF Act; insofar as it does not make provision for the knowledge of the debtor and of facts from which the debt 5 [2006] ZAECHC 125. arises, infringed upon Mr Mdeyide’s rights of access to court as enshrined in the Constitution. He declared s 23(1) to be inconsistent with the Constitution and for that reason, he dismissed the RAF’s special plea. Notshe AJ thereupon referred the matter to the Constitutional Court for confirmation of the order of invalidity. [21] In Road Accident Fund v Mdeyide and Another6 (Mdeyide 1) the matter came before the Constitutional Court to confirm the declaration of invalidity order, which it declined to do. The Constitutional Court concluded that insufficient evidence had been presented in the high court regarding Mr Mdeyide’s capacity to litigate. It remitted the matter for further evidence, remarking that Mr Mdeyide might have been able to invoke the protection of s 13(1)(a) of the Prescription Act if it were to be found that after the accident he had in fact been of unsound mind and in need of a curator ad litem and one had been appointed for him before the termination of the three-year period. [22] The high court thereupon conducted an inquiry, as envisaged in rule 57 of the Uniform Rules of Court, into Mr Mdeyide’s capacity to litigate. Although the high court found that Mr Mdeyide was of sound mind, it nevertheless reinstated the original order. It referred the matter to the Constitutional Court for confirmation.7 [23] In the Constitutional Court two main submissions were made on behalf of Mr Mdeyide. First, it was argued that it was not necessary to reach the constitutional issue. The argument was, that, by virtue of s 16 of the Prescription Act, s 12(3) of the same Act applies also to cases falling under the RAF Act and delays the commencement of prescription, until the creditor acquires knowledge of the identity of the debtor. Consequently, prescription would only have begun to run when Mr Mdeyide found out about the RAF during his first consultation with his attorney. Thus, so it was argued, his claim would not have prescribed when he 6 [2007] ZACC 7; 2007 (7) BCLR 805 (CC); 2008 (1) SA 535 (CC). 7 Mdeyide 2. filed it. The alternative submission was that the high court was correct in its reasoning and conclusion that s 23(1) of the RAF Act was unconstitutional. [24] In determining whether the provisions of the Prescription Act applied also to Mr Mdeyide’s claim, the Constitutional Court had regard, first, to the text of s 23(1) of the RAF Act and secondly, to the provisions of s 16 of the Prescription Act,8 which state that the provisions of the Prescription Act apply save insofar as they are inconsistent with the provisions of any Act of Parliament.9 [25] In relation to the text of the RAF Act, the Constitutional Court noted that the words ‘notwithstanding anything to the contrary in any law’ appearing in s 23(1) of the RAF Act, indicated that the RAF Act was drafted with the knowledge that other provisions on prescription might exist on the statute book and in common law and that the purpose of the RAF Act was to regulate a specific and separate area, namely claims for compensation against the RAF, regardless of any other legal rule. [26] As regards the question whether the provisions of the Prescription Act were ousted by the provisions of the RAF Act, the Constitutional Court undertook a consistency evaluation between the two Acts. It found that s 12(3) of the 8 Section 16 provides: ‘(1) Subject to the provisions of subsection (2)(b), the provisions of this chapter shall, save in so far as they are inconsistent with the provisions of any Act of Parliament which prescribes a specified period within which a claim is to be made or an action is to be instituted in respect of a debt or imposes conditions on the institution of an action for the recovery of a debt, apply to any debt arising after the commencement of this Act. (2) The provisions of any law– (a) which immediately before the commencement of this Act applied to the prescription of a debt which arose before such commencement; or (b) which, if this Act had not come into operation, would have applied to the prescription of a debt which arose or arises out of an advance or loan of money by an insurer to any person in respect of an insurance policy issued by such insurer before 1 January 1974, shall continue to apply to the prescription of the debt in question in all respects as if this Act had not come into operation.’ (Emphasis added.) It is clear from the text of s 16 of the Prescription Act that the section recognises the fact that there were other pieces of legislation which regulated prescription before the RAF Act came into operation. Section 16(2) of the Prescription Act safeguards the continued application of the legislation concerned in certain circumstances. 9 The RAF Act in this case. Prescription Act and s 23(1) of the RAF Act ‘differ with regard to the central topic in the two provisions, namely the point when prescription starts to run.’10 The Constitutional Court stated that s 23(1) simply relies on the date on which the cause of action arose, provided the requirements of s 17 are met. It does not require knowledge of the identity of the debtor and of the facts from which the debt arises, as s 12(3) does. As regards the identity of the debtor the Constitutional Court had this to say at para 49 of the judgment: ‘As to knowledge of the identity of the debtor, the RAF as the debtor against whom claims are lodged, differs from the debtors whose identity is referred to in the Prescription Act. The reason why knowledge of the identity of the debtor is required in the event of prescription of claims in general is obvious. One may often know that money is being owed to you, for example in terms of a delictual claim for damage to property, but one may not know who caused the damage and thus who to claim from, until this knowledge is gained from some investigation or the emergence of evidence otherwise. In contrast, the RAF does not have an “identity” in the same sense that debtors in general have. It is not one of several or numerous possible wrongdoers. It was never an actor in the facts making up the cause of action. As indicated earlier, knowledge of the identity of the driver or owner of the vehicle is in any event required by section 17. The RAF is a statutory body specifically created for the purpose of compensating the victims of road accidents. Knowledge of the identity of the debtor thus means knowledge of the law, that is that a victim of a motor vehicle accident has a claim against a public fund, namely the RAF.’ [27] The Constitutional Court concluded that the Prescription Act was inconsistent with the provisions of the RAF Act and that s 12(3) of the Prescription Act can, therefore, not apply to claims under the RAF Act.11 The appellant’s contention that the Smith case was not overruled by the Constitutional Court in Mdeyide 2, is therefore unsustainable in light of its findings. [28] The conclusion that s 23(1) was drafted specifically to regulate claims for compensation under the RAF Act is also borne out by the background against 10 Mdeyide 2 para 47. 11 Mdeyide 2 para 53. which the section was enacted. The words ‘notwithstanding the provisions of any other law relating to prescription’, were first inserted by s 11(1)(a) of the Compulsory Motor Vehicle Insurance Amendment Act 69 of 1978.12 This was in reaction to the confusion that prevailed regarding whether prescription was governed by the relevant third party compensation legislation or by the Prescription Acts of 1943 and 1969. It has been retained in all subsequent sections of third party compensation legislation, including the Multilateral Motor Vehicle Accidents Fund Act dealing with prescription. [29] Prior to the amendment of s 24(1) of the Compulsory Motor Vehicle Insurance Act 56 of 1972, there were judicial pronouncements to the effect that both the Prescription Act and the common law relative to interruption and suspension of prescription applied to the prescriptive provisions of the section and its precursor, s 11 of the Motor Vehicle Insurance Act 29 of 1942,13 and that therefore prescription under the MVA Act did not run against, for example, a person of unsound mind. [30] For these reasons the reliance by the appellant on the judgment of Tuchten J in Van Rooyen NO v Road Accident Fund,14 cannot be correct. In that judgment Tuchten J held that Smith was not impliedly overruled by Mdeyide 2 on the ground that the Constitutional Court in Mdeyide 2 did not expressly overrule or criticise Smith, nor did it refer to the issue of availability of s 13(1)(a) of the Prescription Act, which was left open in Mdeyide 1. [31] In my view, Van Rooyen NO was clearly wrong to the extent that it sought to create an exception, in respect of incapacitated persons, to the rule that the 12 This Act was repealed by s 19 of the Motor Vehicle Accidents Act 84 of 1986, which was in turn repealed by s 27 of the RAF Act. 13 Terblanche v South African Eagle Insurance Co Ltd [1983] 2 All SA 13 (N); 1983 (2) SA 501 (N) at 504C-H. 14 Van Rooyen NO v Road Accident Fund [2018] ZAGPPHC 675; 2019 (2) SA 290 (GP). Prescription Act and the RAF Act are inconsistent and that the question of prescription of third party claims is solely governed by the RAF Act. [32] It was also submitted by the appellant in her heads of argument that in interpreting s 23 of the RAF Act, which, it was contended, directly affects Mr Jacobs’ right of access to courts, the high court should have had regard to s 34 of the Constitution and, with reference to Mbele v Road Accident Fund [2016] ZASCA 134; [2016] 4 All SA 752 (SCA); 2017 (2) SA 34 (SCA) para 17, the purpose of the RAF Act. It is correct that when interpreting any legislation, a court is enjoined by s 39(2) of the Constitution to promote the spirit, purport and objects of the Bill of Rights. The Constitutional Court in Makate v Vodacom (Pty) Ltd and Others15 explained how this interpretation exercise was to be approached: ‘The objects of the Bill of Rights are promoted by, where the provision is capable of more than one meaning, adopting a meaning that does not limit a right in the Bill of Rights. If the provision is not only capable of a construction that avoids limiting rights in the Bill of Rights but also bears a meaning that promotes those rights, the court is obliged to prefer the latter meaning.’ [33] Section 23 of RAF Act does not affect mentally incapacitated persons’ right of access to a court if they are detained as patients in terms of the mental health legislation or are under curatorship. Prescription of the claims of such persons is suspended for the duration of their detention as patients in terms of any mental health legislation, if they were detained, or, if they were place under curatorship, for the duration of such curatorship. In the present case the incidence of prescription should have been managed by the timeous detention of Mr Jacobs in terms of the mental health legislation and/or by the appointment of a curator ad litem who could have instituted his claims timeously. This would have suspended the running of prescription in terms of s 23(2)(c) of the RAF Act. The construction that I have placed on s 23 of the RAF Act does not have the effect of preventing the dispute between the appellant and the RAF from being resolved by a court of 15 [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC) para 89. law nor does it undermine the purpose of the RAF Act. Regrettable as this result may be, the Constitutional Court has already considered the interpretation of the RAF Act and held that claims under the Act are governed exclusively by the provisions of the said Act to the exclusion of any other law. [34] For these reasons, I hold that the Prescription Act does not apply to claims for compensation under the RAF Act. It is excluded because its provisions are inconsistent with those of the RAF Act relating to prescription. Section 23 of the RAF Act was intended to be fully comprehensive on the subject of claims for compensation under the RAF Act and was intended to exhaust its subject matter. The high court was therefore correct in upholding the special plea of prescription. [35] The next question to determine is the issue of costs. The general rule, when it comes to costs liability, is that costs should follow the result unless there exist sound and proper reasons for a departure from this principle. Having regard to the state of health of Mr Jacobs as set out in the medico-legal reports of the experts, which indicate that due to the severity of the injuries he has been rendered impecunious, I am of the view that there exists a sound reason to depart from the general rule. For that reason, in the exercise of my discretion, I would not order Mr Jacobs to pay the respondent’s costs. [36] In the result the appeal is dismissed with no order as to costs. _________________ ZONDI JA JUDGE OF APPEAL Appearances: For appellant: M Harrington Instructed by: Malcolm Lyons & Brivik Inc, Cape Town Matsepes Incorporated, Bloemfontein For respondent: K L Watt Instructed by: Joubert Galpin Searle, Grahamstown Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 6 May 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. Phillipa Susan van Zyl NO v The Road Accident Fund (263/19) [2020] ZASCA 51 (6 May 2020) Today the Supreme Court of Appeal (SCA) dismissed the appeal of the appellant, Phillipa Susan van Zyl in her representative capacity as curator curatrix ad litem to Mr Jacobs, against the decision of the Eastern Cape Division of the High Court, Grahamstown (high court) upholding the special plea of prescription. On 1 May 2010 Mr Jacobs sustained serious head injuries in a motor vehicle accident. On 18 January 2017 he lodged a claim with the respondent, the Road Accident Fund (RAF), which repudiated his claim on the basis that his claim had prescribed in terms of s 23 of the Road Accident Fund Act 56 of 1996 (RAF Act); and that Mr Jacobs did not fall under any of the categories of persons referred to in s 23(2) of the RAF Act, against whom prescription does not run, as he was neither a person detained as a patient in terms of any mental health legislation nor a person under curatorship. On 28 November 2017 the appellant was appointed as the curatrix ad litem to Mr Jacobs by order of court. On 8 March 2018 the appellant instituted action against the RAF in which she claimed damages on behalf of Mr Jacobs. The RAF raised a special plea and contended the claim had become prescribed because the claim was not instituted within the period of three years from the date of the accident and further that the summons was not served within five years from the date of the accident. In response thereto the appellant denied that Mr Jacobs’s claim had become prescribed. She averred that the provisions of the Prescription Act 68 of 1969 also applied to his claim for compensation under s 23 of the RAF Act and that in terms of s12 and/or 13 of that Act the running of prescription was delayed as since the accident Mr Jacobs had been of unsound mind or insane. In upholding the special plea, the high court held that Mr Jacobs’ claim had indeed become prescribed as the provisions of s 23 of the RAF Act apply to the claim to the exclusion of s 13(1) of the Prescription Act. On appeal to the SCA the appellant persisted with her arguments. The SCA held that the Prescription Act does not apply to claims for compensation under the RAF Act as its provisions are inconsistent with those of the RAF Act relating to prescription. Further, the SCA held that s 23 of the RAF Act was intended to be fully comprehensive on the subject of claims for compensation under the RAF Act and was intended to exhaust its subject matter. In the circumstances the appeal was dismissed with no order as to costs.

1461

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 094/2010 In the matter between LAW SOCIETY OF THE NORTHERN PROVINCES 1st APPELLANT THE SECRETARY OF THE LAW SOCIETY OF THE 2nd APPELLANT NORTHERN PROVINCES and PETRUS JACOBUS VILJOEN RESPONDENT and: In the matter between Case No: 648/10 LAW SOCIETY OF THE NORTHERN PROVINCES 1st APPELLANT THE SECRETARY OF THE LAW SOCIETY OF THE 2nd APPELLANT NORTHERN PROVINCES and PETER ARTHUR DYKES 1st RESPONDENT CHERYL RAMSAMMY 2nd RESPONDENT PHASUDI DOCTOR SEGOGOBA 3rd RESPONDENT JOHAN VAN HEERDEN 4th RESPONDENT Neutral citation: Law Society of the Northern Provinces v Viljoen (094/2010); Law Society of the Northern Provinces v Dykes (648/2010) [2010] ZASCA 176 (02 December 2010) Coram: Heher, Bosielo, Shongwe JJA and R Pillay et K Pillay AJJA Heard: 24 November 2010 Delivered: 02 December 2010 Summary: Legal practitioners – s 42(3)(a) of the Attorneys Act 53 of 1979 – Interpretation. The powers of a secretary of the Law Society to refuse to issue a fidelity fund certificate in the prescribed form to a legal practitioner against whom there are pending proceedings by the Law Society to have him or her suspended or his or her name removed from the roll of practising attorneys. ORDER On appeal from: North Gauteng High Court (Pretoria), (in case no 094/10 Tuchten AJ sitting as a court of first instance) and (in case no 648/10 Sapire AJ sitting as court of first instance) The following orders are made: In the Law Society of the Northern Provinces v Viljoen (appeal no. 094/10) On appeal from the North Gauteng High Court (Tutchten AJ sitting as court of first instance) 1. The appeal is dismissed with costs. In the Law Society of the Northern Provinces v Dykes (appeal no. 648/10) On appeal from the North Gauteng High Court (Sapire AJ sitting as court of first instance) 1. The appeal is dismissed with costs. _________________________________________________________________ JUDGMENT __________________________________________________________________ BOSIELO JA (Heher, Shongwe JJA and R Pillay and K Pillay AJJA concurring) [1] The appeals before us raise the question about the correct interpretation and scope of s 42(3)(a) of the Attorneys Act 53 of 1979. As both appeals concern the same legal issue, it is convenient and practical to deal with both at the same time. [2] The first appellant in both matters is a law society duly incorporated in terms of s 56 of the Act. One of the first appellant’s responsibilities is to provide for the regulation and effective control of the professional conduct of attorneys (s 58(g) of the Act). [3] The respondents in both matters are attorneys who specialise in conveyancing. They all fall under the first appellant’s jurisdiction. On 23 December 2009, the first appellant sent a letter to Viljoen (respondent in the first matter) reminding him to apply for a fidelity fund certificate on the prescribed form (s 42(1) of the Act). In response to this reminder and on 14 December 2009, Viljoen applied in the prescribed form for his fidelity fund certificate for the year 2010. On 5 January 2010, the second appellant, relying on a council resolution dated 22 June 2009, advised Viljoen that he would not be issued with a fidelity fund certificate ‘in the light of policy considerations as there was a pending application to have his name removed from the roll of attorneys’. In refusing to issue the fidelity fund certificate, the second appellant purportedly relied on s 42(3)(a) of the Act. No mention of the resolution was made in the first appellant’s invitation to Viljoen to apply for a fidelity fund certificate in terms of s 42 of the Act. Viljoen had never been notified of the existence of the council resolution. [4] A similar application by Dykes and his partners (respondents in the second matter), made on 22 October 2009, suffered the same fate. By a letter dated 14 December 2009, and relying on the same resolution the second appellant advised Dykes and his partners that no fidelity fund certificates would be issued to them as there was an application pending for the removal of their names from the roll. In so refusing the second appellant once again purported to act in terms of s 42(3)(a) of the Act. [5] Aggrieved by the decision of second appellant to refuse to issue the fidelity funds certificates, respondents in both matters approached the North Gauteng High Court separately by way of motion for a mandamus compelling the second appellant to issue fidelity fund certificates to them for the year 2010. The first application was heard by Tuchten AJ and the second by Sapire AJ. Both judges granted orders compelling the second appellant to issue fidelity fund certificates for 2010 to the respondents. The appellants are appealing against those orders with leave of both the courts below. [6] As the decision in this appeal hinges on the correct interpretation of s 42(3)(a) of the Act, I deem it appropriate to quote the provisions which are relevant to the dispute herein: ‘42 Application for and issue of a fidelity fund certificate (1) A practitioner practising on his own account or in partnership, and any practitioner intending so to practise, shall apply in the prescribed form to the secretary of the society concerned for a fidelity fund certificate. (2) Any application referred to in subsection (1) shall be accompanied by the contribution (if any) payable in terms of section 43. (3) (a) Upon receipt of the application referred to in subsection (1), the secretary of the society concerned shall, if he is satisfied that the applicant has discharged all his liabilities to the society in respect of his contribution and that he has complied with any lawful requirement of the society, forthwith issue to the applicant a fidelity fund certificate in the prescribed form. (b) A fidelity fund certificate shall be valid until 31 December of the year in respect of which it was issued.’ [7] I do not think that it will serve any useful purpose to overburden this judgment with the evidence of the litany of complaints lodged against the respondents and their responses thereto. It suffices, in my view, to state that the first appellant had received various complaints against the respondents in both matters which it regarded as serious. Following thereupon, the first appellant instituted proceedings in the North Gauteng High Court, Pretoria, for the respondents’ names to be struck off the roll of attorneys on the basis that they are no longer fit and proper to continue practising. Having had sight of the appellants’ affidavits, I harbour no doubt that the allegations made against the respondents are serious and if proven to be true, might justify a striking off of the respondents’ names by the court. [8] It is trite that the first appellant has a statutory duty, once it has received information that a member is guilty of unprofessional conduct, to investigate such information or allegations and to take appropriate action. This is what the first appellant did in the two matters. The applications are vigorously opposed and the respondents have filed answering affidavits disputing the allegations contained in the founding affidavits filed by the appellants. The proceedings for striking off against the respondents in both matters are still pending. [9] Central to the second appellant’s refusal to issue the fidelity fund certificates to the respondents in the two cases is a resolution of 22 June 2009. The resolution reads thus: ‘Where the Council has resolved to proceed with an application for the suspension of or the removal of the name of a member from the roll of attorneys a Fidelity Fund Certificate should not be issued to the member concerned, unless the Council for good reason otherwise decides.’ [10] It is common cause that the resolution was not made public or distributed to the members of the first appellant. This is notwithstanding the fact that the resolution was essentially introducing a new element into the concept of ‘any other lawful requirement of the society’ as it appears in s 42(3)(a) of the Act. Counsel were agreed that although the resolution does not amount to a suspension from practice by a legal practitioner, the practical effect thereof is that a practitioner who has not been issued with a fidelity fund certificate is not allowed to practice on his own account or in partnership. It is trite that any legal practitioner who practices without a fidelity fund certificate is committing a professional misconduct. [11] It was submitted on behalf of the appellants that the courts below erred in their interpretation of s 42(3)(a). The contention is that the Council of the first appellant has the authority in terms of s 69 of the Act to set up whatever lawful requirement it might regard as proper and appropriate to regulate the conduct of practitioners. It was argued further that the resolution was lawful and necessary as it enabled the first appellant to be careful regarding the issuing of the fidelity fund certificates to its members so that it can reduce or minimise the risk to which the fidelity fund might be exposed in issuing fidelity fund certificates to legal practitioners who are not fit to practise. Counsel for the appellants submitted further that the mere fact that the resolution was not communicated to the respondents, does not necessarily mean that it is invalid. He submitted that it remained valid, and moreover the respondents had been invited to make representations to change the second appellant’s decision not to issue the certificates. [12] Counsel for Viljoen, launched a two-pronged attack against the resolution. First, he submitted that the resolution is so vague that it fails to inform Viljoen of the exact nature of the complaint to which he was required to respond. He submitted that the lawful requirements contemplated in s 42(3)(a) are the payment of the required sum of money by an applicant and submission of an audited financial report. Secondly, he contended that the requirement imposed by the resolution to the effect that where there are proceedings pending either for the suspension or removal of a practitioner from the roll, such a practitioner will not be issued with a certificate unless good cause is shown, is not related to the legislative purpose of s 42(3)(a). His contention is that the new requirement, if one might call it that, tilts the scale more towards an enquiry into the ethical fitness of an applicant to remain a practitioner, which is a function of the courts, rather than an enquiry into his or her ability to maintain the financial affairs of his or her practice properly and in terms of the rules. [13] Counsel for Dykes and his partners, supported the submission by Counsel for Viljoen that the resolution does not amount to a requirement as envisaged by s 42(3)(a). In other words, it falls outside the ambit of the section. [14] It is clear from s 42(3)(a) that the person who has the authority to issue fidelity fund certificates is the second appellant. It is neither the Council nor Management Committee of the first appellant. The authority of the second appellant to issue fidelity fund certificates is clearly circumscribed by s 42(3)(a). This section sets out two requirements to be met by a legal practitioner for him or her to qualify for a fidelity fund certificate. The first requirement is that such a practitioner must satisfy the secretary that he or she has discharged all his or her liabilities to the society in respect of his or her contribution and, secondly, that he or she has complied with any other lawful requirement of the society. Once the two requirements have been met, s 42(3)(a) compels the second appellant to forthwith issue the fidelity fund certificate in the prescribed form to the applicant. [15] The first appellant’s Council purported to introduce an additional lawful requirement by adopting the resolution on 22 June 2009. In the context of s 42, a ‘lawful requirement’ means one that: (i) relates to the purpose served by the issue of a fidelity fund certificate; (ii) unequivocally informs the practitioner what it is that the society requires of him or her; (iii) the practitioner is capable of complying with, since the section is designed to enable the practitioner to carry on practice subject to satisfying the requirement. For the reasons which follow I am of the view that the terms of the resolution of 22 June 2009 do not meet any of the above-stated criteria. [16] It is important to bear in mind that a practitioner is enjoined by s 42(1) to apply for a fidelity fund certificate in the prescribed form. A perusal of the prescribed form makes it clear from the questions that such a practitioner has to answer that the major focus is on the question whether the practitioner is managing his trust accounts in strict compliance with the rules of the society and not whether he or she is fit and proper to practice. This is underscored by the request to a practitioner in the prescribed form to disclose the balances in his or her trust account at the end of each quarter of the year. Furthermore, this is bolstered by the requirement that such a practitioner shall submit his or her audited financial statements. It is clear to me that this enquiry is intended solely to assess any risk attendant on the secretary issuing a fidelity fund certificate so as to ensure that the Fidelity Fund is not overexposed. Manifestly, this has nothing to do with issues of ethics or whether such a practitioner is fit and proper to continue to practice. The enquiry regarding the fitness of a practitioner to continue to practice is the preserve of the courts. [17] To my mind, the resolution in issue is so vague and broad that it may encompass even transgressions that have nothing to do with a practitioner’s ability and competence to manage his or her trust account properly in terms of the rules. Clearly it has no relation to the legislative purpose contemplated in s 42(3)(a) regarding the issuing of a fidelity fund certificate to a practitioner. Furthermore, it is so vague that it fails to inform the applicant in clear and specific terms of what it is that he or she is alleged to have done which justifies the refusal by the secretary to issue the fidelity fund certificate. It follows that it will be difficult for the applicant to respond to the allegations if he or she does not know the precise nature of the complaint against him or her. The invitation by the Council to such an applicant to make representations will thus remain an illusion. [18] Counsel for the appellants had difficulty explaining exactly what the council resolution is aimed at, because it is couched in very wide and vague terms. It is clear that the resolution creates a general ban against any practitioner against whom there are proceedings pending either for suspension or removal from the roll without reference to the exact nature of the complaint. [19] The fact that a practitioner may avoid the full force of the resolution by advancing ‘good reason’ does not change matters. If the general prohibition does not satisfy the test of ‘a lawful requirement’ it cannot be saved by the opportunity to provide reasons why it should not operate in any particular case. To my mind the resolution is fatally flawed. It follows that both appeals must fail. [20] Both respondents argued for costs against the appellants. The principal submission is that the appellant’s decision to refuse to issue fidelity fund certificates was flawed from the beginning as it was based on a bad judgment. It was argued that it would be wrong and unfair for the respondents to be left out of pocket in circumstances where the respondents have been put to considerable financial loss due to some bad judgment on the part of the appellants. [21] The appellants argued against any costs being awarded against them. It was contended that a law society is a special litigant in the sense that it does not come to court for its own interests. As a body with statutory powers to administer the affairs of its members, it has a statutory duty to approach a court in any matter where it is of the opinion that a practitioner is guilty of conduct which impugns his or her fitness to continue to practise. It was argued further that it does this in the public interest as well as that of the court. We were further urged to consider the fact that there are conflicting judgments on this aspect by the North Gauteng High Court and that the appellants were justified to approach this court for clarity. [22] I have no doubt that in the circumstances of both cases, the appellants were not entitled to refuse to issue fidelity fund certificates to the respondents. It is clear to me that the second appellant’s decision was indeed misconceived. Furthermore, even after the appellants had lost both cases in the high court, they still zealously pursued the appeal in this court, thus exposing the respondents to substantial legal costs. Notwithstanding the long standing and salutary practice of not mulcting a Law Society with an adverse order of costs as it is a special litigant acting in the public interest, I am of the view that it would be unfair, given the facts of this case, not to award costs to the respondents. [23] Contrary to the appellants’ submission, I do not perceive any conflict between these two matters and the two unreported judgments of the North Gauteng High Court involving a Mr Setshogoe to which we were referred. The facts were different. The Law Society had obtained an interdict from the high court, restraining Mr Setshogoe from practising at the time when he applied for a fidelity fund certificate. It was in these circumstances that the secretary refused to issue the fidelity fund certificate. That is not the case here. [24] In the result, the following orders are made: In Law Society of the Northern Provinces v Viljoen (appeal no. 094/10) On appeal from the High Court, North Gauteng (Tutchten AJ sitting as court of first instance) 1. The appeal is dismissed with costs. In Law Society of the Northern Provinces v Dykes (appeal no. 648/10) On appeal from the High Court, North Gauteng (Sapire AJ sitting as court of first instance) 1. The appeal is dismissed with costs. ________________ L O Bosielo Judge of Appeal APPEARANCES: For Appellant: E C Labuschagne SC Instructed by: Rooth & Wessels Inc.: Pretoria Naudes Attorneys: Bloemfontein For Respondent: (Viljoen) I M Bredenkamp SC Instructed by: P Viljoen Inc.: Pretoria Hugo & Bruwer Inc.: Bloemfontein For Respondent: Q Pelser SC (Dykes and Partners) Instructed by: Maponya Attorneys: Pretoria Vermaak & Dennis: 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 02 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. Law Society of the Northern Provinces v Viljoen (094/2010) and Law Society of the Northern Provinces v Dykes (648/2010) [2010] ZASCA 176 (02 December 2010) The Supreme Court of Appeal today dismissed two appeals brought by the Law Society of the Northern Provinces against two judgments by two judges in two separate matters heard at the North Gauteng High Court. These matters involved two firms of attorneys practising as conveyancers under the appellant’s jurisdiction who had applied for fidelity fund certificates for 2010 in terms of s 42 (3) (a) of the Attorneys Act 53 of 1979. Relying on a Council Resolution dated 22 June 2009, second respondent (the secretary) refused to issue the fidelity fund certificate. The reason proffered is that both respondents had cases pending against them either for their suspension or removal of their names from the roll of attorneys. The Council Resolution provided that where the Council had resolved to proceed with an application for the suspension or removal of an attorney from the roll of attorneys, a fidelity fund certificate should not be issued to the applicant, unless the Council for good reason decided otherwise. Both courts below had found that s 42 (3) (a) cannot be interpreted to be so broad as to encompass the issue of pending proceedings to, either suspend or have the attorney’s name from the roll. The SCA found that the Council Resolution was vague and so unclear that an applicant would not know exactly what it is that the society required him or her to do as a requirement to qualify for a fidelity fund certificate. The SCA found further that the Council Resolution is not related to the legislative purpose served by the issue of a fidelity fund certificate. The SCA confirmed the findings of the courts below.

2630

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 686/2013 Not Reportable In the matter between INVESTGOLD CC APPELLANT and DIRK UYS FIRST RESPONDENT MARIESA TROSKIE SECOND RESPONDENT Neutral citation: Investgold CC v Uys & another (686/2013) [2014] ZASCA 166 (01 October 2014) Coram: Bosielo, Tshiqi, Saldulker JJA and Mocumie, Gorven AJJA Heard: 16 September 2014 Delivered: 01 October 2014 Summary: Purchase and Sale of coins – whether payment of the purchase price coupled with delivery of the coins was done with the intention to pass ownership – whether ownership of the coins passed to the purchaser – gold coins subsequently stolen from the vault by the seller‟s employee – whether the subsequent theft of coins by seller‟s employees vitiated its intention to transfer ownership. ___________________________________________________________ ORDER ___________________________________________________________ On appeal from: South Gauteng High Court, Johannesburg (Boruchowitz J sitting as court of first instance): It is ordered that: 1 The appeal is upheld with costs including the costs of two counsel where employed. 2 The order of the trial court is set aside and substituted with an order dismissing the plaintiffs' claim with costs. __________________________________________________________ JUDGMENT ___________________________________________________________ Bosielo JA (Tshiqi and Saldulker JJA and Mocumie, Gorven AJJA concurring): [1] The crisp legal question to be answered in this appeal is whether ownership of the coins passed to the purchaser when delivery thereof was made. Simply put, does the fact that the purchaser had paid the price in full and the seller had physically delivered the coins to the purchaser who received them into his undisturbed possession make the sale complete? At face value this legal question might appear to be simple. However, the peculiar facts of this case prove otherwise. [2] Shorn of unnecessary frills the following facts are common cause: Early in 2011, Rudy Hugo (Hugo) and Raymond Jardine (Jardine), acting in their capacities as the appellant‟s (Investgold) brokers and therefore its agents visited Dirk Uys (Uys) at his business premises in Brooklyn where they sold him gold coins for R76 000 (seventy six thousand rand). Uys indicated to them that he had R1 million which he wanted to use to buy more gold coins. [3] This transaction was followed by another one involving the purchase of kruger rands and rare coins by Uys and Troskie during January 2001 for R1,6 million in cash. It is common cause that the quotation and tax invoice for this sale transaction were not issued in Uys‟ name but in the names of Hugo and Jardine. This is because Uys wished to avoid the Financial Intelligence Centre Act 38 of 2001 (FICA) and also that he did not want the South African Revenue Service (SARS) to know about it. However, this was subsequently corrected by Investgold after they became aware of it. The three agreed that as soon as the coins were available Hugo would advise Uys to come and fetch them at Investgold‟s premises in Killarney. [4] On 26 January 2011, after being advised that their coins were available for collection, Uys went to Investgold‟s premises at Killarney to collect same. Upon arrival Uys was taken to a cubicle inside the office by Hugo where Rafique Davids (Davids), Investgold‟s stock controller, handed the gold coins to him Uys, together with Hugo and Jardine, inspected them to verify and satisfy himself that they were the coins which he and Troskie (the second respondent) had ordered as per the quotation. Upon being satisfied, Uys, Hugo and Jardine signed the requisite delivery note and receipt for the gold coins and returned it to Davids. The coins were then handed over to Uys who received them into his possession as the owner. [5] After Uys had taken possession of the gold coins and was about to leave Investgold‟s premises, Hugo then suggested to him that it was not safe for him to travel with coins and, instead suggested that they be kept safe for him in Investgold‟s vault. At this stage, Uys telephoned his fiancee, Troskie, seeking her consent to store the gold coins in a safe as suggested by Hugo. After he had received the go ahead from Troskie, Uys packed the coins in a bag and, accompanied by Hugo, took them for safekeeping to what he believed was Investgold‟s vault. Unknown to him, the vault belonged to a company called Knox Titanium Vault Company (Pty) Ltd (Knox Vaults). Uys, assisted by a lady called Roxy who apparently worked for Knox Vaults, put the gold coins in a safe. This was after Roxy had explained all the security features of their vaults to him and he was satisfied that his gold coins were safe. After he had put the gold coins in the vault, Roxy gave him one key for the safe whilst she retained the other one. Uys was told that both keys were needed to gain access to the gold coins. In other words, none of them could open the vault without the other one. [6] A tragic event then occurred. On 11 March 2011, Gert Pieter Erasmus (Erasmus) Investgold‟s general manager telephoned Uys and informed him that his gold coins had been stolen. It is common cause that Hugo had stolen the coins from Knox‟s safe after they had been placed there. Later Hugo admitted the theft in an affidavit and returned some of the coins. It is not in dispute that Hugo had already on 19 January 2011, unknown to Uys, forged Uys‟ signature to lease the safe from Knox Vaults. Hugo had misled Uys to believe that he was storing his coins with Investgold when in truth it was with Knox‟s Vault. [7] Based on these facts Uys and Troskie issued summons against Investgold in the main for specific performance by way of delivery of the coins which they had purchased and which were stolen by Hugo. The court below granted judgment in favour of the respondents on this claim. As indicated, the issue was whether Hugo and Troskie had established that, when the coins were delivered to Uys, Investgold did not have the intention to transfer ownership to Uys and Troskie [8] In motivating his judgment, the learned judge held that, because Investgold was an artificial person, it could only act through a natural person. These natural persons, through whom it acted, had to have the intention to pass ownership. He found that these natural persons from whom the intention to pass ownership must be inferred were Hugo and Jardine, and not Erasmus, the manager or the stock controller, Davids. This is because he found them to be the people who were instrumental in the sale transaction and therefore Investgold‟s directing minds. The learned judge held as follows: „It is clear therefore that there was no intention on the part of the defendant to transfer ownership of the coins to the plaintiffs.… The presence of an intention to steal the coins on the part of the persons who were the directing minds of the defendant would have prevented the transfer of ownership.‟ He proceeded further as follows: „The element of physical possession or detentio has also not been established. It is clear on the evidence that Hugo, assisted by Jardine, were at all material times in control of the coins. Even though the coins were pushed through the glass enclosure by the stock controller, Davids, they exercised de facto control. The fact that Uys handled the coins momentarily during the verification process did not make him the possessor of the coins. Even if I am incorrect in this regard, Uys‟ physical possession was not accompanied by a concurrent intention by the defendant to convey ownership to the plaintiffs.‟ [9] Investgold appeals against this judgment with the leave of the court below. [10] Counsel for Investgold submitted that at the critical time when Uys received the coins from Davids, delivery of the coins was completed. It was contended further that when Uys decided, after a telephonic consultation with Troskie, to take the coins for safekeeping to Investgold, he exercised free and independent election as the owner of the coins. At this stage, so the contention went, he had full dominium of the coins and enjoyed undisturbed possession. [11] On the other hand, although admitting the handing over of the coins, the respondents‟ counsel submitted that the mere physical handing over of the coins did not constitute delivery as Hugo and Jardine never intended to pass ownership of the coins to Uys and Troskie. This is evidenced by the fact that as far back as 19 January 2011, Hugo had already formed the intention to steal the coins when he forged Uys‟ signature to procure the safe from Knox Vaults. He contended further that the intention to steal by Hugo and possibly Jardine negated any intention on the part of Investgold to transfer ownership of the coins to Uys and Troskie. It suffices to state that this submission ignores the fact that with the systems set up by Investgold, Hugo would not succeed in stealing the coins whilst they were in Investgold‟s custody. This is the reason why he had to ensure that Uys received them in his possession. [12] Relying on Consolidated News Agency (Pty) Ltd (In Liquidation) v Mobile Telephone Networks (Pty) Ltd 1 it was submitted that as Hugo and Jardine were Investgold‟s agents and directing minds, their actions and intentions were those of Investgold. In other words their actions and intentions are attributed to Investgold. Based on this it was contended that because Hugo and Jardine never intended to pass ownership in the coins to Uys and Troskie, Investgold never discharged its legal obligation to transfer ownership. It was submitted that what happened on 26 January 2011 was not actual and genuine delivery but a mere sham or ruse. [13] A contract of purchase and sale, emptio vendito is described as a contract whereby one person promises to deliver a thing to another and the latter in return promises to pay a price therefor. The obligation of the seller is to give the purchaser undisturbed possession (vacua possessio) of the merx coupled with a guarantee against eviction to the purchaser.2 [14] In a cash sale where payment has taken place, ownership will be transferred on delivery.3 It is trite that the intention to transfer and receive ownership (animus transferandi dominii and animus accipiendi dominii) is proved in various ways and can be inferred from the circumstances.4 In this regard, Watermeyer JA stated:5 1 Consolidated News Agency (Pty) Ltd (In Liquidation) v Mobile Telephone Networks (Pty) Ltd 2010 (3) SA 382 (SCA) paras 30 and 31. 2 G R J Hackwill M A Mackeurtan’s Sale of Goods in South Africa 5 ed (1984) at 66. 3 Electra Home Appliances (Pty) Ltd v Five Star Transport (Pty) Ltd 1972 (3) SA 583 (W) at 585-6. 4 Commissioner of Customs and Excise v Randles Brothers & Hudson Ltd 1941 AD 369, at 398-400. 5 At 398 „Ownership of movable property does not in our law pass by the making of a contract. It passes when delivery of possession is given accompanied by an intention on the part of the transferor to transfer ownership and on the part of the transferee to receive it. If it is delivered in pursuance of a contract of sale, the ownership may pass at the time of delivery or it may not.‟ In Cornelissen NO v Universal Caravan Sales (Pty) Ltd,6 the majority held that: The words “sold and delivered” do not necessarily connote that ownership in the goods has passed to the purchaser, for it is trite law that mere physical delivery of property, unaccompanied by an intention to transfer ownership, does not give the recipient dominium.‟ [15] It is axiomatic that the vexed legal question whether there has been delivery accompanied by an intention to pass dominium depends upon the intention of the parties and the facts of each case.7 [16] This question resolves itself into two issues. The first is to determine who to look to as being in a position to form an intention to transfer ownership on behalf of Investgold. The second is to determine the intention of Investgold at the time. As mentioned, the court below held that the brokers were the guiding minds of Investgold. I do not agree. The sole role of the brokers at the time the coins were delivered was to counter-sign the delivery notes once Uys and the brokers had established that the correct coins had been delivered. Beyond that, the brokers played no part in the delivery of the coins. The guiding mind of Investgold was that of the general manager Erasmus in setting up the system to be implemented for cash sales and deliveries in particular. This system was set up so as to pass ownership. The evidence shows 6 Cornelissen NO v Universal Caravan Sales (Pty) Ltd 1971 (3) SA 158 (A) at 179D-E. 7 R Norman Purchase and Sale in South Africa (1919)at 290. conclusively that the coins were delivered to Uys by Davids on 26 January 2011 with the intention to pass ownership. Uys in turn accepted ownership of the coins with the intention of becoming the owner. [17] As regards the second question, it seems to me that the intention of Investgold was that transfer of ownership would take place when the system for delivery had been implemented and completed. This system was set up in order to ensure that delivery took place in accordance with an accepted quotation (order) and that documentary proof of this delivery was obtained. It is therefore my view that, in the present matter, because effect was given to the system for delivery and the process was followed to completion, the intention to pass ownership was proved. In any event, if the „guiding mind‟ must be determined at the time of a particular delivery, it could not have been those of Hugo or Jardine but that of Davids whose job was to select coins in accordance with the order, deliver them to Uys and ensure that delivery was documented by way of his signature and those of the broker or brokers who had been responsible for the sale. [18] Even if it can be argued that the mind of Hugo must be looked to, it is inconceivable that, knowing as he did that he could not steal coins in the possession of Investgold, he held a mental reservation concerning transfer of ownership when delivery took place for the sole reason that he wanted to steal from Investgold rather than from Uys and Troskie. He was intent on stealing the coins at some future date. The only persons he could successfully persuade to adopt his scheme were Uys and Troskie. No inference can be drawn that he did not intend them to become owners because he did not want to steal from them. [19] It follows that the court below erred in finding that ownership of the coins had not passed to Uys and Troskie. It further erred in finding that, despite physical delivery having been effected, the coins were at all times under the control of Hugo. If this were in fact so, Hugo would not have needed to ask Uys whether he wished to deposit the coins for safekeeping. He may have thought, with justification that Uys was under his influence to place the coins where he could steal them but he was not in control of the coins. Investgold accordingly discharged the onus to prove the transfer of ownership of the coins to Uys and Troskie. In doing so Investgold discharged its obligations under the cash sales. As such, the claim for specific performance ought to have failed. [20] Uys and Troskie relied on two alternative claims. The first one was based on the fact that after becoming aware that Hugo and Jardine had ordered the coins in their names, Investgold intentionally or negligently omitted to advise them of this fact which resulted in them failing to take steps to protect their interests, and allowing Hugo to steal their coins. The second one is based on an alleged misrepresentation by Hugo and Jardine which led to Uys storing his coins at Knox Vaults after they led him to believe that they would be safe whereas they were not safe as Hugo subsequently stole them from the safe. The learned judge did not deal with the two alternative claims. Save to state that they persisted with the two alternative claims, counsel for Uys and Troskie did not make any submissions in support of the two claims. As regards the first of these, the law recognises no such legal duty. As regards the second, the theft by Hugo has nothing to do with carrying out his employment with Investgold. No vicarious liability for his actions thus arises. It suffices to state that the two alternative claims have no merit. [21] In the result, the following order is made: 1 The appeal is upheld with costs including the costs of two counsel where employed. 2 The order of the trial court is set aside and substituted with an order dismissing the plaintiffs' claim with costs. _________________ L O BOSIELO JUDGE OF APPEAL Appearances: For Appellant : AG South Instructed by: Maritz Smith Van Eeden Inc.; Johannesburg Symington & De Kok, Bloemfontein For Respondent : H van Eeden SC (with him JW Steyn) Instructed by: Bento Inc.; Johannesburg Phatshoane Henny 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 01 October 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. INVESTGOLD CC V UYS & ANOTHER (686/13) [2014] ZASCA 166 (01 OCTOBER 2014) Today the Supreme Court of Appeal (SCA) upheld the appellant’s appeal against a judgment by the South Gauteng High Court (Boruchowitz J) with costs. The order of the trial court was set aside and replaced with an order dismissing plaintiff’s claim with costs. The respondent had issued summons against the respondent for specific performance in the form of delivery of the merx. The respondent’s case is that they had purchased Kruger coins from the appellant for R1,6 million cash. The appellant was represented by its brokers, Hugo and Jardine. On 19 January 2011, Hugo forged Uys’ signature to secure a safe at Knox Vault. On 26 January 2011, the appellant’s stock controller, Davids, delivered the Kruger coins to Uys, who after inspecting them signed a delivery receipt. Uys was assisted by Hugo and Jardine to inspect and verify the Kruger coins. As Uys prepared to leave with the Kruger coins, Uys suggested that he should take them for safekeeping at Investgold’s safe as it was unsafe to travel with them. After receiving the Kruger coins, Uys took them for safekeeping at Knox Vault whilst under the erroneous belief that it was Investgold’s safe. Investgold had no control over Knox Vault. Sometime hereafter, Hugo stole Uys’ kruger coins from Knox’s Vault. The trial court found that as the appellant is a corporation, it acted through its agents or employees. It found further that when Hugo secured the safe at Knox’s Vault, he had already formulated the intention to steal the Kruger coins, and that therefore Investgold through Hugo, never had any intention to deliver the Kruger coins to Uys and Troskie. The trial court held that in the circumstances, Investgold was liable to Uys and Troskie for delivery of the Kruger coins. The SCA found that this was a cash sale. It found further that as the purchase price had been paid, when Investgold’s stock controller (Davids) handed the Kruger coins to Uys delivery took place. The SCA held further that, when Uys took the Kruger coins to Knox’s Vault after he had received them, he was exercising his unfettered right as the owner. In essence, the SCA held that Uys had control over the Kruger coins and that Investgold can therefore not be held liable for their subsequent theft from Knox’s Vault. Consequently, the appeal was upheld with costs. ---END---

3932

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 325/2021 In the matter between: PIONEER FOODS (PTY) LTD APPELLANT and ESKOM HOLDINGS SOC LIMITED FIRST RESPONDENT WALTER SISULU LOCAL MUNICIPALITY SECOND RESPONDENT NATIONAL ENERGY REGULATOR OF SOUTH AFRICA THIRD RESPONDENT Neutral citation: Pioneer Foods (Pty) Ltd v Eskom Holdings SOC Limited & Others (325/2021) [2022] ZASCA 171 (1 December 2022) Coram: VAN DER MERWE, MAKGOKA and HUGHES JJA and BASSON and WINDELL AJJA Heard: 8 November 2022 Delivered: 1 December 2022 Summary: Appeal – section 16(2)(a)(i) of Superior Courts Act 10 of 2013 – mootness of appeal – issues of law in appeal settled by an earlier judgment of this Court – disputes overtaken by events – appeal moot – no discrete legal issue of public importance that would affect matters in the future. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mbongwe AJ, sitting as a court of first instance): 1 The appeal is dismissed. 2 There is no order as to costs. ________________________________________________________________ JUDGMENT ________________________________________________________________ Makgoka JA (Van der Merwe and Hughes JJA and Basson and Windell AJJA concurring): [1] On 8 November 2022 when this matter was called, counsel for the appellant, Pioneer Foods (Pty) Ltd (Pioneer) and for the first respondent, Eskom Holdings Soc Limited (Eskom)1 were invited to address the Court on the submission by Eskom in its heads of argument that the appeal had become moot. Upon hearing counsel, this Court dismissed Pioneer’s appeal with no order as to costs, and undertook to furnish reasons later. These are the reasons for the order, which are premised on our finding that the appeal has become moot, and that there is no basis to exercise this Court’s discretion to hear it. Section 16(2)(a)(i) of the Superior Courts Act 10 of 2013 provides that: ‘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.’ [2] Pioneer appealed, with the leave of this Court, against the order of the Gauteng Division of the High Court, Johannesburg (the high court) which 1 Both the second respondent, the Walter Sisulu Local Municipality and third respondent, the National Energy Regulator of South Africa (NERSA) did not participate in the appeal. dismissed its application to review and set aside certain decisions of Eskom to implement intermittent electricity supply interruptions in the area of jurisdiction of the second respondent, the Walter Sisulu Local Municipality (the Municipality). [3] Eskom supplies electricity to the Municipality, which, in turn, distributes electricity to the end-users in its area of jurisdiction. The Municipality fell into arrears with payment for electricity to Eskom. The arrears eventually amounted to over R100m. As part of its measure to exert pressure on the Municipality to pay the arrears, Eskom took decisions to implement intermittent electricity supply interruptions in the area of jurisdiction of the Municipality between July 2017 and January 2018 (the impugned decisions). The notices for the interruptions were published by Eskom in local newspapers. [4] Pioneer is a producer of food and beverages. It runs a maize mill located within the area of the Municipality, and was as such affected by Eskom’s electricity supply interruptions. After unsuccessful attempts to resolve the issue with Eskom, Pioneer launched a two-part application in the high court in January 2018. In Part A, which it brought on an urgent basis, it sought and obtained, interim interdictory relief against Eskom from implementing its decision of 2 January 2018 to interrupt the supply of electricity to Pioneer’s business premises. [5] In Part B, Pioneer sought the judicial review and setting aside of the relevant Eskom decisions. It relied on various grounds including that Eskom was not entitled to interrupt the supply of electricity to the Municipality solely for the purpose of coercing the latter to pay its debt. Pioneer also contended that where Eskom sought to interrupt the supply of electricity, it had to comply with the substantive and procedural requirements of the Promotion of Administrative Justice Act 3 of 2000 (the PAJA). Pioneer also sought an order that Eskom should supply electricity to its business premises, alternatively to the Municipality. In the further alternative, Pioneer sought orders: (a) compelling the Municipality to pay the outstanding debt to Eskom; and (b) compelling Eskom and the Municipality to agree to a payment plan to ensure uninterrupted supply of electricity to its business premises. [6] In response, Eskom raised a preliminary point that Pioneer’s application was premature, based on the provisions of s 30 of the Electricity Regulation Act 4 of 2006 (the ERA). That section provides for the resolution of disputes by the third respondent, the National Energy Regulator of South Africa (NERSA) in relation to any dispute arising out of the ERA. Section 30(1)(b) reads: ‘[Nersa] must, in relation to any dispute arising out of this Act – … if it is a dispute between a customer or end user on the one hand and a licensee, registered person, a person who trades, generates, transmits or distributes electricity on the other hand, settle that dispute by such means and on such terms as [NERSA] thinks fit.’ [7] Eskom contended that since the PAJA was applicable to each of the decisions which Pioneer sought to impugn, s 30 was the ‘internal remedy’ envisaged in s 7(2) of the PAJA which Pioneer had to first exhaust before launching the review application.2 I refer to this as ‘the prematurity defence.’ Substantively, to justify the lawfulness of its decisions, Eskom relied on s 21(5) of the ERA. The section, among other things, grants Eskom the right to reduce or terminate the supply of electricity to a customer if the latter has ‘failed to honour, or refuses to enter into, an agreement for the supply of electricity,’ or ‘contravened [its] payment conditions.’ I refer to this as ‘the s 21(5) defence.’ 2 Section 7(2) of the PAJA reads: ‘[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.’ [8] Part B came before the high court in July 2020, and judgment was delivered on 12 October 2020. The high court held that Pioneer, as a customer of the Municipality, had no locus standi to seek the orders it did against Eskom, as the electricity supply agreement was between Eskom and the Municipality. Despite this finding, the high court proceeded to determine the merits of the application. It upheld both of Eskom’s two defences referred to above. With regard to the ‘prematurity defence’, the high court stated that ‘the engagement of [NERSA] is part of the internal problem resolution processes envisioned in section 7(2) of the PAJA…’ and that the failure to comply with it, was fatal to Pioneer’s application. [9] As to the s 21(5) defence, the high court, with reliance on Rademan v Moqhaka Local Municipality3 held that Eskom was empowered by s 21(5) of the ERA to interrupt the supply of electricity to a defaulting customer such as the Municipality. The high court also held that Eskom had followed proper procedures, including the PAJA and regulatory provisions, when it gave notices to implement the electricity supply interruptions. Consequently, the high court dismissed Pioneer’s application with costs. [10] On 29 December 2020, judgment in Eskom v Resilient Properties and Two Similar Matters4 (Resilient) was delivered. This Court provided clarity on two issues raised in this appeal, namely, whether: (a) Eskom was in law entitled to invoke s 21(5) of the ERA without a court order authorising it to do so; (b) s 30 of the ERA provides for an internal remedy envisaged in the PAJA which must be exhausted before resorting to the courts. 3 Rademan v Moqhaka Local Municipality [2013] ZACC 11; 2013 (4) SA 225 (CC). 4 Eskom Holdings SOC Ltd v Resilient Properties (Pty) Ltd and Others; Eskom Holdings SOC Ltd v Sabie Chamber of Commerce and Tourism and Others; Chweu Local Municipality and Others v Sabie Chamber of Commerce and Tourism and Others [2020] ZASCA 185; [2021] 1 All SA 668 (SCA); 2021 (3) SA 47 (SCA) (Resilient). [11] As to the first issue, this Court concluded that s 21(5) of the ERA empowers Eskom to reduce or terminate the supply of electricity to its customers in the circumstances spelt out in the section. And that it may exercise that power without prior authorisation by a court.5 As to the second issue, this Court rejected Eskom’s contention that s 30 constituted an internal remedy envisaged in s 7 of the PAJA. It explained that the section ‘cannot apply to a dispute where Eskom seeks to interrupt bulk electricity supply to a municipality which, although willing to settle its indebtedness, is unable to do so because it is not only facing financial crisis but also contests Eskom’s right to interrupt electricity.’6 [12] Additionally, in Resilient, this Court also made another important finding (which did not feature in the present case). It held that Eskom was obliged to resolve its disputes with the municipalities to which it supplies electricity, through the framework of the Intergovernmental Relations Framework Act 13 of 2005 (the IRFA). This Court alluded to the unique nature of the relationship between Eskom and such municipalities. Eskom as an organ of state, and the municipalities as local spheres of government, bear constitutional obligations to provide communities with electricity, and any interruption thereof, implicates the municipalities’ ability to discharge its obligations.7 [13] This brought the relationship within the purview of the IRFA.8 Therefore, before taking the decision to interrupt electricity supply to the municipalities failing to pay for the electricity supplied, Eskom is required to comply with ss 40 and 41(3) of the IRFA, which require organs of state to exhaust all other remedies to resolve disputes before they approach a court.9 Thus, Eskom should bear in 5 Ibid para 55. 6 Ibid para 84. 7 Ibid para 80. 8 Ibid para 79. 9 Ibid para 81. mind that terminating the supply of electricity to an entire municipality in the circumstances provided for in s 21(5), would have the effect of collapsing the entire municipality, rendering it unable to fulfil its constitutional and statutory mandate to provide basic services.10 [14] The effect of this Court’s judgment in Resilient is that the jurisprudential issues in this appeal, namely the application of s 21(5) and whether s 30 constitutes an internal remedy envisaged in s 7(2) of the PAJA, have now been decided. This Court has also clarified Eskom’s obligation to comply with the relevant provisions of the IRFA before it decides to interrupt electricity supply to the municipalities. Furthermore, it is common cause that as an organ of state, Eskom’s decision to interrupt electricity to municipalities, constitutes ‘administrative action’ envisaged in s 1 of the PAJA, and that accordingly, it must in each instance comply with both the substantive and procedural fairness requirements of the PAJA. In this Court, counsel for Eskom gave an assurance of Eskom’s commitment in this regard. [15] What then, is left of the dispute between the parties? The impugned decisions, which were time-bound, have come and gone, and it is not possible for Eskom to implement them again. Whether they were tainted by procedural and substantive irregularities, as Pioneer asserted, is immaterial now. An order in respect of those decisions would have no practical effect. If in future it needs to implement electricity supply interruptions, Eskom would have to take new decisions, which would have to comply with the relevant provisions of the IRFA and the PAJA. 10 Ibid para 58. [16] Viewed in light of the above, the appeal has become moot, and it must therefore be dismissed on this basis alone in terms of s of 16(2)(a)(i) of the Superior Courts Act. However, this Court has a discretion to enter into the merits of an appeal, notwithstanding the mootness of the issue as between the parties when ‘a discrete legal issue of public importance arose that would affect matters in the future’ and on which adjudication of this Court is required.11 In the present case, no such issue arises. For all these reasons, the appeal was dismissed. With regard to costs, we deemed it fair that there should not be any order in respect thereof. ______________________ T MAKGOKA JUDGE OF APPEAL 11 Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and Others [2012] ZASCA 166; 2013 (3) SA 315 (SCA) para 5. APPEARANCES: For appellant: JPV McNally SC (with him BL Manentsa) Instructed by: Webber Wentzel, Johannesburg Honey Attorneys Inc., Bloemfontein For first respondent: SL Shangisa SC (with him L Rakgwale) Instructed by: Ngeno & Mteto Inc., Pretoria Kramer Weihmann & Joubert Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY FROM: The Registrar, Supreme Court of Appeal DATE: 1 December 2022 STATUS: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Pioneer Foods (Pty) Ltd v Eskom Holdings SOC Limited & Others (325/2021) [2022] ZASCA 171 (1 December 2022) Today the Supreme Court of Appeal handed down a judgment in which it furnished reasons for an order made on 8 November 2022 dismissing the appeal of the appellant, Pioneer Foods (Pty) Ltd (Pioneer) with no order as to costs. In its reasons, the Court concluded that the appeal had become moot for the following reasons. Pioneer had challenged Eskom’s decisions made between July 2017 and January 2018 to implement intermittent electricity supply interruptions in the Walter Sisulu Municipality between July 2017 and January 2018. Pioneer, as an end-user, was affected by Eskom’s decisions. In its review application against Eskom, Pioneer had raised two legal issues, ie whether: (a) Eskom was in law entitled to invoke s 21(5) of the ERA without a court order authorising it to do so; (b) s 30 of the Electricity Regulation Act 4 of 2006 (the ERA) provides for an internal remedy envisaged in the Promotion of Administrative Justice Act 3 of 2000 (the PAJA) which must be exhausted before resorting to the courts. The Gauteng Division of the High Court, Johannesburg (the high court) had dismissed Pioneer’s review application. While Eskom’s appeal was pending, judgment in Eskom Holdings SOC Ltd v Resilient Properties (Pty) Ltd and Others; Eskom Holdings SOC Ltd v Sabie Chamber of Commerce and Tourism and Others; Chweu Local Municipality and Others v Sabie Chamber of Commerce and Tourism and Others [2020] ZASCA 185; [2021] 1 All SA 668 (SCA); 2021 (3) SA 47 (SCA) (Resilient), was delivered. This Court provided clarity on two issues raised by Pioneer in the appeal. As to the first issue, this Court concluded that s 21(5) of the ERA empowers Eskom to reduce or terminate the supply of electricity to its customers in the circumstances spelt out in the section. And that it may exercise that power without prior authorisation by a court. As to the second issue, this Court rejected Eskom’s contention that s 30 constituted an internal remedy envisaged in s 7 of the PAJA, holding that it did apply in the circumstances. Additionally, in Resilient, this Court also made another important finding (which did not feature in the present case). It held that Eskom was obliged to resolve its disputes with the municipalities to which it supplies electricity, through the framework of the Intergovernmental Relations Framework Act 13 of 2005 (the IRFA). Therefore, before taking the decision to interrupt electricity supply to the municipalities failing to pay for the electricity supplied, Eskom was required to comply with ss 40 and 41(3) of the IRFA, which require organs of state to exhaust all other remedies to resolve disputes before they approach a court. Given the above, this Court concluded that in the light of the Resilient judgment, the issues of law which Pioneer sought clarity on, had been decided. As to Eskom’s decisions to implement electricity interruptions made in period July 2017 – January 2018, the Court pointed out that those were time- bound. They had come and gone, and it was not possible for Eskom to implement them again. Whether they were tainted by procedural and substantive irregularities, as Pioneer asserted, was immaterial now. An order in respect of those decisions would have no practical effect. If in future it needs to implement electricity supply interruptions, Eskom would have to take new decisions, which would have to comply with the relevant provisions of the IRFA and the PAJA. Accordingly, the Court held that the appeal had become moot, and had to be dismissed on this basis alone in terms of s of 16(2)(a)(i) of the Superior Courts Act. However, the Court also considered whether it should exercise its discretion to enter into the merits of an appeal, notwithstanding the mootness. This it can do, when a discrete legal issue of public importance arose that would affect matters in the future and on which adjudication of the Court is required. It concluded that no such issue arose in the present matter, hence the dismissal of the appeal. With regard to costs, the Court deemed it fair that there should not be any order in respect thereof. *END*

3236

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable CASE NO: 232/07 In the matter between : JACOB GEDLEYIHLEKISA ZUMA First Appellant THINT HOLDINGS (SOUTHERN AFRICA) (PTY) LTD Second Appellant THINT (PTY) LTD Third Appellant and THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Respondent ___________________________________________________________________________ Before: FARLAM, NUGENT, CLOETE, PONNAN & MLAMBO JJA Heard: 21 SEPTEMBER 2007 Delivered: 8 NOVEMBER 2007 Summary: Letter of request issued under s 2(2) of the International Co- operation in Criminal Matters Act 1996 – whether provisions of the section complied with – whether appellants have standing to challenge the validity of the request. Neutral citation: This judgment may be referred to as J G Zuma v NDPP [2007] SCA 135 (RSA) ___________________________________________________________________________ NUGENT JA NUGENT JA: [1] On 2 April 2007 the Deputy Judge President of the High Court at Durban (Levinsohn DJP) issued a letter requesting the Attorney-General of the Republic of Mauritius to transmit to the Republic of South Africa fourteen documents1 that are in the possession of the authorities in Mauritius and to obtain and to transmit statements as to their authenticity. In doing so the learned judge purported to exercise the authority that is conferred upon a judge in chambers or a magistrate by s 2(2) of the International Co-operation in Criminal Matters Act No. 75 of 1996. The letter of request was issued at the instance of the Directorate of Special Operations (a division of the office of the National Director of Public Prosecutions). The documents and authenticating statements are said by the Directorate to be required as evidence in any prosecution of the appellants that might occur. The appellants say that Levinsohn DJP ought not to have issued the letter of request and they now appeal, with the leave of the learned judge, against his decision to do so. [2] The decision to issue the request has generated a record of fourteen volumes and voluminous heads of argument. That impressive volume of paper ought not to obscure what is in issue. The learned judge has done no more than place a judicial imprimatur upon a request to the Attorney-General of Mauritius to provide assistance for a possible prosecution. His decision has not compromised or even affected any rights of the appellants. It was submitted on behalf of the appellants that their ‘fair trial rights’ (the right of every accused person to a fair trial that is protected by s 35(3) of the Bill of Rights) have in some way been compromised but that is not correct. Their right to be tried 1 At times the record refers to thirteen documents but the discrepancy is not material for present purposes. fairly, if they are tried at all, is unaffected by the issue of the letter of request, and will remain unaffected even if the request is acceded to. It is no doubt so, as submitted on their behalf, that the evidence that is sought to be obtained by the letter of request might result in or contribute to their conviction, but it will do so only if it is admitted at a trial, and their right to object to the admission of the evidence, on any ground that might properly be available to them, remains intact. Finally, it was submitted that the decision to issue the letter of request has compromised the appellants’ right not to have such a request issued, but that begs the question whether they have such a right at all and I will return to that later in this judgment. But before doing so I will set out briefly the circumstances in which the letter of request came to be issued and deal with the grounds upon which it was submitted that Levinsohn DJP erred in issuing it. [3] The documents that are sought by the NDPP are at present in the possession of a body in Mauritius known as the Independent Commission Against Corruption (ICAC). They came into the possession of the ICAC in consequence of an order that was made by the Supreme Court of Mauritius on 5 October 2001. The order authorised the Director of the Economic Crime Office of that country (the Director) to enter, amongst others, the premises of a company known as Thales International Africa Ltd (formerly Thompson-CSF Africa Ltd) and those of one of its officers, Mr Alain Thetard, and to search for and remove documents of the kind specified in the order. The order was applied for by the Director at the request of the Directorate of Special Operations. [4] An official in the office of the National Director of Public Prosecutions (the NDPP), Mr Downer SC, was present at the time the order of the Supreme Court of Mauritius was executed. Mr Downer was given copies of the fourteen documents that are now in issue and the originals were retained by the Director. (The Economic Crime Office in Mauritius has since been abolished and has been succeeded by the ICAC.) [5] About a week after the order was executed Thales International Africa Ltd and Mr Thetard (and another company whose involvement in the matter has become immaterial) launched proceedings in the Supreme Court of Mauritius for, amongst other things, orders restricting the use that could be made of the documents that had been seized. The application culminated in an undertaking being given by the ICAC (recorded by the Supreme Court on 27 March 2003) not to communicate any of the documents to any person or authority unless it was authorised to do so by order of a court in Mauritius. (The other terms of the agreement are not now material.) [6] During June 2005 the first appellant (Mr Zuma) was indicted on charges of corruption, and in November 2005 the second and third appellants (Thint Holdings and Thint respectively) were similarly indicted. They were called upon to answer to the charges in the High Court at Durban on 31 July 2006. [7] On 7 December 2005 the NDPP sought to secure possession of the original documents (and authenticating evidence) that are now in issue for use as evidence in the impending trial by invoking the provisions of s 2(1) of the Act.2 That section permits ‘a court or the officer presiding at proceedings’, in prescribed circumstances, to issue a letter of request for assistance from a foreign 2 Section 2(1): ‘If it appears to a court or to the officer presiding at proceedings that the examination at such proceedings of a person who is in a foreign State, is necessary in the interests of justice and that the attendance of such person cannot be obtained without undue delay, expense or inconvenience, the court or such presiding officer may issue a letter of request in which assistance from that foreign State is sought to obtain such evidence as is stated in the letter of request for use at such proceedings.’ state to obtain ‘such evidence as is stated in the letter of request for use at such proceedings’. On 22 March 2006 Combrinck J refused to issue the request on the grounds that s 2(1) conferred authority only upon a court that was seized of criminal proceedings and the application was postponed to be heard by the court that was scheduled to try the appellants. [8] On the day that the trial of the appellants was due to commence the prosecution applied for the trial to be postponed. The application was argued before Msimang J and on 20 September 2006 the learned judge ordered that the postponement be refused and he struck the matter from the roll. [9] The NDPP then brought the application that is the subject of this appeal (it was lodged on 4 December 2006) in reliance upon the provisions of s 2(2) of the Act. That section authorises a judge in chambers, or a magistrate, upon application to him or her, to issue a letter of request in which assistance from a foreign state is sought ‘to obtain such information as is stated in the letter of request for use in an investigation related to an alleged offence’ if he or she is satisfied ‘(a) that there are reasonable grounds for believing that an offence has been committed in the Republic or that it is necessary to determine whether an offence has been committed; (b) that an investigation in respect thereof is being conducted; and (c) that for purposes of the investigation it is necessary in the interests of justice that information be obtained from a person or authority in a foreign State.’ Although the Act permits such an application to be brought ex parte the NDPP served a copy on the appellants in accordance with an earlier agreement to do so. Answering and replying affidavits were filed and the application was considered by Levinsohn DJP in open court on 22 March 2007. The learned judge issued the letter of request on 2 April 2007. [10] It was submitted on behalf of the appellants that because they were indicted, and the indictments have not been withdrawn, ‘proceedings’ as contemplated by s 2(1) continued against them at the time the application was considered by Levinsohn DJP, with the result that he was not authorised to exercise the authority that is conferred by s 2(2). I do not think that is correct. The word ‘proceedings’ might have various meanings depending upon its context. It is clear that it is used in s 2(1) to mean the trial of a person on a criminal charge,3 which commences when the person who stands accused is called upon to plead to the charge. That construction seems to me to accord with the ordinary meaning of the term in the context in which it is used, and is fortified by the provisions of s 3(1), s 3(3)(a) and (b), s 5(4) and s 6, all of which contemplate evidence being placed before a court after issue has been joined. The clear distinction between the two sections is that s 2(1) allows for evidence to be taken in a foreign state in the course of a trial, while s 2(2) allows for assistance to be sought in the course of a criminal investigation that precedes a prosecution. Notwithstanding that the appellants have been indicted a trial on the charges has yet to commence (it was struck from the roll before the appellants were called upon to plead) and it was competent for Levinsohn DJP to exercise the authority that is conferred by s 2(2). [11] The further submissions that were pressed before us by the appellants are interrelated. They all arise from the purpose for which the documents are 3 ‘Proceedings’ are defined in s 1 of the Act to mean ‘criminal proceedings and any other proceedings before a court or other tribunal, instituted for the purpose of determining whether any act or omission or conduct involves or amounts to an offence by any person.’ sought. I have already pointed out that the NDPP is well aware of what the documents contain and is in possession of copies. (Copies were given to Mr Downer in Mauritius immediately after they were seized.) The appellants have already intimated to the NDPP that if they are ever brought to trial they will object to the introduction into evidence of copies of the documents. The sole purpose for which the NDPP now requires the originals of the documents is to overcome such an objection by proffering the original documents as evidence in the possible trial. [12] It was submitted on behalf of the appellants that s 2(2) of the Act is not available to obtain assistance for the purpose of securing evidence for a prosecution. It was submitted that s 2(2) permits assistance to be sought only where it is ‘necessary’ to do so in order to obtain ‘information’ for purposes of an ‘investigation’ into possible criminal conduct. Such an investigation, so it was submitted, is confined to making enquiries to determine whether an offence has been committed, from which it follows that the ‘information’ that might be sought is confined to knowledge that is as yet unknown to the investigator. Once it has been established that an offence has been committed, so the submission went, the authority that is conferred by s 2(2) to obtain assistance comes to an end. Any further assistance that might be required to secure evidence for production in a prosecution that might follow may only be sought under the provisions of s 2(1). What was sought in the present case, so it was submitted, was not ‘information’ in the sense that I have described, and the purpose for which the documents were sought cannot be said to have been ‘necessary’ for the purpose of an ‘investigation’ of that kind. [13] I think that is an unduly narrow construction of the section. I have already said that the provisions of s 2(1) are designed to enable a court before which an accused person is being prosecuted, or the presiding officer at such a trial, to have evidence placed before it that is obtainable only in a foreign state. The construction that the appellants place on s 2(2) would mean that once a criminal investigation has established that an offence has been committed, evidence in a foreign state to prove the commission of the offence may only be secured by the prosecution after a trial has commenced. In my view that would be an absurd result that could not have been intended by the legislature. [14] A criminal investigation, in ordinary language, is conducted not only to inform the investigator whether an offence was committed, but also to gather evidence that will prove its commission in due course. I see no reason to give the word the restricted meaning that is contended for by the appellants. I think it follows that the word ‘information’ is similarly not confined to knowledge of whether an offence was committed, and least of all to knowledge that is as yet unknown, but extends to known facts recorded in documentary form that might provide evidence of the commission of the offence. That construction is supported by the provisions of s 5(2), which contemplates a request for assistance yielding evidence that might be admissible in subsequent criminal proceedings.4 In my view what is required to be shown under s 2(2) is only that a criminal investigation (which includes the gathering of evidence for a prosecution) is underway and that it is necessary to elicit the assistance of a foreign state to obtain information (which includes known facts in documentary form) for purposes of that criminal investigation. In my view the section plainly permitted assistance to be sought to obtain possession of the documents and 4 ‘Evidence’ is defined in s 1 to include ‘all books, documents and objects produced by a witness’. authenticating statements that are now in issue and Levinsohn DJP cannot be faulted for having issued the letter of request. [15] But the matter does not end there. I pointed out earlier in this judgment that the issuing of the letter of request was not definitive or dispositive of any rights of the appellants. That naturally raised the question whether the decision of Levinsohn DJP was even appealable,5 but I think the matter goes even further. It is true, as counsel for the appellants reminded us, that the rule of law and the principle of legality requires state conduct (which includes the conduct of a judge) to be in accordance with law, but it does not follow that it might be challenged when rights are not affected by the conduct. The courts do not generally concern themselves with academic or abstract questions of law. [16] Numerous cases have considered in what circumstances a person might be entitled to initiate, or intervene, in legal proceedings that are aimed at vindicating rights, some of which were referred to in support of the submission that the appellants had standing to challenge the validity of the decision to issue the letter of request. I do not think those cases are of assistance. All those cases were concerned, in one form or another, with proceedings to vindicate rights. The question in each case was whether the person concerned had sufficient interest in the vindication of the rights that were in issue to entitle him or her to initiate or intervene in the proceedings. Thus there is a line of cases in which decisions impacting upon the rights of the public at large were sought to be impugned, 5 See the general rule in Zweni v Minister of Law and Order 1993 (1) SA 523 (A) 532J-533A, which has been applied by this court on numerous occasions (for example, Wallach v Lew Geffen Estates CC 1993 (3) SA 258 (A) 263F-G; Trope v South African Reserve Bank 1993 (3) SA 264 (A) 267D-G) with limited exceptions (Moch v Nedbank Travel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) 10E-H; Phillips v National Director of Public Prosecutions 2003 (6) SA 447 (SCA) paras 19 and 23). Counsel for the appellants relied particularly on Beinash v Wixley 1997 (3) SA 721 (SCA) 729J-730B but that applies to when and not whether a decision may be brought on appeal. raising the question whether an individual had a peculiar interest that gave him or her standing to vindicate those rights. One of the earliest cases of that kind was Dalrymple v Colonial Treasurer,6 which has been endorsed in numerous subsequent cases,7 in which it was said that the ‘general rule of our law is that no [person] can sue in respect of a wrongful act, unless it constitutes the breach of a duty to him by the wrongdoer, or unless it causes him some damage in law’.8 Although a broader approach has since been taken in constitutional matters, once more that is in the context of the adjudication of rights.9 There have also been cases in which a person has sought to intervene in proceedings in which the rights of others are to be determined. There it has been held that a party may intervene in litigation that is not determinative of his or her own rights only if he or she has a ‘direct and substantial interest’ in the litigation (Amalgamated Engineering Union v Minister of Labour10) which has been explained as ‘the right that is the subject-matter of the litigation.’11 The present case is quite different. A court that is asked to issue a letter of request is not called upon to pronounce upon or adjudicate any rights at all. It is asked to do no more than place its imprimatur upon a request for inter-state assistance. [17] It has nonetheless been held, in Kolbatschenko v King NO,12 that the validity of a letter of request might indeed be challenged. In that case the foreign state was requested to take all steps necessary to obtain certain documents and information, if necessary by warrants for search and seizure. It was held that the 6 1910 TS 372. 7 For example, Roodepoort-Maraisburg Town Council v Easter Properties (Pty) Ltd 1933 AD 87 at 101-2; Cabinet of the Transitional Government for the Territory of South West Africa v Eins 1988 (3) SA 369 (A) 388B- I; Jacobs v Waks 1992 (1) SA 521 (A) 533 J-534E. 8 Per Innes CJ at 379. 9 See Ferreira v Levin NO; Vryenhoek v Powell NO 1996 (1) SA 984 (CC) para 165; Minister of Home Affairs v Eisenberg & Associates 2003 (5) SA 281 (CC) para 28. 10 1949 (3) SA 637 (A). 11 Henri Viljoen (Pty) Ltd v Awerbach Brothers 1953 (2) SA 151 (O) 169H. See, too, United Watch & Diamond Co. (Pty) Ltd v Disa Hotels Ltd 1972 (4) SA 410 (C) and cases there cited, which are to similar effect. 12 2001 (4) SA 336 (C). applicant had standing to challenge the validity of the letter of request because he was ‘closely connected’ to the entities whose property was liable to be seized under the warrants that were requested.13 But what is more important for present purposes is that the court went on to say if that was insufficient to give the applicant standing then ‘the fact that the applicant is at risk of being prosecuted is…sufficient to elevate his interest to what is required in that regard…’.14 [18] In a decision of the High Court at Pretoria that was delivered shortly before this appeal was heard Van der Merwe J dismissed an application to set aside a letter of request (the applicant in that case was Mr Zuma) on the ground that the applicant had no standing to contest the validity of the letter of request.15 Referring to the finding in Kolbatschenko the learned judge said the following: ‘If the court in the Kolbatschenko judgment…was of the opinion that the risk of being prosecuted on its own is enough to clothe a person whose affairs [are] to be investigated with locus standi, I find myself in disagreement with that finding.’ (The learned judge also distinguished the decision in Reuters Group Plc v Viljoen NO 2001 (2) SACR 519 (C). In my view that case is also at least distinguishable from the case before us and for that reason I have not dealt with it.) [19] I respectfully associate myself with the views of Van der Merwe J. Underlying the reasoning in Kolbatschenko appears to be the assumption that a person who faces the risk of prosecution if a warrant for search and seizure is executed has standing to challenge the validity of the warrant and hence, by parity of reasoning, that he or she also has standing to challenge the validity of a 13 At 349B. 14 At 349E-F. 15 Ex parte National Director of Public Prosecutions: In re an Application for the Issuing of a Letter of Request in terms of Section 2(2) of the International Co-operation in Criminal Matters Act, No 75 of 1996 unreported decision dated 14 September 2007 under Case No. 3771/07. request for the issue of such a warrant. None of the cases that were referred to in Kolbatschenko support that reasoning. In all those cases the applicant who challenged the validity of the warrant was threatened with an invasion of his or her rights of privacy and property if the warrant was executed. I do not think that a person who is at risk of prosecution if a warrant for search and seizure is executed has standing to challenge the validity of the warrant for that reason alone. That being so it also cannot afford him or her standing to challenge the validity of a letter requesting that such a warrant be issued and in my view Kolbatschenko was incorrectly decided in that respect. [20] That the documents that are sought in the present case might assist in any prosecution of the appellants that might occur does not seem to me to entitle them to challenge the validity of the letter of request and I see no other grounds that might entitle them to do so. That the appellants were given notice to attend the proceedings and were afforded the opportunity of being heard by the learned judge does not seem to me to take the matter further. It follows that the appellants also have no standing to prosecute an appeal against the decision of the learned judge and on that ground alone the appeal must fail. I do not think the matter warranted the employment of three counsel. [21] The appeal is dismissed with costs that include the costs of two counsel. _____________________ R.W. NUGENT JUDGE OF APPEAL FARLAM JA ) CLOETE JA ) CONCUR PONNAN JA ) MLAMBO JA )

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 8 November 2007 Status: Immediate J G ZUMA & 2 OTHERS v NDPP 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 (8 November 2007) dismissed an appeal by Mr Jacob Gedleyihlekisa Zuma, Thint Holdings (Southern Africa) (Pty) Ltd and Thint (Pty) Ltd (the appellants) against a decision of the Deputy Judge President of the High Court at Durban to issue a Letter of Request to the authorities in Mauritius under the International Co-operation in Criminal Matters Act No. 75 of 1996 to furnish certain documents to the prosecuting authority in South Africa. The documents concerned were seized in Mauritius under a warrant issued in that country. The prosecuting authority in South Africa alleged that it required the documents for use as evidence against the appellants should they be tried in the future. The appellants contended, on various grounds, that the Deputy Judge President was not authorised by the Act to issue the Letter of Request. The SCA held that the Letter of Request had been properly issued and, in addition, that the appellants had no standing in law to contest the actions of the Deputy Judge President. The appeal was accordingly dismissed.

2948

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 209/2014 Non reportable In the matter between: ATHOLL DEVELOPMENTS (PTY) LTD APPELLANT and THE VALUATION APPEAL BOARD FOR THE FIRST RESPONDENT THE CITY OF JOHANNESBURG CITY OF JOHANNESBURG METROPOLITAN SECOND RESPONDENT MUNICIPALITY Neutral citation: Atholl Developments v The Valuation Appeal Board for the City of Johannesburg [2015] ZASCA 55 (30 March 2015) Coram: Ponnan, Willis, Saldulker JJA and Van Der Merwe and Meyer AJJA Heard: 27 February 2015 Delivered 30 March 2015 Summary: Appeal – Appealability - appeal does not lie against the reasons for an order of court - matter struck off the roll _________________________________________________________________ ORDER _________________________________________________________________ On appeal from: Gauteng Local Division, Johannesburg (Vally J sitting as court of first instance). The matter is struck off the roll with costs, including the costs of two counsel. _________________________________________________________________ JUDGMENT _________________________________________________________________ Saldulker JA (Ponnan, Willis JJA and Van Der Merwe and Meyer AJJA Concurring): [1] The appellant, Atholl Developments (Pty) Ltd (Atholl), is the lessee, in terms of a 99 year registered long lease (the lease), of Erven 482 and 483, Illovo Extention 4, Johannesburg (the property). The property, which is located opposite the Wanderers Cricket Stadium, is owned by the Wanderers Club. Pursuant to the lease the appellant constructed a hotel on the property and has for some time now traded as the Protea Hotel Wanderers (Protea). The appellant is responsible for the payment of the rates levied on the property. Aggrieved by a valuation, and the assessment of rates pursuant to that valuation, which was levied by the second respondent, the City of Johannesburg Metropolitan Municipality (the City) in respect of the property, the appellant appealed to the first respondent, the Valuation Appeal Board (the Appeal Board). [2] The Appeal Board is a statutory body established in terms of s 56(1) of the Local Government: Municipal Property Rates Act 6 of 2004 (the MPRA) to hear and decide reviews and appeals against the decision of a municipal valuer. The effect of the Appeal Board‟s decision was to overturn the valuation imposed by the City. On 13 June 2012, the Appeal Board handed down the reasons for its decision. The Appeal Board determined that the combined value of the leased property was approximately R308 million. Not persuaded by the reasons of the Appeal Board for its decision, the appellant launched an application in the Gauteng Local Division, Johannesburg to review and set aside that decision. [3] The appellant sought the following order: „1. Reviewing and setting aside the following decisions of the first respondent [the Appeal Board], delivered on 13 June 2012 and reasoned on 12 July 2012: 1.1 The decision to value the registered lease over stand 482 Illovo Extension 4, Johannesburg in an amount of R130 390.000 (One Hundred and Thirty Million, Three Hundred and Ninety Thousand Rand); and 1.2 The decision to value the registered lease over stand 483 Illovo Extension 4, Johannesburg in an amount of R161 610 000.00 (One hundred and Sixty One Million, Six Hundred and Ten Thousand Rand). . . . . 3. In the alternative to paragraph 2 above, remitting the matter to the first respondent for the appeal against the decision of the municipal valuer, communicated to the applicant on 17 February 2012, to be reconsidered In the light of this Court‟s judgment. 4. Ordering the first respondent [the Appeal Board] and second respondent [City] to pay the applicant‟s [Atholl‟s] costs, jointly and severally, the one paying the other to be absolved.‟ The application succeeded with costs before Vally J who set aside the decision of the Appeal Board and remitted the matter to it for reconsideration of the objection of the appellant. [4] That notwithstanding the appellant sought and obtained leave from Vally J to appeal to this court. In its notice of appeal the appellant intimated that its appeal lay only in respect of certain paragraphs of the judgment, namely 32, 40, 46, 47 and 49. Prior to the hearing of the matter the registrar of this court directed correspondence to the parties at the instance of the presiding judge, requesting the parties to file additional heads of argument to address whether: (a) an appeal properly so-called served before this court inasmuch as, on the face of it, the appeal appeared to be directed at the reasons for judgment as opposed to the substantive order of the court below; (b) the judgment sought on appeal will have any practical effect or result; and (c) entertaining the appeal now opened the door to the fractional disposal of matters and the piecemeal hearing of appeals. In response, the appellant filed supplementary heads of argument in which it indicated that it was persisting with the appeal because Vally J had found against it on two main grounds, which, so it was suggested: (a) constitute final and binding findings as between the parties and would be binding on the Appeal Board; and (b) an appeal lies against those findings. Each of those contentions will be considered in turn. As to a: [5] It is so that usually when a court reviews and sets aside a decision of an administrative body it almost always refers the matter back to that body to enable it to reconsider the issue and make a new decision (per Heher JA, Gauteng Gambling Board v Silverstar Development Ltd & another 2005 (4) SA 67 (SCA) para 1). In circumstances such as those it would ordinarily be prudent for a court not to expressly itself too firmly on any matter that has been remitted for a fresh decision to the decision maker. For, to do so may well be to fetter the decision of the decision maker called upon to reconsider the matter. And whilst Vally J may well have ranged beyond that narrow remit in this case, I do not believe that anything that was said by him will either have the effect of unnecessarily fettering the Appeal Board in its later decision or will in truth be binding on it in its reconsideration of the matter. [6] In my view the appellant‟s rights remain unaffected. The views expressed by Vally J are not automatically binding on the appellant, which will be free to reconsider the matter (True Motives 84 (Pty) Ltd v Mahdi and Another 2009 (4) SA 153 (SCA)). As Cameron JA put it in True Motives at para 103: „the most authoritative and illuminating exposition in our law of the distinction between what is binding in a previous decision, and what is stated “by the way”, is that of Schreiner JA in Pretoria City Council v Levinson.‟ In Pretoria City Council v Levinson 1949 (3) SA 305 at 317, Schreiner JA stated: „(W)here a single judgment is in question, the reasons given in the judgment, properly interpreted, do constitute the ratio decidendi, originating or following a legal rule, provided (a) that they do not appear from the judgment itself to have been merely subsidiary reasons for following the main principle or principles, (b) that they were not merely a course of reasoning of the facts . . . and (c) which may cover (a)) that they were necessary for the decision, not in the sense that it could not be reached along other lines, but in the sense that along the lines actually followed in the judgment the result would have been different but for the reasons.‟ [7] Vally J remitted the matter to the Appeal Board. That order has pivotal significance in applying Schreiner JA‟s distinction. Whatever Vally J said in the offending paragraphs was merely incidental to and in no way formed part of the ratio of his judgment. This means whatever was said in those paragraphs can in no way be binding on the Appeal Board. As to b: [8] It will be immediately apparent that when one compares the relief sought to that granted, the appellant was wholly successful before Vally J. In Administrator, Cape & another v Ntshwaqela & others 1990 (1) SA 705 (A) at 714I-715D, this Court said: „In legal usage the word judgment has at least two meanings: a general meaning and a technical meaning. In the general sense it is the English equivalent of the American opinion, which is “(t)he statement by a Judge or court of the decision reached in regard to a cause tried or argued before them, expounding the law as applied to the case, and detailing the reasons upon which the judgment is based”. (Black’s Law Dictionary 5th ed sv opinion.) In its technical sense it is the equivalent of order… When a judgment has been delivered in Court, whether in writing or orally, the Registrar draws up a formal order of Court which is embodied in a separate document signed by him. It is a copy of this which is served by the Sheriff. There can be an appeal only against the substantive order made by the Court, not against the reasons for judgment.‟ [9] In the oft-quoted judgment by Centlivres CJ in Western Johannesburg Rent Board & another v Ursula Mansion (Pty) Ltd 1948 (3) SA 353 (A) at 354, the following is said: „This court mero motu drew counsel‟s attention to the fact that the so-called notice of appeal was not a notice of appeal at all, for it does not purport to note an appeal against any part of the order made by the court a quo. Even apart from sub-rules (2) and (3) of Rule 6 of this Court, it is clear that an appeal can be noted not against the reasons for judgment but against the substantive order made by a Court.‟ [10] More recently, in Tecmed Africa (Pty) Ltd v Minister of Health & another [2012] 4 All SA 149 (SCA), Ponnan JA put it thus (paras 16-17): „[16] Before us, Counsel was constrained to concede that securing a licence for the use of the machine by Cancare at the Durban Oncology Centre had indeed become academic. That notwithstanding, so he urged upon us, the appeal should nonetheless be entertained. His argument, consistent with the approach adopted in the affidavit filed on behalf of Tecmed on this aspect of the case, amounted to this: the approach and reasoning of the Full Court to the disputed factual issues on the papers would stand and were it not to be set aside by this court, would serve as an insurmountable obstacle in due course to the successful prosecution of its envisaged civil claim against the Minister. In my view, for the reasons that follow Counsel‟s submission lacks merit. [17] First, appeals do not lie against the reasons for judgment but against the substantive order of a lower court. Thus, whether or not a Court of Appeal agrees with a lower court‟s reasoning would be of no consequence if the result would remain the same.‟ [11] As the appeal is directed at the reasons as opposed to the substantive order of the court below, there is no proper appeal before us.1 It must follow that the appeal must be struck off the roll. [12] I turn to consider the question of costs. There can be no dispute that the first respondent was brought to court by the appellant as an unwilling party. When the application for leave to appeal was set down before Vally J, the first respondent did not appear in court to oppose the application, in the belief that an appeal did not lie against the reasoning of a court. Vally J granted the appellant leave to appeal on 5 March 2014. No reasons were furnished as to why he believed the matter to be appealable. At the very first opportunity, on 1 June 2014, the first respondent‟s attorney addressed a letter to the appellant, raising the question of appealability. This letter reads: „At the outset we wish to advise that we are of the opinion that your client is not entitled to an appeal, and our understanding of Rule 49 of the uniform rules of Court is that an Applicant can only appeal the judgment or order, and never the reasons for the judge reaching his or her conclusion. In this matter the order as granted was the order as prayed for by the Applicant and as such it is our contention that the Applicant would not be entitled to proceed with this appeal. It is on this basis that our clients never opposed the Application for Leave to Appeal in front of Judge Vally, and we are surprised that leave to appeal was indeed granted. In this regard we refer you to Rule 49(4) and to the discussion thereon contained on pages 356 and 357 of Erasmus: Superior Court Practice: 1 Rule 49(4) of the Uniform Rules of Court reads: ‘Every notice of appeal and cross-appeal shall state - (a) what part of the judgment or order is appealed against; and (b) the particular respect in which the variation of judgment or order is sought.’ “An appeal can be noted only against the judgment itself (i.e., the substantive order), not against the reasons for judgment and a notice which purport to appeal against the reasons for judgment is bad". In light of the above it is our contention that leave to appeal should not have been granted and that this is a matter that the Supreme Court of Appeal cannot entertain.‟ The appellant had thus been alerted to the point by its opponent at a fairly early stage and even after the issue had been raised by the Registrar of this court it chose to persist with the appeal. The first respondent was thus compelled to appear before this court.2 It follows that the appellant should bear those costs, which it was agreed should include those of two counsel. [13] In the result the matter is struck off the roll with costs, including the costs of two counsel. _________________ H Saldulker Judge of Appeal 2 Deutsches Altersheim Zu Pretoria v Dohmen & others [2015] ZASCA 3 paras 11 – 12. APPEARANCES: For the Appellant A Subel SC (with him A Friedman) Instructed by: Shapiro- Aarons Inc, Johannesburg Matsepes Inc, Bloemfontein For the First Respondent: M M Rip SC (with him J Vorster) Instructed by: Ivan Pauw & Partners, 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 30 March 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Atholl Developments v The Valuation Appeal Board for the City of Johannesburg (209/2014) [2015] ZASCA 55 MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) struck a matter brought by Atholl Developments (Pty) Ltd (the appellant) against the Valuation Appeal Board off the roll. The appellant, feeling aggrieved by a property valuation conducted by the City of Johannesburg Metropolitan Municipality (the City), appealed to the Valuation Appeal Board for the City of Johannesburg (the Appeal Board). Dissatisfied with this result as well, it sought a review of the Appeal Board’s decision, and its application for review was granted in the Gauteng Local Division, Johannesburg, which remitted the matter back to the Appeal Board for reconsideration. However, during the course of the judgment granting the order for review, that court made certain findings which, the appellant submitted, were binding on the Appeal Board and precluded it from truly hearing the matter de novo, to the prejudice of the appellant. Consequently, the appellant sought an order from the SCA setting aside the decision of the court a quo. The SCA held that it is an established principle that it is only possible to appeal against the order of a court, and not the reasons for a judgment. Accordingly, the SCA held that there was no proper appeal before it and ordered that the matter be struck off the roll. The SCA also, however, noted that in its view the appellant’s rights remained unaffected by the views expressed by the court a quo, which were not automatically binding, and the respondent remained free to reconsider the matter. --- ends ---

1828

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 66/10 In the matter between: JACOBUS HENDRIKUS JANSE VAN RENSBURG N.O. 1ST APPELLANT PHILIP FOURIE N.O. 2ND APPELLANT JACOB LUCIEN LUBISI N.O. 3RD APPELLANT LILY MAMPINA MALATSI-TEFFO N.O. 4TH APPELLANT ENVER MOHAMMED MOTALA N.O. 5TH APPELLANT RABOJANE MOSES KGOSANA N.O. 6TH APPELLANT (in their capacities as joint-liquidators of MP FINANCE GROUP CC [IN LIQUIDATION]) and SAREL JOHANNES LODEWIKUS STEYN (18137/2005) RESPONDENT Neutral citation: Janse van Rensburg v Steyn (66/10) [2011] ZASCA 71 (25 May 2011) Coram: NAVSA, HEHER, SNYDERS, SHONGWE JJA and MEER AJA Heard: 3 May 2011 Delivered: 25 May 2011 Updated: Summary: Practice – default judgment – validity of order appointing plaintiffs as liquidators – order preceded by published rule nisi – order res judicata between liquidators and investors of estate administered by them. Insolvency – voidable preference – application to set aside under s 29 of Insolvency Act 24 of 1936 and to recover amount of disposition – ‘debtor’ – who is – consolidated estate in which liquidators unable to identify entity making the disposition – interpretation of consolidation order. ____________________________________________________________________________________ ORDER On appeal from: North Gauteng High Court (Pretoria) (Tuchten J sitting as court of first instance): In the result the appeal succeeds. The following order is made: 1. The appeal is upheld with costs. 2. The order of the court a quo is set aside and replaced with the following: ‘1. The payments totalling R117 100.00 made by the Krion Scheme to the defendant are set aside in terms of s 29 of the Insolvency Act 24 of 1936. 2. Judgment is entered against the defendant for payment of R117 100.00 and interest thereon at the prescribed rate from date of judgment to date of payment. 3. Costs of suit.’ _______________________________________________________________________ JUDGMENT _____________________________________________________________________ HEHER JA (NAVSA, SNYDERS, SHONGWE JJA AND MEER AJA concurring): [1] This is an appeal from a judgment of Tuchten AJ sitting in the North Gauteng High Court with leave of the learned judge. [2] The six applicants, professional liquidators, sued the respondent, a retired train driver. They relied on s 29 of the Insolvency Act 24 of 1936. They asked the court to set aside as voidable preferences payments made to the respondent by the consolidated estate of four corporate entities and a ‘partnership’ which estate they referred to in their particulars of claim as ‘the Krion scheme’, and for payment of R117 100 as contemplated in s 32(3) of the Act. [3] The respondent (Steyn) did not oppose the action. The liquidators applied for default judgment. The trial judge expressed doubts about the validity of their cause of action and required them to file an affidavit to explain why more than one entity was being liquidated under the same name and why that entity was claiming payment of the alleged debt. The liquidators duly provided such an explanation by means of an affidavit by their attorney, Mr Coetzee, supported by the application papers in TPD case no 21098/2002 to which reference will be made below. [4] The learned judge was not persuaded. Although he questioned the locus standi of the liquidators in his judgment, he left that matter open. Instead he refused the application on the grounds that: ‘Section 29 of the Insolvency Act requires a plaintiff to show that the disposition in question was made by a specific debtor. A plaintiff who relies on either s 26 or s 29 is further required to show that at a decisive moment the liabilities exceeded the assets of that specific insolvent debtor . . . This is precisely what the plaintiffs are unable to do: this is why no such allegation is made in their particulars of claim and the evidence presented through the affidavit of the plaintiff’s attorney shows that this is why the court order was sought.1’ Tuchten AJ accordingly concluded that the liquidators’ claim disclosed no valid cause of action and he dismissed the application for judgment. The locus standi of the liquidators [5] Because of the doubts expressed by the learned judge, and because Fabricius AJ in his judgment in the Botha case – the appeal in which was heard together with this appeal and in respect of which judgment is also delivered today – expressly approved of those reservations, it will be convenient to deal first with the question of locus standi. [6] According to the liquidators’ particulars of claim: ‘7.1 The First to Sixth Plaintiffs act herein in their capacities as the duly appointed liquidators of the estate of MP Finance Consultants CC (in liquidation), Krion Financial Services Limited (in liquidation), Marburt Financial Services Limited (in liquidation), Madikor 20 (Pty) Ltd (in liquidation) and M&B Co-Operative Limited Partnership. 7.2 All of the estates referred to hereinabove have been consolidated into a single estate by order of the High Court of South Africa (Witwatersrand Local Division) under case number 21098/2002. 7.3 The consolidated estate is referred to as MP Finance Group CC (in liquidation) and is referred to herein as the ‘Krion Scheme’.’ Four matters of note arise from the allegations made in para 7 of the claim: 1. The liquidators sue as the joint liquidators of a consolidated estate. 2. The consolidated estate is made up of the estates in liquidation of one close corporation, three companies, and an entity which, by description, is a partnership that is not alleged to have been sequestrated. 3. The consolidated estate is alleged to be that of a close corporation that bears a name which is not that of one of the entities whose estates have been combined. 4. The authority relied on for this, patently unusual, situation is an order of the High Court. [7] There is, of course, a context to these allegations, disclosed to the learned judge, that should not be lost sight of in the procedural mists. The liquidators are carrying out a public duty. They applied for and received sanction for both the scope of their administration and the manner of its exercise.2 Although I would not necessarily have sought relief in the terms of the orders in case no 21098/2002 (or granted it) that is, for reasons which will appear, water under the bridge. The liquidators have been carrying out their mandate for more than seven years. Before they applied for the authority conferred by the two orders they were aware of complexities and uncertainties in the administration of the estates of the various entities. The ramifications appear from the founding affidavit of the first appellant in case no 21098/2002. In short, the Krion scheme was a pyramid scheme operated by a Ms Marietjie Prinsloo almost entirely on a cash basis and dependent entirely upon procuring ‘investments’ from gullible members of the public sufficient to pay the fantastic rate of return promised to every one. The scheme was operated under various names including the four registered corporate entities referred to in the particulars of claim. Although meticulous records were kept of moneys received from and returns owing to investors, none of the entities, incorporated or otherwise, kept books of account or published financial statements and only Krion Financial Services Ltd opened a bank account (and then only for a period of about three months in 2002). The liquidators’ task was especially complicated by the practice of Ms Prinsloo, as the driving 1 The learned judge was referring to the rule issued in case no 21098/2002 as confirmed on 4 February 2003. 2 In case no 21098/2002 and case no 388/2003 to which reference will also be made below. force behind the operation of the scheme, of moving from one corporate identity to another successively and as it suited her and, particularly, during a period when there were official enquiries being made into her affairs. On such occasions the assets and liabilities of the discarded entity were simply taken over holus bolus by the one that followed. As the first appellant deposed: ‘Mev Prinsloo het self getuig [in a s 417 enquiry] dat dit ook vir haar onmoontlik sou wees om vas te stel welke beleggers by welke entiteit belê het en welke entiteit die maandelikse rente en of kapitaal terugbetalings aan beleggers gedoen het. Dit was egter nie vir haar belangrik nie aangesien sy al die aparte entiteite se besigheid as net een besigheid beskou het en was die verskillende entiteite aldus haar net nodig om die skema te probeer wettig . . . So byvoorbeeld blyk uit al die state dat MP Financial [a trading name utilized by Ms Prinsloo] die uitbetalings doen ten spyte van die feit dat dit gedoen is met fondse van die ander entiteite soos en wanneer hulle begin handel dryf.’ [8] The first appellant informed the court in the initial application (and likewise the learned judge a quo) that 1. a minimum of 8 748 persons invested money in the scheme; 2. each investor invested, on average, 3.1 times; 3. 26 885 separate investments were made; 4. the total of all investments was about R1.5 billion, represented by about R950 million in new investments and about R625 million in re-investments; 5. about R975 million was returned to investors; 6. there was an unexplained shortage of about R600 million. [9] In the circumstances that gave rise to the original application a pragmatic, overall view was required, rather than one that attempted to tie loose ends. Since 2003 the liquidators have been before this Court on three occasions in the bona fide administration of the consolidated estate.3 During those appeals no challenge was raised to their locus standi. They have caused thousands of summonses to be issued in order to recover assets of the consolidated estate for the equitable benefit of creditors. All these considerations were known to the court a quo. In such circumstances a court should be 3 See Fourie NO v Edeling NO [2005] 4 All SA 393 (SCA); MP Finance Group CC (in liquidation) v Commissioner, South African Revenue Service 2007 (5) SA 521 (SCA); Janse van Rensburg & Others NNO v Steenkamp; Janse van Rensburg & Others NNO v Myburgh 2010 (1) SA 649 (SCA). slow to undermine the process of liquidation unless that consequence is unavoidable. [10] A brief reference to the entity, called M & B Co-Operative Limited Partnership in para 7.1 of the liquidators’ particulars of claim, is necessary. This entity was, according to the founding affidavit in case no 21098/2002, a vehicle used by Ms Prinsloo to further the scheme, her intention being to incorporate it as a co-operative society; that did not happen and in consequence it never matured beyond one of the trading names of the Krion Scheme. Although the deponent describes it as ‘regtens soos ‘n vennootskap’ and purports to identify the partners, it is clear that he does not speak from personal knowledge and he does not provide any factual basis for his legal conclusion. It may therefore be accepted simply as one of the names used by the corporate entities engaged in the scheme whose recognition in the order of Hartzenberg J was probably superfluous. [11] I think that the answer to the perceived dilemma about the locus standi of the liquidators lies in the orders made by Hartzenberg J in case no 20198/2002 and the reasons for those orders, as well as the order that the same learned judge made in case no 1288/2003. [12] The order in case no 20198/2002 was in so far as relevant to the present appeal, as follows: ‘2. Dat dit verklaar word dat die boedels van MP Finance Consultants BK (in likwidasie), Krion Financial Services Bpk (in likwidasie), Martburt Finansiële Dienste (in voorlopige likwidasie), Madikor Twintig (Edms) Bpk (in likwidasie) en M & B Koöperasie Bpk Vennootskap een entiteit is bekend as die MP Finance Group BK, welke saamgevoegde boedel vir alle doeleindes as ‘n gelikwideerde beslote korporasie beskou sal word en dat verklaar word dat die besigheid van die verskillende entiteite, die besigheid van die saamgevoegde beslote korporasie was. 3. Dat die voormelde gesamentlike boedel van die verskillende entiteite as een beslote korporasie beredder en beskou sal word vir doeleindes van die voorafgaande en sal die feit dat daar aparte entiteite opgerig is, verontagsaam word. 4. Dat die voorafgaande nie afbreuk sal doen aan die regte van enige skuldeiser wat ‘n eis bewys teen enige van die afsonderlike entiteite hierbo na verwys nie, met dien verstande dat sodanige skuldeiser se eis slegs ontmoet word uit ‘n bate wat bewys word die bate van sodanige afsonderlike entiteit is. 5. Dat in die geval van Krion Financial Services Bpk (in likwidasie) word verklaar dat die bepalings van Artikels 311, 312, 417, 418 en 424 van die Maatskappywet (Wet 61 van 1973) van krag bly, asof hierdie bevel glad nie gemaak is nie, behalwe dat alle koste hieraan verbonde uit die saamgevoegde boedel betaal mag word en dat die likwidateurs te enige tyd in die toekoms om gegronde redes mag aansoek doen aan hierdie hof dat enige ander bepalings van die Maatskappyewet ook van krag sal wees, of dat hierdie bevel op enige gepaste wyse gewysig word om voorsiening te maak vir die meer effektiewe administrasie van die boedel. 6. Dat die likwidasie van die saamgevoegde boedel geag word ‘n aanvang geneem het op 4 Junie 2002. 7. Dat behalwe vir die voorafgaande uitsonderings word die Applikante gelas om enige eise wat bewys word teen enige van die gemelde entiteite te beskou as ‘n eis teen die saamgevoegde boedel.’ [13] The order in case no 1288/2003 was, also to the extent relevant, and as amended by this Court, in the Fourie matter, as follows: ‘1. It is declared that the investment scheme by Marietjie Prinsloo (formerly Pelser) during the period 1998 to June 2002 under various names including MP Finance Consultants CC, Madikor Twintig (Pty) Ltd, Martburt Financial Services Limited, M & B Ko-operasie Beperk and Krion Financial Services Limed (“the investment scheme”) was at all material times from and after 1 March 1999 insolvent in that its liabilities exceeded its assets. 2. All contracts concluded between the investment scheme and investors in the scheme were illegal and null and void. 3. All actual payments, whether as profit or interest, from and after March 1999 by the aforesaid investment scheme to the second, third, fourth, fifth and further respondents, in so far as they exceed the investments of each particular investor are set aside, under s 26 of the Insolvency Act as dispositions without value by the scheme to investors at times when its liabilities exceeded its assets, provided that the right of investors to rely on the provisions of s 33 of the Insolvency Act is in no way affected by this order.’ [14] The confirmation of both orders was preceded by the nationwide publication of a rule nisi intended, among other purposes, to serve as notice to all investors in the Krion scheme. Neither the names or whereabouts of every investor was known to the liquidators and this, together with the substantial cost of effecting personal service on all identifiable investors, obviously persuaded the court that substituted service should be authorised. Publication of the terms of the rule in the first application was accompanied by a succinct summary of the application, the rule and its effects intended for the enlightenment of investors. The summary was as follows: ‘Marietjie Prinsloo (voorheen Pelser) het haar beleggingskema bedryf deur verskeie entiteite naamlik MP Finance Consultants BK, Martburt Finansiële Dienste Bpk, Madikor Twintig (Edms) Bpk, M & B Ko-operasie Bpk en Krion Finansiële Dienste Bpk. Almal behalwe M & B Ko-operasie Bpk, wat nooit geregistreer was nie, is reeds gelikwideer en die voorlopige likwidateurs het die Hooggeregshof gevra om die verskeie boedels te konsolideer sodat dit voortaan alles beskou sal word asof dit maar net een maatskappy was, wat bekend sal staan as die MP Finance (Groep) BK. Die redes vir konsolidasie is onder andere dat dit deurentyd dieselfde besigheid was ten spyte daarvan dat verskeie name van tyd tot tyd gebruik was, dat die entiteite se sake nie afsonderlik bedryf was nie en het hulle onder andere mekaar se skulde betaal en was hul sake so in mekaar ineengestrengel dat dit vir die likwidateurs onmoontlik sal wees om afsonderlike bates en laste van die verskeie entiteite te identifiseer. Belanghebbendes mag die aansoek bestry en redes aanvoer waarom so ‘n konsolidasie bevel nie finaal gemaak moet word nie. Afskrifte van die aansoek stukke is beskikbaar by prokureurs Strydom & Bredenkamp Ing met Tel: (012) 342-0700, verwysing Judy Grobler. Die beleggers se verteenwoordiger ondersteun die aansoek aangesien baie beleggers met meer as een entiteit sake gedoen het en dit baie moeilik sal wees om te bepaal hoeveel van elke entiteit ge-eis moet word.’ [15] No individual investor opposed confirmation of the rule in the first application. The so-called ‘investors representative’, Mr C S Edeling, contested several aspects, but abandoned his opposition before confirmation. The order was not appealed. It thus became binding on all investors including the respondents in the present appeals.4 The order in case 1288/2003 was the subject of an appeal by Mr Edeling and certain investors. The appeal was substantially unsuccessful.5 Although the court stated that it was open to any investor to challenge the enforceability of the order on the ground that he had not received notice or had not understood the order, it is clear that the order was to remain prima facie binding on all investor who did not successfully challenge it on that basis. Neither Mr Botha in this appeal nor the appellants Steyn and Zwarts in the other two 4 See Insamcor (Pty) Ltd v Dorbyl Light & General Engineering (Pty) Ltd; Dorbyl Light & General Engineering (Pty) Ltd v Insamcor (Pty) Ltd 2007 (4) SA 467 (SCA) at 476F-477B, paras 28 and 29. 5 See Fourie NO v Edeling, above. appeals before us attempted to place evidence before the court which might justify their release from the effects of the order. As paragraphs 2 and 3 of the order in case no 21098/2002 expressly authorised and instructed the liquidators to proceed with liquidation of the four corporate entities as a consolidated estate the issue of locus standi was not one that could arise between an investor such as Mr Steyn and the liquidators. The orders are presumed to be correctly-made, whether they were or not.6 The court a quo had no reason to enter upon the issue suo moto and could not sit as a court of appeal on the order made in those proceedings. Compliance with s 29 of the Insolvency Act [16] The orders go beyond locus standi. Properly interpreted7 they 1. deem the whole operation of the Krion scheme to have been conducted under a single corporate entity, MP Finance Group CC; 2. authorise that the administration of the separate estates of the various corporate entities be carried on as one consolidated estate, MP Finance Group CC (in liquidation); 3. declare the estates, treated as one, to have been insolvent from 1999 because their liabilities exceeded their assets; 4. relieve the liquidators of the necessity of identifying assets and liabilities as attaching to any of the individual constituents of the consolidated estate. [17] So understood, the order disposes of all the perceived difficulties which moved the learned judge to refuse the order. The liquidators’ allegations must be read as relating to a specific insolvent debtor, viz the deemed corporate entity that embraced all temporary corporate vehicles and trade names used by Ms Prinsloo in implementing the fraudulent scheme, whether to attract investment or to discharge debts or perceived debts. Interest [18] The appellants claimed interest at the statutory rate of 15.5 per cent per annum a tempore morae to date of payment. In the application for default judgment the demand relied on was the service of the summons on 30 May 2005. There was some debate in 6 African Farms & Townships Ltd v Cape Town Municipality 1963 (2) SA 555 (A) at 564B-F. 7 As to which see Firestone South Africa (Pty) Ltd v Gentiruco AG 1977 (4) SA 298 (A) at 304D-H. No judgments were delivered in either application. counsel’s heads of argument as to whether such an order was permissible. [19] In Meskin’s Insolvency Law and its operation in winding up, ed Magid et al, Issue 33, the authors submit (at 5-121) that ‘the fact that section 32(3) does not empower the Court to make any order for the payment of interest does not preclude its awarding mora interest to the judgment creditor from the date of judgment. . . [A]n award of such interest from some earlier date is not competent since there is no obligation to restore or pay until the Court orders accordingly.’ That there is no such obligation before the court sets aside an impeachable disposition and makes an order for recovery has recently been made clear in Duet and Magnum Financial Services CC (in liquidation) v Koster 2010 (4) SA 499 (SCA) in which Nugent JA explained the operation of s 32(3), pointing out (at para 10) that the defendant sued for the setting aside of a disposition under the sections and payment has no present obligation to pay the moneys that are claimed and only becomes obliged to pay once the court has made a declaration to that effect. Further (at para 12): ‘the order obtained by the liquidator or trustee is one that brings a debt into existence once it has been shown that a disposition that falls within the terms of ss 26 to 31 has occurred. Once it is so shown the liquidator is entitled to recover the property or its value . . . [T]he declaration that is made by the court brings into existence debts that did not exist before and simultaneously enables the debts immediately to be enforced through the ordinary process of execution. . .’ [20] Thus the ordinary incidence of demand by means of service of the summons giving rise to mora ex persona must yield to the effect of the statute as explained in Duet and Magnum because the debtor is in mora only from date of judgment. [21] It would therefore appear that the order for payment of mora interest from date of service of the summons made in analogous circumstances (although without motivation) in Paterson NO v Trust Bank of Africa Ltd 1979 (4) SA 992 (A) at 1003G should be regarded as having been made per incuriam. [22] In the result the appeal succeeds. The following order is made: 1. The appeal is upheld with costs. 2. The order of the court a quo is set aside and replaced with the following: ‘1. The payments totalling R117 100.00 made by the Krion Scheme to the defendant are set aside in terms of s 29 of the Insolvency Act 24 of 1936. 2. Judgment is entered against the defendant for payment of R117 100.00 and interest thereon at the prescribed rate from date of judgment to date of payment. 3. Costs of suit.’ ____________________ J A Heher Judge of Appeal APPEARANCES APPELLANTS: F du Toit SC Thys Cronje Inc, Pretoria C/o Van der Merwe Sorour, Bloemfontein RESPONDENT: -

Supreme Court of Appeal of South Africa MEDIA STATEMENT From: The Registrar, Supreme Court of Appeal Date: 25 May 2011 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. On 25 May 2011 the Supreme Court of Appeal delivered judgment in three appeals that had their origin in the liquidation of the fraudulent Krion pyramid scheme, viz Van Rensburg & Others NNO v Steyn, Appeal No 66/2010, Van Rensburg & Others v Botha, Appeal No 758/2010 and Zwarts v Van Rensburg & Others, Appeal No 590/2010. The appeals arose out of conflicting judgments in the High Courts. The issues in the appeals were, broadly: 1) the validity of the appointment of the liquidators to administer the consolidated insolvent estate of the scheme; 2) the validity of the order (made by the High Court in 2003) that consolidated the various entities under which the scheme was operated into one insolvent estate; 3) whether the order was binding on Messrs Steyn, Botha and Zwarts in actions brought by the liquidators under s 29 of the Insolvency Act to recover voidable dispositions; 4) whether the liquidators in the actions had alleged and proved that the defendants were debtors of the consolidated estate. The SCA decided all the issues in favour of the liquidators. Because the defendants, as investors in the scheme, had been given proper notice of the relief claimed in the 2003 proceedings, the orders made were binding upon them; the insolvent estate of the consolidated entities in the scheme was a creditor entitled to claim under s 29 and the investor defendants were its debtors; each of the investors had invested with with an entity afterwards consolidated into the scheme and not with Ms Prinsloo, its guiding mind, personally. --ends--

185

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1210/2016 In the matter between: DANIEL COENRAAD DE BEER APPELLANT and THE STATE RESPONDENT Neutral citation: De Beer v The State (1210/2016) ZASCA 183 (5 December 2017) Coram: Cachalia and Bosielo JJA and Tsoka, Ploos van Amstel and Rogers AJJA Heard: 2 November 2017 Delivered: 5 December 2017 Summary: Criminal Law and Procedure: appeal to high court against conviction of rape: after notice to appellant sentence increased to life imprisonment: court entitled to increase sentence in terms of s309 (3) of the Criminal Procedure Act 51 of 1977: sentence disproportionate: sentence of regional court reinstated. ____________________________________________________________________ ORDER ____________________________________________________________________ On appeal from: Gauteng Local Division, Johannesburg (Vally J and Siwendu AJ, sitting as a court of appeal): (a) Paragraph 2 of the order made by the Gauteng Local Division, Johannesburg, is set aside, save for that part of it which directed that the name of the appellant shall be reflected in the sexual offenders‟ register. (b) The sentence imposed by the regional court is reinstated, namely 15 years‟ imprisonment, 5 years of which is suspended for five years on condition that the accused is not convicted of a contravention of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, committed during the period of suspension. The effective period of imprisonment will be 10 years. (c) The sentence is antedated to 9 October 2013. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Ploos van Amstel AJA (Cachalia JA and Tsoka and Rogers AJJA concurring): [1] The appellant in this matter was convicted in a regional court of rape in contravention of s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (the Act). The charge against him was that over a period of about four months he on numerous occasions committed an act of sexual penetration with an eight year old girl by inserting his fingers into her private parts and that he made her touch his private parts. The regional magistrate sentenced him to 15 years‟ imprisonment, of which he suspended five years on condition that the appellant is not convicted of contravening the Act in question during the period of suspension. [2] With the leave of the regional magistrate the appellant appealed against his conviction to the Gauteng Local Division in Johannesburg. The appeal was set down for hearing on 29 February 2016. On that day the appellant was notified by the court that it would consider increasing the sentence in the event of the conviction being upheld, and that he should be ready to make submissions as to why this should not be done. The appeal was then postponed to 10 May 2016 in order to give both the appellant and the State an opportunity to prepare submissions in this regard. [3] In the event the court a quo dismissed the appeal in respect of the conviction and increased the sentence to imprisonment for life. On 11 October 2016 this court granted the appellant special leave to appeal against the increased sentence. [4] The first line of attack in this court related to the power of the court a quo to have increased the sentence in circumstances where the appellant had only appealed against his conviction and the State had not appealed against the sentence. [5] In S v Bogaards 2013 (1) SACR 1 (CC) Khampepe J acknowledged that a court of appeal is empowered to set aside a sentence and impose a more severe one. She said that at common law there was no formal requirement for an appeal court to give an accused person notice when that court was considering an increased sentence on appeal. The Constitutional Court (the CC) held that it was necessary to develop the common law so as to require notice to an appellant where an increase in the sentence is being contemplated by the court of its own accord. Khampepe J said the following at para 72: „It is worth emphasising that, requiring the appellate court to give the accused person notice that it is considering an increase in sentence or imposing a higher sentence upon conviction for a substituted offence, does not fetter that court‟s discretion to increase the sentence or to impose a substituted conviction with a higher sentence. The court may clearly do so in terms of s 22 (b) of the Supreme Court Act and s 322 of the CPA. Elevating the notice practice to a requirement merely sets out the correct procedure according to which the court must ultimately exercise that discretion. The notice requirement is merely a prerequisite to the appellate court‟s exercise of its discretion. After notice has been given and the accused person has had an opportunity to give pointed submissions on the potential increase or the imposition of a higher sentence upon conviction of another offence, the appellate court is entitled to increase the sentence or impose a higher sentence if it determines that this is what justice requires.‟ [6] Counsel for the appellant however submitted that where the appeal is only against the conviction the question of sentence is not before the court, with the result that the sentence cannot be increased. In support of this submission he relied on the judgment in S v Nabolisa 2013 (2) SACR 221 (CC). [7] The facts in Nabolisa were different. The appellant in that matter had been convicted by the KwaZulu-Natal Division in Pietermaritzburg of dealing in dangerous dependence-producing drugs and sentenced to 12 years‟ imprisonment. He appealed to this court against his conviction and sentence. The State did not seek leave to cross- appeal against the sentence, but in its written heads of argument indicated that it would ask for the sentence to be increased from 12 years to 15 years‟ imprisonment. It later filed supplementary heads of argument, in which it indicated that it would ask for the sentence to be increased to 20 years‟ imprisonment. In accordance with the then prevailing practice this court considered that the matter of sentence was properly before it and increased the sentence to 20 years‟ imprisonment. On appeal to the CC it was held that the State cannot seek an increase in a sentence without cross-appealing against it. It held that is not sufficient for the State merely to indicate in its heads of argument that it intends to do so. [8] There had been no notification to the appellant in Nabolisa that this court, of its own accord, would consider an increase in sentence in the event of the conviction being upheld. That case was concerned solely with the right of the State to ask for an increase in the sentence where it had not cross-appealed. The judgement is therefore not inconsistent with the proposition that the question of sentence may become part of the subject matter of the appeal by the appeal court notifying the appellant that it is considering an increase. [9] There are provisions of the Criminal Procedure Act 51 of 1977 (the CPA) which are relevant in the present context. Section 309 (3) provides that in an appeal from a lower court the High Court, in addition to the powers referred to in s 304 (2), shall have the power to increase any sentence imposed upon the appellant or to impose any other form of sentence in lieu of or in addition to such sentence. Section 322, which appears in the chapter dealing with appeals in cases of criminal proceedings in superior courts, provides in subsection (1)(b) that in the case of an appeal against a conviction or of any question of law reserved, the court of appeal may give such judgment as ought to have been given at the trial or impose such punishment as ought to have been imposed at the trial. [10] In S v F 1983 (1) SA 747 (O) the appellant appealed against his conviction but not against the sentence. He was notified by the court that it may consider increasing the sentence in the event of the conviction being upheld. It was argued that the court did not have the power to do so as sentence was not part of the subject matter of the appeal. Smuts J, with whom LC Steyn J concurred, dismissed this argument and held that in terms of s 309 (3) of the CPA the court had the power to increase the sentence also where the appellant had only appealed against the conviction. This case was referred to with approval in S v Kirsten 1988 (1) SA 415 (A) at 421F. [11] This is consistent with the notion that sentence is always a matter for the court. That is why the State and an accused person cannot bind a court by agreeing what the sentence should be. When an appeal is lodged against a conviction, and it appears to the appeal court that the sentence imposed by the lower court is manifestly inappropriate, it cannot be deprived of its jurisdiction to ensure that justice is done by the failure of the State to cross-appeal. In such a case the appeal court is entitled to notify the appellant that it may consider an increase in the sentence if the conviction is upheld. The question of sentence then becomes part of the subject matter of the appeal. It is true that this may discourage an appellant from pursuing his appeal against the conviction, but this is no reason why a sentence which is manifestly inappropriate should be allowed to stand. The victims of crime have a legitimate interest in expecting appropriate sentences to be imposed and that justice be done. [12] When confronted with the provisions of s 309 (3) and the decisions in S v F and S v Kirsten, counsel for the appellant abandoned the point with regard to the power of the court a quo to have increased the sentence. Nothing further needs to be said about it. [13] The remaining question is whether the increase by the court a quo of the sentence to life imprisonment was appropriate. [14] The offences occurred during the period December 2009 to April 2010. The young girl in question is the appellant‟s stepdaughter. She and her sister lived with him and their mother. At the time of the trial, which commenced in May 2011, the appellant was 34 years old. He was employed by a firm that repaired railway lines. The basis of the charge of rape was that he had inserted his finger in the girl‟s vagina on numerous occasions, in her bedroom. The medical evidence was that there was swelling in her vagina, and infection. The hymen was however intact. The appellant pleaded not guilty but did not testify in his defence. [15] As I have said, the regional magistrate imposed a sentence of 15 years‟ imprisonment, of which he suspended five years. He did not spell out what he considered to be substantial and compelling circumstances. However, my impression, from a reading of his judgment, is that he did not impose the prescribed minimum sentence of life imprisonment because he felt it would be disproportionate in the circumstances. [16] The court a quo, which heard the appeal, expressed the view that the regional magistrate had not provided any logical reason for not imposing the prescribed minimum sentence. It held that no substantial and compelling circumstances were shown to exist, and that imprisonment for life would not be disproportionate to the offence. [17] The minimum sentencing legislation (the Criminal Law Amendment Act 105 of 1997) has had a far reaching effect on sentences imposed in respect of the offences listed in the Act. This court has pointed out on many occasions that injustices may occur if the prescribed minimum sentences are imposed without a proper consideration of the existence of substantial and compelling circumstances, including the question whether the prescribed sentence will be disproportionate to the offence, in the wide sense, in other words, including all the circumstances of not only the offence itself, but also the circumstances of the parties involved. [18] The duty on the courts to avoid injustice, in the present context, was perhaps brought into sharper focus by the provisions of the Criminal Law (Sexual Offences and Related Matters) Amendment Act. Its effect was to expand the definition of rape to include an unlawful and intentional act of sexual penetration with a complainant, without his or her consent. „Sexual penetration‟ is defined in s 1, in wide terms, to include any act which causes penetration to any extent whatsoever by any part of the body of one person, or any object, into or beyond the genital organs or anus of another person. What would previously have amounted to an indecent assault, and attracted a significantly lighter sentence, may now fall within the definition of rape in s 3, and attract the minimum prescribed sentence. Where the victim is a person under the age of 16 years the prescribed minimum sentence, in terms of s 51(1) read with Part I of Schedule 2 of Act 105 of 1997, is imprisonment for life. [19] It is therefore important, in every case, to guard against an injustice being perpetrated by adhering slavishly to the prescribed minimum sentences. In S v Malgas 2001 (2) SA 1222 (SCA) Marais JA said the following, at para 22: „The greater the sense of unease a court feels about the imposition of a prescribed sentence, the greater its anxiety will be that it may be perpetrating an injustice. Once a court reaches the point where unease is 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‟. He added the following, at para 23: „While speaking of injustice, it is necessary to add that the imposition of the prescribed sentence need not amount to a shocking injustice (“n skokkende onreg” as it has been put in some of the cases in the High Court) before a departure is justified. That it would be an injustice is enough. One does not calibrate injustices in a court of law and take note only of those which are shocking„. [20] In S v GK 2013 (2) SACR 505 (WCC) is an insightful discussion by Rogers J, with whom Gamble J concurred, of the approach to the proportionality of life sentences in rape cases. He referred to cases such as Malgas, S v Abrahams 2002 (1) SACR 116 (SCA), S v Mahomotsa 2002 (2) SACR 435 (SCA), S v Vilakazi 2009 (1) SACR 552 (SCA) and S v SMM 2013 (2) SACR 292 (SCA), all of which support his approach. He also referred to crimes which would previously have constituted indecent assault and would probably have attracted a few years‟ imprisonment, but now fall within the minimum sentencing regime. The present case falls into this category. See in this regard the analysis in S v Coetzee 2010 (1) SACR 176 (SCA), at paras 18 to 25, of sentences imposed in cases of indecent assault. The sentences included terms of imprisonment ranging between eighteen months and five years, with portions thereof suspended, and in some cases correctional supervision in terms of s 276(1) of the CPA. [21] The court a quo does not seem to me to have given proper consideration to the question whether a life sentence was proportionate to the crime, the appellant and the legitimate needs of society. It seems to me to have focused too much on the fact that life imprisonment was the prescribed minimum sentence. [22] I am of course conscious of the fact that the complainant was only eight years old when the crime was committed. The appellant was in a position of trust as her stepfather, which he abused. On the other hand, the crime was not accompanied by the sort of violence that often occurs when a young girl is attacked by a stranger, away from her home. The rape was committed by the insertion of a finger, which is plainly lower on the scale of severity than full sexual intercourse. What counts against the appellant however is the fact that he did this over the course of about four months, although the complainant testified that it only happened on three occasions. It also counts against him that he threatened to hurt the complainant if she told anyone what he was doing. The complainant has been affected emotionally and psychologically by the incident, although the main cause of her sadness appears to be that her mother did not believe what she said, and took the appellant‟s side. [23] The appellant deserved a custodial sentence, but imprisonment for life in my view will be an injustice. The disproportionality seems plain to me. [24] It remains to consider what to do about the sentence. The discretion in this regard belonged to the regional magistrate. I do not consider that he misdirected himself in any material respect, or that he exercised his discretion improperly. There is therefore no basis for interfering with his sentence. The suspended part of the sentence will hopefully serve its purpose. [25] In those circumstances the appeal against the increase of the sentence should succeed, subject to the correction of an error in the condition of suspension imposed by the regional magistrate. [26] The following order is made: (a) Paragraph 2 of the order made by the Gauteng Local Division, Johannesburg, is set aside, save for that part of it which directed that the name of the appellant shall be reflected in the sexual offenders‟ register. (b) The sentence imposed by the regional court is reinstated, namely 15 years‟ imprisonment, 5 years of which is suspended for five years on condition that the accused is not convicted of a contravention of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, committed during the period of suspension. The effective period of imprisonment will be 10 years. (c) The sentence is antedated to 9 October 2013. ________________ JA Ploos van Amstel Acting Judge of Appeal Bosielo JA (Tsoka AJA concurring): [27] This is an appeal against a sentence of imprisonment for life imposed on appeal by the Gauteng Local Division, Johannesburg. The appellant was convicted of rape of an eight year old girl, read with s 3 and further with ss 1, 55, 56(1), 57, 58, 59, 60 and 61 of the Criminal Law Amendment Act (Sexual Offences and Related Matters) 32 of 2007. Furthermore, this charge was to read together with ss 256, 257 and 281 of the Criminal Procedure Act 51 of 1977 (CPA) together with the provisions of s 51 of the Criminal Law Amendment Act 105 of 1997 (CLAA) as amended as well as ss 92(2) and 94 of the CPA. [28] In essence, the charge against the appellant is that he inserted his fingers on various occasions into the complainant‟s private parts, licking it and showing her his private parts which he would ask her to touch. [29] The appellant was convicted as charged and sentenced to imprisonment for 15 years with 5 years suspended on condition that he is not convicted of contravening the Sexual Offences and Related Matters Act 32 of 1997 during the period of suspension. The effective sentence was 10 years‟ imprisonment. [30] With the leave of the regional magistrate, the appellant filed this appeal with the Gauteng Local Division, Johannesburg, against his conviction only. The state did not file any appeal against the sentence imposed by the regional magistrate, nor did it cross- appeal against the sentence. In essence there was no appeal against the sentence before the court below. [31] The appellant‟s appeal against his conviction was initially enrolled for 29 February 2016. On this day, the high court, mero motu placed the appellant on notice to indicate why his sentence should not be increased if it were to find that his conviction was in order. [32] It appears that the high court had a prima facie view that the sentence of 10 years‟ imprisonment was in the circumstances of this case inappropriate, as the prescribed minimum sentence was life imprisonment. Hence it gave notification to both parties and an opportunity to prepare arguments on this issue in the case. The matter was postponed to 10 May 2016 to allow both the appellant and the respondent sufficient time to prepare their submissions. [33] At the hearing of the appeal, both the appellant and the respondent led evidence and addressed the court regarding the sentence as per the notification. After submissions by both parties, the court below confirmed the conviction and set aside the effective sentence of imprisonment for 10 years and replaced it with life imprisonment. [34] Aggrieved by this, the appellant petitioned this Court for special leave to appeal against both conviction and sentence. This Court granted the special leave to appeal only against the sentence of life imprisonment only on 11 October 2016. [35] The crisp legal question to be answered in this appeal is whether a sentencing court has the authority where the respondent neither lodged an appeal nor cross-appeal against the sentence imposed by another court, to raise the inappropriateness of the sentence mero motu. The appellant says it can whilst the respondent says it cannot. [36] Before us on appeal, counsel for the appellant submitted that, absent a formal application for a cross-appeal on sentence, the court below had no authority to raise the issue of the inappropriateness of the sentence mero motu. [37] On the other hand, the respondent‟s counsel submitted that s 309(3) of the CPA gave the court below the power and authority, where the circumstances justify it, to set a sentence by the trial court aside, and substitute it with an appropriate sentence. [38] He argued further that in this case, not only did the court below give both parties due notice, it gave them sufficient time to prepare their submissions. As a result, both the applicant and the respondent made submissions to the court below on the issue on which the court below had warned them. In conclusion, he asserted that the court below acted properly in terms of s 309(3) and the appeal ought to be dismissed. [39] A clear reading of s 309(3) tells us in no uncertain terms that the court below had authority to act as it did. During the hearing counsel for the appellant conceded this. [40] The next question is whether the sentence imposed by the court below is proportionate to the crime committed. It is true that because the offence for which the appellant was convicted falls within the ambit of s 51(1) of the CLAA, life imprisonment in the absence of substantial and compelling circumstances, would have qualified as an appropriate sentence. However, every case has to be adjudicated on its own circumstances, including the nature and impact of the crime and the legitimate interests of the public, the personal circumstances of the appellant, the so-called basic triad. S v Zinn 1969 (2) SA 537 (A). [41] After careful consideration of relevant facts, the regional magistrate imposed a sentence of 15 years‟ imprisonment and suspended 5 years on suitable conditions after it had found substantial circumstances. However, the court below found the sentence to be disproportionate to the crime committed. It altered the sentence to life imprisonment. [42] The question which confronts us in this appeal is whether a sentence of imprisonment for life which was imposed by the court below, in the circumstances of this case, is disturbingly disproportionate that it evokes a sense of shock, and is unjust. [43] In a nutshell, the evidence showed that: the appellant raped the complainant several times with his fingers, he made her lick his fingers, he also made her touch his penis, that she was 8 years old, thus a minor, the appellant was her stepfather, thus in a position of trust. However, the medical report revealed superficial scratches on her vagina, but the hymen was still intact. [44] Regarding the appellant, he was 37 years old at the time when he was sentenced; he is married to the complainant‟s mother; although he is not the complainant‟s natural father, he is gainfully employed and looks after his brother. The court below found these facts not weighty enough to qualify as substantial and compelling to justify a lesser sentence than life imprisonment. [45] It is a truism that the Criminal Law Amendment Act 108 of 1997 introduced far- reaching changes to our sentencing regime. As a reaction to the escalating levels of serious crime, the Legislature introduced mandatory sentences for certain specified offences. There is some measure of uncertainty, regarding the correct approach as to the proper application of minimum sentences prescribed by the CLAA. Some courts have held that the minimum prescribed sentence must be applied as a matter of course as soon as an accused is convicted of an offence falling within the various categories of the CLAA, unless the circumstances of the appellant are shown to be exceptional. This approach is wrong. [46] The correct approach was adumbrated as follows in S v Vilakazi 2009 (1) SACR 552 (SCA) at 566A-D: „The court was required to apply its mind to the question of whether the sentence was proportional to the offence. . . .‟ The court proceeded at 559e-562d to hold that: „It was accordingly incumbent upon a court to assess whether the prescribed sentence was indeed proportionate to a particular offence. If any circumstances were present that would constitute weighty justification for the imposition of a lesser. Thus, a prescribed sentence could not be assumed a priori to be either proportionate to the offence, or, indeed, constitutionally permissible. Proportionality was to be determined on the circumstances of a particular case.‟ Accordingly, the notion that prescribed sentence is to be imposed in „typical‟ cases, and departed from only in „atypical‟ ones was without merit. [47] As alluded to above, the question remains, whether are circumstances in this case such that they call for life imprisonment as the most appropriate sentence. Is the sentence of imprisonment for 10 years imposed so disturbingly disproportionate that it requires to be interfered with? [48] Having perused the record, I am not persuaded that the circumstances of this case call for life imprisonment as the appropriate sentence. In fact it appears to me to be disturbingly disproportionate and it induces a sense of shock. Importantly, no misdirection has been shown on the part of the regional magistrate. Neither has it been shown to have exercised its discretion injudiciously. It follows its sentence is not open to an attack. It must stand. [49] It is axiomatic that imprisonment for life is the ultimate sentence in our statute books. It replaced the death sentence. It has serious and far reaching consequences. Section 51(1) of the CLAA prescribes it for the offences like the one for which the appellant is convicted unless the court can find substantial and compelling circumstances to justify a departure from the sentence which is peremptorily decreed by the CLAA. [50] What then are substantial and compelling circumstances? This Court has cautioned in the seminal judgment of S v Malgas 2001 (1) SACR 469 (SCA) that there is no closed category of substantial and compelling circumstances. It cautions all sentencing officers to consider all the facts, including what is traditionally known as ordinary mitigating circumstances to determine if, taken together, they do not constitute substantial and compelling circumstances. See Malgas (supra) [51] Having considered all the facts relevant to sentencing, the regional magistrate imposed a sentence of 15 years‟ imprisonment with 5 years thereof suspended for five years on suitable conditions. The court below found that there was no justification for the regional court to have imposed the sentence that it did and not the minimum sentence prescribed by CLAA. To my mind, the facts of this case do not justify a sentence of imprisonment for life. [52] It follows that the sentence imposed by the court below is inappropriate and must be set aside. For all these reasons, I will concur in the order of the majority. ________________________ L O Bosielo Judge of Appeal APPEARANCES: For Appellants: J J Greeff Instructed by: Kemp De Beer & Goosen Attorneys, Pretoria Symington & de Kok Attorneys, Bloemfontein For Respondents: P Nel Instructed by: Director of Public Prosecutions, Johannesburg 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 5 December 2017 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Daniel Coenraad De Beer (1210/2016) ZASCA 183 (5 December 2017) MEDIA STATEMENT The Supreme Court of Appeal held in this matter that the Local Division had the power to increase a sentence where the appellant had appealed against his conviction only, after it had notified the appellant that it was considering doing so. The sentence of life imprisonment was however held to be disproportionate, and was set aside. The sentence imposed by the regional court was reinstated.

3764

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 134/2021 In the matter between: WAYLAN ABDULLAH APPELLANT and THE STATE RESPONDENT Neutral Citation: Abdullah v The State (Case no 134/21) [2022] ZASCA 33 (31 March 2022) Coram: MOCUMIE, SCHIPPERS and NICHOLLS JJA and TSOKA and MEYER AJJA Heard: 16 March 2022 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be have been at 09h45 on 31 March 2022. Summary: Criminal law and procedure – caution applied to single witness evidence – whether the state witness’ identification was reliable and credible – whether the appellant’s right to a fair trial was infringed by the high court’s refusal to recall the state witness after inspection in loco was completed. ___________________________________________________________ ORDER ___________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Salie-Hlope J, sitting as court of first instance): The appeal is dismissed. __________________________________________________________ JUDGMENT ___________________________________________________________ Nicholls JA (Mocumie and Schippers JJA and Tsoka and Meyer AJJA concurring): [1] On 15 September 2020 the Western Cape Division of the High Court, Cape Town (the high court) convicted the appellant, together with his co-accused, of one count of murder; robbery with aggravating circumstances; possession of an unlicensed firearm; and, unlawful possession of ammunition. He was sentenced to an effective term of 29 years imprisonment. The appellant sought leave to appeal against his conviction. It was refused by the high court (Salie-Hlope J) but was granted by this Court. [2] The central issue in this appeal is the identification of the appellant as one of the persons who shot the decease. Aligned to this is the high court’s refusal to grant an application to recall the sole eyewitness to the shootings after an inspection in loco had been held, and after the appellant had changed his legal representatives. [3] The facts are largely common cause. On 18 October 2018 between 17h00 and 18h00 two persons, Prezano Holland and Gregory Carelse were shot and killed in Bishop Lavis, Cape Town by two gunmen acting with a common purpose. Mr Holland was killed by a single gunshot wound whereas Mr Carelse’s body was riddled with multiple gunshot wounds. According to the pathologist ten shots were fired into his body, six of which were to the head. Of the 14 cartridges found at the scene, seven were fired from one 9 millimetre firearm, and the others from a .38 revolver. One of the firearms used was linked to many other murder cases. Because there were no witnesses to Mr Holland’s murder, both accused were acquitted of his murder. The focus of this appeal is therefore the murder of Mr Carelse (the deceased). [4] Before dealing with the question of identification, it is necessary to briefly sketch the milieu in which the murders took place. Gang violence has long been rife in the areas on the outskirts of Cape Town, commonly known as the Cape Flats. Gangs have their roots in the apartheid forced removals where communities were moved from their old neighbourhoods, in or near the city centre, to the wastelands which make up the Cape flats.1 Gang violence continues today, unabated, making everyday life a hazardous business for the residents of those areas. Shootings and bullet- ridden bodies have become a daily occurrence in the gang-ravaged areas. The South African Police Service reported in 20192 that gang violence is often related to clashes between rival gangs or between gangs and residents. In 2018 the Western Cape Department of Community Safety acknowledged that there is the added challenge of drug abuse as well as 1 D Pinnock Gang Town 1 ed (2016). 2 South African Police Service (SAPS). 2020. Annual report 2018-2019 at 24, available at https://www.saps.gov.za/about/stratframework/annual_report/2018_2019/annual_crime_report2020.pdf accessed on 2022/03/30. police officials who are being controlled by gangs and corrupt politicians who have control of the drug trade in specific areas.3 [5] The deceased was employed as a senior security officer in the Community Safety Department of the City of Cape Town. He was also a police reservist for over 20 years and a community activist committed to ridding the area where he lived of the scourge of drugs and gang-related violence. The deceased was an eyewitness and prospective State witness in a gang-related drive-by shooting that took place in 2017, in which three persons were murdered. The accused in that case were members of the notorious prison gang, the 28’s, whose members, when outside prison, are mostly affiliated to a gang known as the ‘Firm’. Sergeant Lombard, the investigating officer in the triple murder case, testified was that there were leadership disputes among the 28’s which played themselves out amongst members of the Firm. Valhalla Park which borders on Bishop Lavis, was considered a safe territory for members of the Firm and the 28’s. Colonel Charl Kinnear, a witness in this case and a senior member of the Anti-Gang Unit, said that there were two factions of the 28’s in Valhalla Park. Their respective territories were divided by Forel Street. Mr Carelse spoke of a ‘war’ between the gangs in Valhalla Park and Bishop Lavis. [6] In the triple murder which was referred to as the ‘Forel Street murders’, the deceased, after witnessing that shooting, gave chase and managed to execute the arrest of an infamous gang member, Mr Abraham Wilson. The deceased made a statement to the police and agreed to be a State witness. Sergeant Lombard said that the victims in the Forel 3 Western Cape Department of Community Safety: Provincial Policing Needs and Priorities (PNP). Report for the Western Cape on the Policing of Drugs 2018-2019 at 8, available at https://www.westerncape.gov.za/assets/cover_page_-_pnp_on_drug_prevention_2018_and_19.pdf, accessed on 2022/03/29. Street murder case were other known gang members, pointing to internecine gang warfare. The deceased was well-known in the community as a person who worked closely with the police in their crime prevention efforts. It became widely known that the deceased was the person who had arrested, and handed over, Mr Wilson to the police. Sergeant Lombard said that notwithstanding the risks, the deceased had insisted on remaining in the community where he lived despite it being known that he was working with the police. Another State witness in the Forel Street murder case had been murdered some months before the killing of the deceased, in March 2018. [7] I now revert to the main issue in this appeal - whether the single witness to the murder, Mr Dale Carelse, made a credible and reliable identification of the appellant as being one of the two people who shot and killed the deceased. Mr Carelse is the son of the deceased and was 27 years old at the time of the murder. It is trite that as a single witness, his evidence must be approached with due caution, and should be satisfactory in all material respects.4 The principles relating to identification are equally well established. It is not enough for the identifying witness to be honest. The reliability of his identification must be tested against other factors such as lighting, visibility, proximity of the witness and opportunity for observation.5 [8] Mr Carelse’s version is briefly as follows. On 18 October 2018 he was at home with his father in Bishop Lavis. At about 15h20 his father told him that he was going to attend to an incident in Valhalla Park and left armed with his .38 revolver in a waist holster. Later that afternoon between 4 R v Mokoena 1932 OPD 79 at 80; S v Sauls 1981(3) SA 172 (A); [1981] 4 All SA 182 (A) at 185. 5 S v Mthethwa 1972 (3) SA 766 (A) at 768A-C; see also the various cases where Mthethwa has been cited with approval. 17h00 and 18h00, as he was standing in the doorway of the house, Mr Carelse saw his sister walk past heading for the bus stop on her way to work. Two minutes after she had passed he heard a single shot and then a series of shots. He jumped over the wall because he thought his sister was in danger. He called to her to return to the house and kept on running in the direction of the shots. He said that he was not trying to be a hero, rather this was an automatic reaction to a high-pressure situation. [9] As he was running Mr Carelse heard more shots. He saw two people firing shots. They were on the same side of the road as he was. The shooting stopped. He saw the one shooter bend down and ‘fiddle’ with the person who was lying on the ground. The appellant was standing over the person, pointing a firearm towards him, while the other shooter searched him. The two assailants then ran in the direction of Valhalla Park. As Mr Carelse approached the body lying on the pavement, he realised that the person who had been shot was his father. When Mr Carelse reached his father, he had already died as a result of the bullet wounds. His firearm was no longer in his possession. [10] Mr Carelse immediately identified the assailants as members of the Firm who lived in Valhalla Park. He did not know their proper names, only their nicknames, Krag and Wena. The appellant was known to him as Wena. Mr Carelse had gone to school in Valhalla Park and while they were not friends, he saw them both very regularly. In fact, he said that he saw the appellant on a daily basis. The appellant used a gangster language known as Sabela when conversing with his friends. He was antagonistic towards Mr Carelse who thought the reason for this was his father’s anti- gang sentiments. [11] Mr Carelse’s mother confirmed that the following day after the death of her husband, in the morning, her son informed her that the persons who had shot his father were known to him by their nicknames, Krag and Wena. However, she did not tell the police what her son had shared with her. Her husband had always told her not to trust people, especially the police at the Bishop Lavis Police Station. She was therefore reluctant to volunteer any information. [12] It was only 19 days later, and having been persuaded to do so by his uncle and a good friend of his father, that Mr Carelse agreed to make a statement to the investigating officer, Colonel Kinnear. Mr Carelse said that he was scared to come forward and only did so once he had been given assurances by his uncle that he could trust Colonel Kinnear. Colonel Kinnear had been in the police service for 31 years, was born in Bishop Lavis and, like the deceased, had lived his entire life in the area. It is not insignificant that in September 2020 Colonel Kinnear was murdered in a hail of bullets outside his house in Bishop Lavis, while investigating numerous cases of organised crime involving gangsters and high level police officers. [13] The appellant contends that Mr Carelse did not have the opportunity to properly observe and identify the gunmen. Much was made of the fact that Mr Carelse only had between 2-4 seconds in which to observe the appellant. Had the appellant been a stranger to him, this could have been a significant factor. However, when seeing a person who is known to you, it is not a process of observation that takes place but rather one of recognition. This is a different cognitive process which plays a vital role in our everyday social interaction. The time necessary to recognise a known face as opposed to identifying a person for the first time, is very different. It has been recognised by our courts that where a witness knows the person sought to be identified, or has seen him frequently, the identification is likely to be accurate. [14] In Arendse v S6 this Court quoted with approval the trial court’s comments in R v Dladla:7 ‘There is a plethora of authorities dealing with the dangers of incorrect identification. The locus classicus is S v Mthetwa 1972 (3) SA 766 (A) at 768A, where Holmes JA warned that: “Because of the fallibility of human observation, evidence of identification is approached by courts with some caution. In R v Dladla 1962 (1) SA 307 (A) at 310C- E, Holmes JA, writing for the full court referred with approval to the remarks by James J – delivering the judgment of the trial court when he observed that: ‘one of the factors which in our view is of greatest importance in a case of identification, is the witness’ previous knowledge of the person sought to be identified. If the witness knows the person well or has seen him frequently before, the probability that his identification will be accurate is substantially increased … In a case where the witness has known the person previously, questions of identification …, of facial characteristics, and of clothing are in our view of much less importance than in cases where there was no previous acquaintance with the person sought to be identified. What is important is to test the degree of previous knowledge and the opportunity for a correct identification, having regard to the circumstances in which it was made”.’ [15] This Court reaffirmed this principle more recently in Machi v The State8 where the witnesses stated that they knew the appellant and he too admitted that he knew them. The court said in these circumstances there is no room for mistaken identity. [16] Mr Carelse testified that he knows Valhalla Park well. He went to school there. He knows the appellant because they frequented the same 6 Arendse v S [2015] ZASCA 131 para 10. 7 R v Dladla 1962 (1) SA 307 (A) at 310C-E. 8 Machi v The State [2021] ZASCA 106 para 27. places where Mr Carelse ‘would be hanging out with friends’. He said that the appellant, and his co-accused, were members of the Firm and would often be in the company of members of the Firm in Valhalla Park. Mr Carelse named several members of the Firm within the appellant’s circle of friends and said that he frequented the home of one Noah, where drugs were sold. This evidence, which shows that the appellant was well-known to Mr Carelse, was not challenged, nor controverted. [17] It was argued on behalf of the appellant that in view of the chaos while the shooting was in progress, Mr Carelse did not have an unobstructed view of the scene. This would have inhibited his ability to identify the perpetrators. It was further argued that Mr Carelse observed the appellant’s firearm, not his face. Neither of these submissions have a factual basis. The basis for the latter is Mr Carelse’s evidence on being asked to describe the firearms. He said: ‘[The appellant] had a hand pistol, he had a pistol in his possession. And accused 1, I did not focus on his hands, I mostly focused on his face’. One cannot extrapolate from this comment that Mr Carelse did not see the appellant’s face. He expressly stated that as he moved closer to the scene ‘[the appellant] was busy aiming with his firearm. I identified him by his face. . .’. Similarly, there is no evidence, nor was it put to Mr Carelse, that other people obstructed his view of the scene. He did not testify that people were running towards the scene which might have impeded his view, but rather away from the scene. The only people he saw on the scene, armed with firearms, were the appellant and his co-accused. They then fled the scene. [18] The appellant points to various other reasons why Mr Carelse’s identification of him is unreliable. Firstly, the statement to Colonel Kinnear was not made until 19 days after the incident. Mr Carelse explained why he was scared to come forward. This is hardly surprising in view of the fact that his father had, in all probability, been murdered for his role in assisting the police and because he was a State witness in the Forel Street murders. Added to this was Mr Carelse’s belief that some of the police were implicated in the gang-related crimes. Colonel Kinnear stated that other people refused to give witness statements for fear of being killed in retaliation. Under these circumstances, Mr Carelse’s reluctance to go the police is quite understandable. [19] Another complaint is that the description of the clothing that the appellant was wearing on the day was not contained in the statement made to Colonel Kinnear. Mr Carelse insisted that he had informed Colonel Kinnear that the appellant was wearing grey tracksuit pants and a maroonish coloured T-shirt while Colonel Kinnear insisted that he recorded everything that the appellant had told him. This it was contended, together with the lengthy interval before making the statement, is a factor that should be considered in assessing whether Mr Carelse’s identification of the appellant was reliable. [20] The absence of a description of the clothing that the appellant was wearing is hardly a reason to question the veracity of Mr Carelse’s identification of the appellant. Moreover, this type of detail takes on far less significance once the appellant was a person well known to Mr Carelse. In any event, there is other corroboration of the appellant’s identification. Photographs of the appellant show that he had his name ‘Wena’ tattooed on his body, as well as ‘28’ signifying his membership of the 28 gang. Prior to the appellant’s arrest and the day after he made the statement to the police, Mr Carelse identified the appellant in a photo identification parade. [21] Mr Carelse described how the two shooters approached and shot the deceased from different angles. That there were two of them is corroborated by the fact that spent cartridges from 2 different firearms were found on the scene. The angle that Mr Carelse said they approached from explains why the corner house was damaged and why shrapnel was found inside the house. Mr Carelse’s description of the shooting was in line with the V-shaped pattern of the ejected cartridges found on the scene. This is objective corroboration of his version. [22] The high court held that, in view of the direct and credible evidence against him, the appellant’s failure to testify in his own defence resulted in the prima facie case against him becoming conclusive. It is correct that the absence of any rebuttal in these circumstances was damning. Although an accused person’s right to silence is guaranteed in the Constitution, this does not absolve an accused of the need for an honest rebuttal, if the situation, and evidence, demand it.9 [23] Apart from the question of identification, the second prong of the appellant’s attack is that the high court erred in not granting the application to recall Mr Carelse after an inspection in loco had been held. This, it is contended, had an impact on his constitutional right to a fair trial which includes the right to adduce evidence and challenge evidence.10 [24] An inspection in loco achieves two purposes, the first being to enable the court to follow the oral evidence. The second is to enable the 9 Osman v Attorney General Transvaal 1998 (4) SA 1224 (CC); S v Boesak 2000 (3) SA 381 (SCA) at 396; S v Chabalala 2003 (1) SACR 143 (SCA) para 21. 10 Section 35(3)(i) of the Constitution of the Republic of South Africa provides that: Every accused person has a right to a fair trial, which includes the right—to adduce and challenge evidence. court to observe real evidence which is additional to the oral evidence.11 In this instance it was clearly held for the first purpose. At the pleading stage the presiding judge mentioned the need for an inspection in loco to orientate herself as to the layout of the area where the shootings had taken place. It was then agreed with the State and defence counsel that this would be more useful once Mr Carelse’s evidence in chief had been completed. [25] The inspection in loco eventually took place after Mr Carelse’s entire evidence had been completed. All parties were present, including the two accused and their counsel. Various points were noted and the distance between points measured. The following day a memorandum of agreed facts was drawn up by counsel. It merely records the point where the deceased was lying and the distances from various fixed points; the points where Mr Carelse was when he identified the appellant and his co-accused; the time it took him to run between various points. No objections were raised during the inspection in loco. The memorandum was signed by the state prosecutor and defence counsel for the appellant’s co-accused, but not counsel for the appellant who by that stage had been replaced by new legal representatives. [26] After a postponement of several months, the new counsel of the appellant commenced with an application to recall Mr Carelse for further cross-examination. The application was premised on the appellant’s constitutional right to a fair trial. The appellant set out the reasons why Mr Carelse should be recalled. This was, inter alia, because Mr Carelse had not been sufficiently cross-examined on: (a) his previous knowledge of the appellant; (b) the time and opportunity he had to observe the scene; (c) the 11 P J Schwikkard et al Principles of Evidence 4 ed (2015) para 19.6. See also Newell v Cronje 1985(4) SA 692 (E) at 697-698; Kruger v Ludick 1947(3) SA 23 (A) at 31; Bayer South Africa (Pty) Ltd and Another v Viljoen 1990 (2) SA 647 (A) at 659-660. fact that Mr Carelse ran towards danger rather than away from danger; and (d) what occurred at the inspection in loco. It was alleged that there were material differences between Mr Carelse’s enactments at the inspection in loco of how the murder occurred when compared to his viva voce evidence. The discrepancy referred to was Mr Carelse’s oral evidence that he was between 15-25 metres away when he identified the appellant. Whereas, the place he pointed out at the inspection in loco was 38.9 metres away. [27] The high court refused the application. In the appellant’s notice of appeal, a somewhat different contention was advanced, namely that the court had failed to place the observations on record and allow the parties to comment thereon. In argument before this court the emphasis fell squarely on the appellant’s constitutional fair trial rights and the alleged gross infringement thereof by not allowing further cross-examination. [28] On the facts of this case, I am not persuaded that there was any justification for further cross-examining Mr Carelse. Concerning the discrepancy in distances, he had already qualified his evidence prior to the holding of the inspection in loco, saying he was very bad at estimating distances. Mr Carelse had been cross-examined for two days by the appellant’s previous counsel. All counsel including the appellant were on the scene. The observations were noted by counsel for the respondent in detail and confirmed by the trial judge to be correct, signed by both counsel for the respondent and the appellant’s co-accused. The appellant’s counsel, whose mandate was abruptly terminated the next day, did not raise any objection. None of the parties indicated any interest in pursuing what was noted at the scene. [29] The appellant’s counsel eschewed any reliance on the incompetence of the appellant’s erstwhile counsel and was unable to point to other additional evidence elicited by the inspection in loco, other than the discrepancy in distances referred to above. This has no bearing on Mr Carelse’s evidence as a whole which was credible and consistent.12 The constitutional right to challenge evidence does not extend to the right to have a witness recalled every time an accused person changes his legal representatives. The courts have a duty to ensure justice is done, not only to the accused, but towards witnesses as well. [30] For all these reasons the high court cannot be faulted for accepting Mr Carelse’s identification evidence of the appellant as one of the men who shot the deceased, as credible and reliable. Nor did the high court err in refusing to allow the application for the recall of Mr Carelse. [31] In the result I make the following order; The appeal is dismissed. ____________________ C H NICHOLLS JUDGE OF APPEAL 12 S v Van Meyden 1999 (2) SA 79 (W) at 81-82; S v Heslop 2007 (4) SA 38 (SCA) at 45; Director of Public Prosecutions, Gauteng v Pistorius 2016 (2) SA 317 (SCA) at 330. APPEARANCES: For first appellant: R Liddell Instructed by: Lidell Weeber & van der Merwe Inc., Wynberg Webbers Attorneys, Bloemfontein For respondent: L J Badenhorst Instructed by: The Director of Public Prosecutions, Cape Town The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 March 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Abdullah v The State (Case no 134/21) [2022] ZASCA 33 (31 March 2022) Today the Supreme Court of Appeal (SCA) dismissed the appeal by the appellant. The SCA confirmed the order of the Western Cape Division of the High Court (Salie Hlophe, J). The appellant was convicted with his co-accused on murder, possession of firearm and possession of ammunition contrary to the Firearm and Ammunition Act 120 of 2000.He was sentenced to an effective 29 years of imprisonment. The central issue in this appeal was the identification of the appellant as one of the attackers. Aligned to this was the high court’s refusal to grant an application to recall the sole eyewitness to the shootings (Mr Carelse) after an inspection in loco had been held, and after the appellant had changed his legal representatives. Apart from the question of identification, the second prong of the appellant’s attack is that the high court erred in not granting the application to recall Mr Carelse after an inspection in loco had been held. This, it is contended, had an impact on his constitutional right to a fair trial which includes the right to adduce evidence and challenge evidence. The SCA held, the high court cannot be faulted for accepting Mr Carelse’s identification evidence of the appellant as one of the men who shot the deceased, as credible and reliable. Nor did the court err in refusing to allow the application for the recall of Mr Carelse. In the result the SCA dismissed the appeal. ~~~~ends~~~~

1209

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT REPORTABLE CASE NO: 54/2007 In the matter between JULIUS PREDDY FIRST APPELLANT PERCY MILLER SECOND APPELLANT and THE HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA RESPONDENT CORAM: HOWIE P, MTHIYANE, HEHER, MLAMBO and MAYA JJA HEARD: 12 MARCH 2008 DELIVERED: 31 MARCH 2008 Summary: Health Professions Act 56 of 1974 – ss 42 and 43 - medical practitioners guilty of unprofessional conduct – Penalties imposed by Professional Committee of Enquiry suspended on certain conditions – whether such conditions competent. Interpretation and application of section 42(1) and 43(1)(b) of the Act – intention to empower sentencing authority to select one or more of the penalties – substitution of ‘and’ for ‘or’ not to be lightly resorted to. Neutral Citation: Preddy v Health Professions Council of SA (54/2007) [2008] ZASCA 25 (31 March 2008). MTHIYANE JA MTHIYANE JA: [1] The first and second appellants are specialist medical practitioners registered in terms of the Health Professions Act 56 of 1974 (‘The Act’). At a disciplinary enquiry conducted by the Professional Conduct Enquiry Committee (‘the Committee’) in terms of s 41 of the Act, the appellants were found guilty of unprofessional conduct. Their conviction arose from an arrangement in terms of which the appellants referred patients to a radiology firm in return for which they received certain payments. The payments were found by the Committee to constitute perverse incentives (‘kickbacks’) and their receipt by the appellants, disgraceful conduct. In total the first appellant received R156 792, 00 and the second appellant R756 153, 00 over the period 1993 to 1999. [2] The appellants were suspended from practice for five years but the operation of the suspension was suspended for five years on the following conditions: (1) that they were not convicted of receiving perverse incentives for a period of five years during the period of suspension; (2) that the amounts received were paid to the Health Professions Council of South Africa (‘the Council’) within a specified period; (3) that they performed community service in any public service hospital for two years, with the distinction that the first appellant was to serve only one day per week, and the second appellant two days. [3] The appellants appealed to the Disciplinary Appeal Committee (i.e. an internal appeal in terms of the Act). The appeal succeeded in part to the extent that the conviction was confirmed but the period within which the appellants had to pay the Council was extended by a further six months to one year. In addition the second appellant’s community service was reduced to one day per week. [4] A further appeal to the Pretoria High Court in terms of s 20 of the Act failed. The convictions of both appellants were confirmed but the penalties were amended to the extent that the condition requiring them to do community service was expressed in hours rather than days. The High Court (Botha J, with Sithole AJ concurring) ordered that: ‘1. The appeal against the finding that the appellants were guilty of unprofessional conduct is dismissed. 2. The appeal against the penalties is dismissed except that the third condition of suspension is altered to read: “That [the appellants] perform community public service by practising [their] profession in any public service hospital for 800 hours over a period of two years from this date”. 3. The respondents [i.e. the appellants] are to pay the costs of the appeal, which will include the costs of two counsel.’ [5] The appeal to this court with leave of the High Court is confined to the penalties. It turns primarily on whether the conditions of suspension of the penalties imposed by the Committee are competent or ultra vires the Act. A related issue raised by the appellants is whether the imposition of the suspension of the appellants from practice was appropriate. [6] It is convenient first to dispose of the latter issue. In this regard the appellants argue that the penalty imposed upon them was too severe in the circumstances. They maintain that a suspension from practice for a period of three or six months would have been more than adequate. I do not agree. Given the serious light in which the offences were viewed by the Council, it cannot be said that the sentences imposed are unduly harsh or leave one with a sense of shock. It has been said of various predecessors of the Council that each was the repository of power to make findings on what was ethical and unethical in medical practice (Meyer v SA Medical and Dental Council.1) and the body par excellence to set the standard of honour to which its members should conform (De La Rouviere v SA Medical and Dental Council.2) That is still so. When the Council says that particular professional misconduct by a practitioner is serious its assertion must be taken to heart unless there are compelling reasons to the contrary. It is not for the court to usurp the function of the professional body in its determination of what is or is not improper or disgraceful. I am not persuaded that there is any reason to interfere with the Committee’s finding. In my judgment the penalty imposed was not inappropriate and the appellants’ submission to the contrary falls to be rejected. [7] I turn to the question whether the conditions of suspension imposed upon the appellants are competent. It is necessary first to deal briefly with the penalty provisions in s 42(1) of the Act. The sub-section reads: (1) Every person registered under this Act who, after an inquiry held by the professional board, is found guilty of improper or disgraceful conduct, or conduct which, when regard is had to such person’s profession, is improper or disgraceful, shall be liable to one or other of the following penalties – (a) a caution or a reprimand or a reprimand and a caution; or (b) suspension for a specified period from practising or performing acts specially pertaining to his profession; or (c) removal of his name from the register; or (d) a fine not exceeding R10 000; or (e) a compulsory period of professional service as may be determined by the professional board; or 1 1982 (4) SA 450 (T) at 455H). 2 1977 (1) SA 85 (N) 97E. (f) the payment of the costs of the proceedings or a restitution.’ [8] The Committee which was empowered to impose the penalties in terms of the above section is a creature of statute and derives its powers from the Act. It can only operate within the four corners of the Act and exercise only those authorities and powers expressly or by necessary implication conferred upon it in terms of the Act. (See Ndamase v Functions 4 All;3 Fedsure Life Assurance v Greater Johannesburg Transitional Metropolitan Council.4) [9] As a starting point in the interpretation of a statute the words used ought to be given their ordinary grammatical meaning having due regard to their context. Section 42(1) of the Act provides that upon conviction for improper or disgraceful conduct a practitioner shall be liable for ‘one or other’ of the penalties, not ‘one or more’ of the penalties therein specified. The word ‘or’ appears immediately at the end of each penalty provision, leading one irresistibly to the conclusion that the intention of the Legislature was to empower the sentencing authority to impose any one of the sentences but not a combination of one or more. The appellants, quite rightly in my view, argued that if the Legislature had intended to provide otherwise it would have used language consistent with such an intention. [10] There is no doubt that there are cases where the word ‘or’ has been read as ‘and’, but this occurs in cases where to give the word ‘or’ its natural meaning would give rise to an interpretation that is unreasonable, inconsistent or unjust. (See Gorman v Knight Central GM Co., Ltd.5) This is however not the case in the present matter. The penalties prescribed by 3 2004 (5) SA 602 (SCA) at 605G–606B. 4 1999 (1) SA 374 (CC) paras 56 and 58. 5 1911 TPD 597 at 610. the section were clearly intended to be alternative options available to the sentencing authority.6 Moreover, as this judgment demonstrates, such an interpretation does not render the Committee less effective in disciplining the members of the profession. [11] Reading ‘or’ as ‘and’ has been described as a violent expedient which ought not to be adopted, except in the last resort, for the simple reason that ‘or’ does not mean ‘and’, and when the Legislature uses ‘or’ it must prima facie at all events be taken to mean ‘or’ and not ‘and’ (Colonial Treasurer v Great Eastern Collieries Ltd 1904 TS 716 at 719). It has been said: ‘ ‘[O]r’ must always be construed in its ordinary and proper sense as a disjunctive particle signifying a substitution or an alternative, unless the context shows or furnishes very strong grounds for presuming that the Legislature really intended the word and to be used. If to use the word ‘or’ in its proper and grammatical sense would strain the plain object of the Act, the Court will presume … that ‘and’ was intended for ‘or’. But, … the Court must not alter words in an Act of Parliament merely to give it a meaning such as it thinks those who framed it would have done, if the question had presented itself to them.’ (See S v Pretorius7) [12] In similar vein this Court in Ngcobo v Salimba CC8 (per Olivier JA) said: ‘It is unfortunately true that the words ‘and’ and ‘or’ are sometimes inaccurately used by the Legislature and there are many case in which one of them has been held to be the equivalent of the other (see the remarks of Innes CJ in Barlin v Licensing Court for the Cape 1924 AD 472 at 478). Although much depends on the context and the subject-matter (Barlin at 478), it seems to me that there must be compelling reasons why the words used by the Legislature should be replaced; in casu why ‘and’ should 6 This intention is borne out by the original structure of s 42(1)(a), (b) and (c) and the amendments made by Act 79 of 1990 and Act 89 of 1997. 7 1969 (1) SA 235 (T) at 237 F-G. 8 1999 (2) SA 1057 (SCA) at 1067J-1068B. be read to mean ‘or’, or vice versa. The words should be given their ordinary meaning “. . . unless the context shows or furnishes very strong grounds for presuming that the Legislature really intended” that the word not used is the correct one (see Wessels J in Gorman v Knight Central GM Co Ltd 1911 TPD 597 at 610; my emphasis). Such grounds will include that if we give ‘and’ or ‘or’ their natural meaning, the interpretation of the section under discussion will be unreasonable, inconsistent or unjust (see Gorman at 611) or that the result will be absurd (Greyling and Erasmus (Pty) Ltd v Johannesburg Local Road Transportation Board and Others 1982 (4) SA 427 at 444C-D) or, I would add, unconstitutional or contrary to the spirit, purport and objects of the Bill of Rights (s 39(2) of the 1996 Constitution).’ [13] It follows therefore that the Committee could select only one of the penal options listed in paragraphs (e) to (f) of s 42(1) and not ‘one or more’ or a combination of them. [14] This brings me to the conditions for the suspension of the penalty. Counsel for the appellants drew attention to the monetary value of the professional services rendered by specialist practitioners of their qualification and experience, which, when calculated at the then prevailing rate, amounted to between R800 and R1200. On that basis, counsel submitted that the monetary equivalent of the total periods of community service imposed on the appellants was grossly out of proportion to the largest monetary fine which the Committee was empowered to impose (R10 000, in terms of s 42(1) of the Act). The penalty sections, he said, should be interpreted in a manner which rendered them consistent. Counsel also submitted that the imposition of community service as a condition of suspension was simply an impermissible attempt to levy a fine under another guise. So also was the order for payment to the Council of the amounts received as kickbacks. Finally, in this regard, said counsel, the imposition of community service and the order for payments were duplications of penalties clothed as conditions of suspension; the effect was that the Committee was in reality imposing three penalties when it was empowered by s 42(1) to impose only one. [15] All these submissions depend on the same fallacy, viz that the conditions which may be imposed under s 43(1)(b) are limited by the terms of the penalty powers of the Council (s 42(1)). Counsel for the respondent submitted that the purpose of conditions of suspension is to ameliorate the penalties. More correctly, I think, the purpose is to provide a means of avoiding strict performance of the penalty. None of the available penalty options provided for in the section standing alone would have constituted an appropriate punishment. A caution and discharge or a caution or reprimand was out of the question, given the seriousness of the misconduct. So also the removal of the appellants from the roll or an outright suspension from practice for five years, both of which would have been too harsh and totally against the weight of the evidence presented by the respondents in mitigation. A fine would have been too lenient. Such was the dilemma in which the Committee found itself. [16] In its present form s 43(1)(b) of the Act provides a clear-cut solution. The section provides for the postponement or suspension of the operation of the penalty imposed under s 42(1) on conditions ‘as may be determined by’ the Committee. It reads: ‘(1) Where a professional board finds a person referred to in section 42(1) guilty of conduct referred to therein, it may – (a) . . . (b) impose any penalty mentioned in paras (b), (c) or (d) of section 42(1), but order the execution of such penalty or any part of the penalty to be suspended for such period and on such conditions as may be determined by it.’ [17] Although there is no specific provision in the Act for the imposition of a condition requiring an offending medical practitioner to perform community service or to pay the amount of perverse incentives received by him or her to the Council, these conditions are ancillary to the power it had to impose the penalty provided for in s 42. [18] A condition of suspension cannot multiply penalities. What it can do is to offer the affected person a choice to avoid the single penalty laid down by the Committee by voluntarily adopting another course of action, (see R v Hendricks;9 R v Littlejohn10) which in its totality may or may not include or exceed a prescribed penalty. The imposition of a condition does not compel performance with its terms; the affected person is perfectly free to submit himself or herself to the penalty and ignore the conditions. Thus a power to lay down the conditions provides scope for creativity on the part of the sentencing authority (without infringing on its penalty power). As the record shows, the Committee took full advantage of the scope for creativity when deciding on the conditions. [19] In the court below Botha J correctly referred to R v Fourie11 to justify the conclusion that a condition of suspension may require an accused to do something that would otherwise be outside the jurisdiction of a court. The question in R v Fourie was whether the court was limited in the amount of compensation it could award to the complainant upon conviction of the accused. The court concluded that it was not. This is because it was empowered by the relevant section to impose such 9 1915 CPD 821. 10 1946 TPD 161 at 168. 11 1947 (3) SA 468 C at 470. conditions as ‘in its discretion it thinks suitable.’ (See R v Fourie at 470). The power to impose conditions under s 43(1) is no less broad. [20] For the above reasons I am of the view that the Committee did not misdirect itself in any way in imposing the conditions it did and there is no basis to interfere with its finding. [21] Accordingly the appeal is dismissed with costs. ______________________ KK MTHIYANE JUDGE OF APPEAL CONCUR: HOWIE P HEHER JA MLAMBO JA MAYA 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: 31 March 2008 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. PREDDY v HEALTH PROFESSIONS COUNCIL OF SA (54/2007) [2008] ZASCA 25 (31 March 2008). [1] The SCA today dismissed an appeal by two specialist medical practitioners, Dr Julius Preddy and Dr Percy Miller against the decision of the Pretoria High Court upholding the decision of a Professional Committee of Enquiry which found them guilty of disgraceful conduct. [2] The charges arose from an arrangement which they had with a radiology firm in terms of which they received certain payments as ‘kickbacks’, in return for referring patients to the firm concerned. During the period 1993 to 1999 Dr Preddy received R156 792 and Dr Miller, R756 153. [3] The Committee found that these payments constituted perverse incentives and suspended the two doctors from practice for two years on certain conditions. Two of the conditions were that (1) they pay the amounts received to the Health professions Council of South Africa and (2) that they do community service at certain public hospitals for 800 hours (more detailed particulars of the penalty appears in the full judgment). [4] The SCA rejected the argument advanced on behalf of the doctors that the conditions imposed by the Committee were inappropriate and dismissed their appeal with costs.

3522

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1334/2019 In the matter between: FIRSTRAND BANK LIMITED APPELLANT AND THE SPAR GROUP LIMITED RESPONDENT Neutral citation: FirstRand Bank Limited v The Spar Group Limited (1334/2019) [2021] ZASCA 20 (18 March 2021) Coram: CACHALIA, DAMBUZA and MAKGOKA JJA and SUTHERLAND and UNTERHALTER AJJA Heard: 9 November 2020 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 18th day of March 2021. Summary: A bank which is aware that funds deposited by a third party into its client’s bank account to which the client has no legitimate claim may not appropriate such funds on the premise that the client has a claim to the funds and use them by way of set off to discharge the client’s debt to the bank – A bank which is aware that a third party has deposited funds into its client’s bank account and is aware that the client has no legitimate claim to the funds is under a duty to take steps to prevent harm to the third party by way of the misappropriation of those funds by its client – the bank’s failure to prevent harm to the third party renders it a co-wrongdoer with the client for the theft. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Baqwa J, Madiba J concurring and Thlapi J dissenting sitting as court of appeal): The appeal is dismissed with costs including the costs of two counsel. JUDGMENT Sutherland and Unterhalter AJJA (Cachalia, Dambuza and Makgoka JJA concurring) Introduction [1] This case is about banks, their customers, and third parties who have put money into the customers’ accounts. It considers two interrelated questions. First, can a bank set off the customer’s debts to the bank against amounts standing to the credit of a customer, if the bank knows that a third party has a claim to these funds? If not, what claim does the third party have against the bank? Second, does the bank owe a legal duty to the third party if the bank allows the customer to utilise the money deposited by the third party into the customer’s account, if the bank knows the customer has no valid claim to those funds? [2] The respondent, Spar Group Ltd (Spar), conducts business as a franchisor of the Spar brand of retail grocers and the Tops brand of liquor vendors. Spar fell into a dispute with one of its franchisees, Umtshingo Trading 30 (Pty) Ltd (Umtshingo), whose controlling mind was Mr Arnaldo Paolo (Mr Paolo). The Umtshingo business, in terms of the franchise agreement, operated three outlets. For each outlet, Umtshingo kept a bank account with the appellant, Firstrand Bank Ltd, which trades as First National Bank (FNB or the Bank), at its Nelspruit branch. One outlet, a grocer, styled Bella Donna Kwik Spar, was owned by a close corporation, Central Route Trading 30 CC (Central Route), the sole member of which was Mr Paolo. Despite this distinct corporate identity, the franchise agreement regulated all three outlets as a single business conducted by Umtshingo, and Central route 30 CC was, de facto, a division of the whole business – Umtshingo. Its account, in the name of Central Route, was referenced as 323. The other two outlets were liquor stores, Bela Donna Tops, whose account was referenced as 656, and Sonpark Tops, whose account was referenced as 309. These latter two accounts were held in the name of Umtshingo. [3] Spar held a notarial bond over the assets of Umtshingo. Umtshingo defaulted on its obligations under the franchise agreement. In consequence, Spar obtained a provisional order from the local magistrates’ court perfecting its security. The terms of the notarial bond permitted Spar to take over the Umtshingo businesses and run them for its own account. Armed with the provisional order, Spar confronted Mr Paulo with the stark option of closing the shops or allowing Spar to trade for its own account in terms of a ‘short term business lease’, during the interim period, until a final order to perfect the bond was granted. Mr Paolo was keen to avoid closure, supposedly to escape a loss of business reputation, and acquiesced, save in one important respect, to the terms of a draft agreement which regulated this arrangement. The single reservation was that Mr Paolo refused to de-link the speedpoint credit card devices of the stores from the bank accounts of Umtshingo. It is this resistance that is the fons et origo of the controversy in this case. [4] Spar ran the outlets on the terms of the unsigned draft agreement and in the course thereof, credited the stock on hand to Umtshingo and brought in new stock. Cash receipts were deposited into a Spar account. However, the speedpoint credit card devices in use, which facilitated electronic deposits of revenue directly into Umtshingo’s designated accounts, remained in use. Spar continued to allow revenue earned from its trading to be deposited into these three accounts, albeit reluctantly, whilst taking several steps to try to get Mr Paolo to consent to a change or to get FNB to redirect the revenue to a Spar account. Spar’s failure to achieve either of these objectives resulted in substantial sums flowing into Umtshingo’s accounts. [5] Mr Paolo therefore retained control over the accounts and, during the period of Spar’s trading, effected substantial disbursements out of two of these accounts, namely account 656 and account 309. Moreover, the debit balances (in respect of Umtshingo’s overdraft liability, its debts to FNB in respect of a loan and a guarantee paid by FNB to Spar) in two of the accounts, ie account 323 and account 309, were purportedly extinguished by FNB applying set off against the credits in these accounts that derived from the revenue generated by Spar and deposited into the accounts. [6] The upshot was that Spar contended that FNB ought not to have allowed disbursements to be made at Mr Paolo’s behest because Umtshingo had no rightful interest or claim to the funds, and that FNB, furthermore, was not entitled to set off Umtshingo’s debts in respect of which Spar had a quasi-vindicatory claim. [7] The four claims made by Spar were as follows: (a) Claim 1: R1,343,422.92 used by FNB to discharge the overdraft in account 323. (b) Claim 2: R2,039,948.68 disbursed by Paulo from account 655. (c) Claim 3: R1,358,890.90 disbursed by Paulo from account 309. (d) Claim 4: R898,744.92 used by FNB to discharge the debts due to it by Umtshingo. FNB alleged that this claim had prescribed by the time that it was added to the other claims, by way of an amendment made by Spar to the pleadings on 6 March 2013. [8] FNB’s defence was that it had lawfully appropriated the sums claimed because these were amounts due and payable to FNB. It was common cause that Umtshingo was indebted to FNB in the amounts alleged by FNB and that FNB did not obtain the permission of Spar to effect the set off of Umtshingo’s indebtedness to the Bank. The quantum of Spar’s claims was not in dispute. [9] The issues that therefore arose for decision were these: (a) Was FNB entitled to set-off the credits that derived from the funds deposited into the accounts by Spar against Umtshingo’s debts owing to FNB? (b) Was FNB liable in delict to Spar for the losses it suffered when Mr Paulo caused sums to be withdrawn from these accounts, which funds derived from deposits into the accounts by Spar, and to which neither Mr Paulo, nor Umtshingo, had any rightful interest or claim? (c) Had Claim 4 prescribed? [10] Spar sued FNB in the Gauteng Division of the High Court. At the conclusion of the trial, claim 4 was dismissed because it was held to have prescribed, and the other three claims were dismissed on the basis that FNB had not done anything to incur liability to Spar. On appeal to the full court of the Gauteng Division, these results were reversed by a majority decision. Spar was held to have proven its case in respect of all four claims. The dissenting judgment endorsed the trial court’s holding, but did not deal with the prescription issue. It is the majority judgment of the full court that is on appeal to this Court. [11] To make sense of the evidence that gave rise to the issues, it is necessary first to examine the course of events in some detail. The only witnesses to testify at trial were three Spar employees. Much of what occurred was contemporaneously captured in prolific correspondence, among the several actors and their attorneys. The evidence adduced, some six years after the events, was often little more than a running commentary on the correspondence and a spirited but valueless exchange with counsel about the what-ifs of those events. The narrative of material events [12] The appropriate place to begin is on 1 February 2010. Umtshingo was in financial trouble. On that date it reached agreement with FNB to reorganise its credit facilities to alleviate the distress. Umtshingo was granted a loan of R2.1m. Central Route was granted an overdraft of R200,000. These arrangements were concluded between FNB and Umtshingo. Spar was neither privy thereto, nor informed of these facts. In addition, FNB, on Umtshingo’s behalf, had provided Spar with a performance guarantee of R400,000, an additional burden on the business, if it were to be called up. [13] Spar held a general notarial bond over the assets of Umtshingo. Spar, in response to a default by Umtshingo, which was in arrears in the sum of R2,539,408.14, on 5 March 2010, obtained a provisional order, perfecting its security. On 8 March 2010, Spar took physical control of the business. The return day was 1 April, 26 days hence. This date, as it turned out, was extended and then again extended. [14] Spar, as a consequence of assuming beneficial control over the trading activities of Umtshingo, registered the Umtshingo businesses for VAT and became liable as a vendor. Mr Paolo was asked to authorise a delinking of the speedpoint credit card devices from Umtshingo’s accounts so that the revenue would flow to a Spar account. Mr Paolo refused to do so because he intended to challenge the provisional order, although the terms of the ‘short term business lease’ held out no ultimate harm to his interests, as it provided for the net profit made by Spar to be credited against Umtshingo’s indebtedness to Spar, regardless of the final outcome of the application to perfect the notarial bonds. FNB also refused to change the bank account linked to the speedpoint devices, unless Mr Paulo agreed thereto, or a court order was presented to it. Of course, until the provisional order perfecting the bond had been made final, there was no relevant order to present to FNB. What, then, was to regulate affairs in the interim? [15] Axiomatically, Spar risked the revenue of its own trading being diverted. This was obvious because Mr Paulo alone could exercise control over the Umtshingo accounts. This was appreciated by Spar’s management. Rob McLagan, the Branch Manager of FNB, Nelspruit, got wind of the takeover before any formal communication from Spar. On 9 March, he emailed Lorraine Hopley, Spar’s Lowveld Divisional Credit Manager to ask what was afoot. Ms Hopley replied to Mr McLagan that Spar had ‘perfected [its] notarial bond on an urgent basis’. Further, she stated that the three outlets were henceforth to be run by Spar for its own account. She reminded Mr McLagan of the R400,000 guarantee that would be called up as soon as the final order was to hand. She expected the order to be obtained in ‘early April’. Also, she expressed scepticism that Mr Paolo was ‘likely to survive’, financially, alluding to the prospect of the liquidation of Umtshingo. [16] Mr McLagan was alarmed. FNB was then exposed in respect of account 323 in the amount of R1,343,422.92 and in respect of account 309 in an amount of R292,140.84.1 Mr McLagan thereupon asked why the notarial bond was invoked because, as regards FNB, Umtshingo was not delinquent. Hours later, Ms Liezel van der Walt, Spar’s accountant,2 emailed FNB to ask for a change to the bank details and requested that she be informed of the bank’s procedure so as to achieve this result. She alluded to two earlier instances, Longtom Spar and Silinda Spar, where, similarly, the businesses had been taken over by Spar, during an interim period until a final order was granted, and, as her email implied, FNB had changed bank accounts in those instances. The implication was conveyed that there was an expectation by Spar that such a change would be straightforward. It is not clear whether the two examples alluded to were businesses that banked at the Nelspruit branch of FNB of which, therefore, that branch would have had knowledge or whether they were examples of which it was taken for granted that the Nelspruit branch would have had knowledge because of the ostensibly informal relationship between Spar and FNB. Spar was itself a client account-holder of FNB at its Durban branch, a relationship which Spar thought was pertinent to its dealings in matters such as this. [17] Mr McLagan alerted his senior staff to the Spar takeover. He had also spoken to Mr Paolo who had questioned the legitimacy and the legality of the court order 1 The scale of the exposure compared to what was arranged on 1 February 2010 is unexplained. 2 Ms Van der Walt was Mrs Streicher by the time she testified. Her name by which she was known at the time of the events is retained. obtained from the magistrate.3 Significant for the controversy, Mr McLagan noted his concern that ‘. . . we sit with an account where there is no income to service our facility’. Ms Grobler, the FNB Risk Manager, warned that because the client could no longer trade, ‘. . . we cannot allow any debits against the accounts’. Ms Grobler made two further remarks. First, she stated that she was irked by Spar acting against a franchisee without telling FNB, which was not in line with ‘a franchise arrangement’ between FNB and Spar. Plainly, she understood that a risk to FNB by a potential default of a client because of action taken by Spar was an event of which she expected prior notification. This suggests that Spar routinely knew with whom its franchisees banked and exchanged information about them. Second, she announced that she would take up this dissatisfaction with Spar’s Franchise Specialist, Ms Ash Sodha. Ms Grobler reported the next day to Mr McLagan: ‘I spoke to Ash . . . regarding our dissatisfaction surrounding the way Spar deals with distressed franchisees where FNB is also involved as a credit provider. . . The bank (who has marked unsecured facilities for the specific franchisee based on the Spar model) is then left with an unsecured exposure and no business to service the [debt?]’4 Plainly, the principal concern of the several FNB officials was the bank’s risk. [18] Meanwhile, Ms Hopley was in earnest pursuit of Mr Paolo’s consent to delink the speedpoint credit card devices. On 11 March 2010, she emailed Mr Paolo’s attorney, having previously sent a draft lease agreement for signature. She had also been present on 8 March when the seizure of the business was effected. At that time, she had spoken to Mr Paolo and his attorney about the ‘short term business lease’. The draft agreement contained a consent to change the bank account. She warned Mr Paolo that a delay could result in the closure of the stores. In similar vein, on 3 In due course Mr Paulo’s skepticism about the perfection order was proven correct because it was dismissed on the grounds that the court that ordered it had no jurisdiction to do so. 4 The last word of the sentence is obscured in the document in the record. 19 March 2010. Ms van der Walt emailed FNB with reference to an earlier oral request made on 12 March, reiterating the requirement to change the account. She also furnished the new proposed account details. [19] It is notable that in this email from Ms van der Walt the three outlets were expressly mentioned and her request to change the details of the bank account was couched as if a single bank account was in issue. It is common cause that at this time Spar was unaware that there were three distinct bank accounts; that FNB had not divulged their existence; and that Spar was under the incorrect impression that all revenue was being channelled into the 323 account. FNB’s failure to alert Spar is a central aspect of the dispute. [20] Four days later, on 23 March 2010, Ms van der Walt was still chasing after a change of the bank accounts. She undertook to provide a copy of the provisional order which she hoped would be ‘sufficient proof’ to have the bank account details changed. She supplied the provisional court order. Soon afterwards, she reported to Ms Hopley that FNB had insisted on a final order and that a request to change the details would only be considered thereafter. Ms Hopley then emailed Mr McLagan. She stated that the predicament was plain: if the account was not changed, the revenue would have to be refunded to Spar. She then asked: ‘Please can you at least give me the assurance that [Paolo] does not have access to this money in the interim as he will have to pay us back irrespective of what happens on 1 April. If necessary, could you put a hold on this money in the account until the matter is resolved.’ [21] Mr McLagan answered: ‘The belladonna account has been frozen and only pre-funded cheques are being paid. Pre-funded means a deposit out of the client’s own external funds. . . .’ (Emphasis added.) [22] What was meant by client’s ‘own external funds’ was not further elaborated upon. However, it may be reliably surmised that such a remark could not have been understood to include the revenue generated by Spar. The theme of a ‘frozen’ account came up again in relation to some cash takings that were deposited, mistakenly, into the 323 account. On 31 March, Ms Hopley raised this error with McLagan and asked that the sum be transferred to Spar’s account, alternatively, to ‘freeze’ the sum pending the final court order. Mr McLagan refused. On 31 March he emailed Ms Hopley to advise that this could not be done without Paulo’s consent. He added: ‘I do reiterate that the account is frozen and no day-to-day payments are permitted without prior approval or against confirmation of a specific deposit from Paulo to cover the payment.’ (Emphasis added.) These assurances by Mr McLagan were significant communications and are pertinent to understanding Spar’s conduct in tolerating the revenue flows into Umtsthingo’s accounts. [23] At about this time, the exact time being uncertain, Spar put up a sign in the outlets saying that credit card payments would not be accepted. Mr Paolo objected and insisted the ban be lifted, supposedly to preserve his business reputation. Spar acquiesced. Nevertheless, the saga of Mr Paulo’s refusal to change bank accounts persisted, with his attorney as spokesman. On 7 April, the attorney, in an email to Spar’s attorney, claimed that Mr Paolo’s continued refusal was based on FNB’s insistence. This finger-pointing between Mr Paolo and FNB continued. [24] On 24 May 2010, Spar called in the R400,000 guarantee from FNB. This triggered an email from Mr McLagan to Mr Paolo, bemoaning the delays in finalising the perfection order. Significantly, he stated: ‘The fact that Spar Group has taken over the daily management of the franchisee and the business is for all intents and purposes no longer under your control, the bank is currently extending facilities to an entity with no trading capability. This position in itself holds risk for the bank due to the absence of a business case to support the lending.’ (Emphasis added.) Mr McLagan thereupon noted an exposure of R575,334.13 on the Central Route account 323. He demanded a reduction of R100,000 per month. In respect of the Umtshingo accounts, he demanded rectification of the default on the loan in a sum of R21,802.23 by 31 May. It is significant that at this date, two and a half months after Spar had taken over the outlets, the exposure of FNB on account 323 had reduced from R1,343,422.92, on 10 March, to R575,334.13. The only, and obvious, source of funds to reduce this exposure was the earnings of Spar. [25] Not unsurprisingly, Spar was interested from the outset to know the state of ‘the account’. Mr McLagan refused to disclose any details. On 27 May 2010, he emailed Ms van der Walt and said this: ‘The speedpoint monies are banking into the account which is currently blocked. Unfortunately I am unable to give you details on the amount or balances in the account in terms of client confidentiality until a final order is granted and we are instructed to do so in terms of the law.’ (Emphasis added) Significantly, Mr McLagan alluded to ‘the account’, singular, thereby concealing the existence of two other accounts into which Spar-generated revenue was steadily flowing, and leaving Spar under the impression only one account existed. [26] On 2 June 2010, a communication from FNB’s Manager, Customer Service, Speedpoint, in the Corporate and Commercial Banking office in Pretoria, to Mr McLagan, advised him of Spar’s request to change the bank accounts. Mr McLagan queried the legitimacy of this request. Mr McLagan then emailed the Risk Manager, Ms Grobler, to question whether Spar could just introduce new speedpoint accounts ‘. . . while the business is still technically that of Mr Paolo?’ He opined that despite Spar running the store, Mr Paolo should consent or an ‘order of court should be perfected’. This view was then backed up by Ms Grobler, acting on the advice of ‘Corrie’, that no amendments should be made without Paolo’s consent or pursuant to a court order. [27] Shortly thereafter, on15 June 2010, Ms Hopley sought clarity that the account had been frozen from 8 March and not 24 March. Mr McLagan evaded a direct answer. He stated that he had no formal notification on 8 March. He omitted reference to the email of 10 March notifying him of Spar’s takeover. On 17 June, Ms Hopley reminded Mr McLagan of the 10 March communication. Mr McLagan again evaded an answer. He regurgitated his stock reply about being unable to do anything until a final order was presented. He added that on 10 April, a month after his first knowledge of the takeover, all limits on the account, ie, making payments from the account dependent upon external sources, had been lifted. Moreover, he added: ‘We have no control over credit balances which the client is able to transfer.’ [28] The very next day 18 June 2010, Spar’s attorney ceased to beg Mr Paolo to consent to an account change, more than three months after first asking. An urgent application was threatened. Mr Paolo’s attorney again obfuscated and blamed the bank for the refusal and alleged FNB required nothing less than the final order. An urgent application to freeze the account was then launched. A provisional order was granted on 24 June 2010 and confirmed on 27 July 2010. [29] Mr Paulo’s attorney, on 25 June 2010, was quick to point out to FNB that the order to freeze mentioned only the 323 account. Thus, the other two accounts were not to be frozen. On 28 June 2010, Mr McLagan sought advice whether he should unblock the other two accounts. Ms Grobler then told him to lift the block on these accounts: ‘ . . . although we suspect that Spar intended for all the proceeds of the Spar and the 2 Tops outlets to be frozen, the order specifically mentions that a hold is to be placed on funds flowing into that one account.’ To FNB’s knowledge therefore Spar remained ignorant that there were three accounts, and despite the acknowledgement by Ms Grobler of Spar’s misapprehension, a deliberate decision was taken that no disclosure be made to Spar. [30] Ultimately, the provisional order perfecting the bond was not confirmed. [31] On 25 October 2010, about eight months after the takeover of the business, a demand was made by Spar to FNB to pay the moneys that Spar had earned whilst trading. The letter of demand conveyed that even then Spar was under the mistaken impression that all the revenue from all three outlets was being channelled into one account. Mr Paulo also claimed the credit balance in this account. [32] After further ruminations, FNB accepted it was in the position of a stakeholder and thereupon itself on 24 February 2011, three months after the demand had been made, initiated an application to obtain an order of court to pay the sum in account 323 to Spar. In the argument advanced on appeal, on behalf of FNB, it was submitted that because the account in issue, account 323, was in the name of Central Route, Umtshingo Trading (Pty) Ltd was not a party. This sophistry is, of course, literally correct, but substantively a misrepresentation of the true relationship between FNB and Umtshingo. [33] Central Route was deregistered on 24 February 2011. [34] On 10 March 2011, a month after FNB launched the interpleader application, the Managing Director, Spar Lowveld, addressed yet another request to FNB to cancel several speedpoint devices. There is an oblique allusion to Ms van der Walt being aware by this time that Mr Paolo must have been operating more than one account. On 11 March 2011, Spar’s attorney tackled Mr Paolo’s attorney with the accusation of Mr Paolo diverting money from the two Tops outlets to ‘another account or accounts under his control’. The generalised tenor in which these allegations was articulated indicated that Spar knew no details and had surmised the diversion of funds, possibly from reading the 323 account statement, disclosed in FNB’s interpleader application and realising that substantial sums were not accounted for. Mr Du Preez, the Divisional Financial Director, Lowveld Spar, deposed to an answering affidavit in which he stated that it was only in the course of this interpleader application that Spar learned that there had been credit card revenue diverted from the two Tops stores ‘ . . . to an account other than the frozen account’ (ie Account 323). This information could only have been derived from the contents of FNB’s founding affidavit and Mr Paolo’s answering affidavit. Mr Paolo had alluded to the two Tops accounts (albeit giving the wrong account number in one case, ‘988’, instead of 309) in his answering affidavit dated 15 June 2011. An order directing FNB to pay over the money was eventually given on 23 March 2012. [35] The liquidation of Umtshingo took place on 6 August 2012. On 10 August 2012, the three outlets ceased to trade. [36] On 22 January 2015, in replying to a Rule 35(3) notice, FNB’s attorneys provided details of account 309. This was when Spar first learned of the 309 account and of the transactions that had occurred. It promptly caused an amendment to be made to its pleadings in the form of claim 4. Analysis of Claims 1 and 4 [37] FNB’s professed entitlement to claim set off is the appropriate starting point of the analysis. It is a durable proposition of our law that when the customer of a bank deposits money into their account, the money becomes the property of the bank. The bank enjoys a real right of ownership. In the usual case, the deposit gives rise to a credit balance in the account of the customer and a personal obligation owed by the bank to its customer to pay the credit balance, together with interest, if agreed.5 [38] The ownership by the bank of deposits made into an account by a customer is of systemic importance to the banking system. Deposits made into the accounts of customers are pooled so as to permit the bank, in turn, to grant credit and make loans. The bank is the economic intermediary that secures savings and enables borrowing. Central to this function is the recognition of the bank’s ownership of the deposits made with it and the bank’s right to extend loans without reference to the customers who made such deposits. Were it otherwise, absent customer consent, the bank’s loans would be akin to theft. [39] The personal obligation of the bank to pay the balance standing to the credit of the customer may be discharged by payment to the customer, payment to persons designated by the customer, or set off. Set off comes about when two parties are mutually indebted to one another, and both debts are liquidated, due and payable. The bank may set off a customer’s indebtedness to the bank against that customer’s 5 ABSA Bank Bpk v Janse van Rensburg 2002 (3) SA 701 (SCA) at 709A-B; Dantex Investment Holdings (Pty) Ltd v National Explosives (Pty) Ltd (In Liquidation) 1990 (1) SA 736 (A). claim against the bank, arising from deposits made by the customer and standing to their credit. Put simply, the bank may set off the credit and debit balances of the same client. These claims are then extinguished. [40] Set off, like payment, extinguishes a debt, but does so reciprocally – one debt extinguishes another. Set off is not an appropriation of property. The operation of set off and the FNB’s reliance upon it cannot be characterised as an issue as to whether FNB lawfully appropriated the property of Spar. Rather, the issue is whether FNB could set off Umtshingo’s indebtedness against the credit balance in Umtshingo’s accounts, arising from the deposits made into those accounts by Spar. [41] There is no dispute as to Umtshingo’s indebtedness to FNB. That much was common ground. The question is whether FNB was indebted to Umtshingo. It will ordinarily be the case that, when the customer of a bank makes a deposit into their account, it is an incident of the contract between the bank and its customer that the bank has an obligation to pay its customer the credit balance arising from the deposit made. The customer enjoys a personal right to payment from the bank. [42] However, this is not invariably the case. The customer may be acting as the agent of a third party, permitting the third party to utilise the account. The third party may make a deposit into an account, whether in error or by arrangement with the account holder, to which the third party enjoys an entitlement. Here, the money, once deposited, is no less the property of the bank. The origin of the deposit is not relevant to the assumption of ownership by the bank. [43] Who then acquires the personal right to the credit arising from the deposit? One answer is provided by an agreement subsisting between the bank, the customer and the third party depositor, in terms of which deposits made into the account give rise to an obligation by the bank to pay any credit thereby accruing in the account to the third party. In such a situation, the bank cannot set off the indebtedness of its customer to the bank against the bank’s indebtedness to the third party. No mutuality exists, the debts are not due as between the same parties. [44] What then occurs if there is no such agreement as between the bank and the third-party depositor? Does the knowledge of the bank that a third party has deposited money into a customer’s account, to which the customer has no claim, give rise to any right enjoyed by the third party to payment of this money from the bank? And if so, what right would that be? [45] These questions gave rise to the different interpretations of Joint Stock6 that divided the courts below. On one interpretation of the majority judgment in Joint Stock, agreement and knowledge were used interchangeably, but the true ratio of the majority judgment was that the claim of the third party rests upon agreement with the bank. So understood, Joint Stock, on its facts, simply recognised that where the bank owes a personal obligation to the third party to pay the credit balance accruing from the third party’s deposits, the bank cannot set off its customer’s indebtedness to the bank against the bank’s debt that is due to the third party. The other interpretation of Joint Stock is that it went further and recognised that the bank’s knowledge of the entitlement of the third party, rather than its customer, to the funds credited to the account may give rise to a right enjoyed by the third party to payment from the bank. 6 Joint Stock Co Varvarinskoye v ABSA Bank Ltd and Others [2008] ZASCA 35; 2008 (4) SA 287 (SCA). [46] This difference of interpretation, pertinent for the resolution of the case before us, is best approached in the following way. The evidence at trial clearly established that Spar had, for its own benefit, assumed control of the trading activities of Umtshingo’s businesses. Whatever reservations Mr Paolo may have expressed as to the perfection of Spar’s notarial bond, he plainly acquiesced in the arrangement that Spar take over the running of the businesses, at least until his reservations were finally determined by a court. It follows that moneys deposited into the accounts of Umtshingo were the proceeds of Spar’s trading activities to which Umtshingo had no claim. [47] Although the deposit of the proceeds of these businesses into the accounts of Umtshingo gave rise to credits in the accounts of Umtshingo held with FNB, this did not mean that Umtshingo had a claim against FNB for the amounts standing to its credit. In Perry NO7 stolen money was deposited into a Nedbank account. Schutz JA explained that, by operation of law, ownership of this money passed to Nedbank and could not be claimed by way of the rei vindicatio. However, the mere fact that the customer’s account had been credited with the stolen money did not mean that the customer (and thief) had a claim against Nedbank for payment of the amount standing to his, ostensible, credit. [48] The same position arises when funds are paid into a bank account in error. The customer into whose account an amount is paid in error has no entitlement to the funds credited to that account.8 And an appropriation of the funds by such a customer, with knowledge that they were not entitled to deal with the funds, would amount to theft. 7 First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 960 (SCA). 8 Nissan South Africa (Pty) Ltd v Marnitz NO and Others 2005 (1) SA 441 (SCA) paras 25 and 26. [49] Umtshingo had no entitlement to the funds paid into the accounts held with FNB. Those funds were the proceeds of the business conducted by Spar for its own benefit. At a minimum, FNB knew that this was so. In these circumstances, Umtshingo enjoyed no personal right against FNB to the funds credited to its accounts that derived from Spar’s deposits. [50] Once that is so, it follows that FNB cannot contend that Umtshingo’s indebtedness to the Bank was set off against FNB’s indebtedness to Umtshingo because FNB owed no such debt to Umtshingo. FNB’s defence of set off must therefore fail. [51] What then is the basis upon which Spar enjoyed a claim to the funds credited to the Umtshingo accounts in respect of which FNB cannot rely upon set off? In both Joint Stock9 and Nissan10 it was common ground that if no person had an interest or claim to the money credited to the account, other than the party in the position of Spar, then that party was entitled to payment from the bank. [52] There are two central conclusions to be found in Joint Stock11. First, there is no inflexible rule that only an account holder may assert a claim to money held in their account with a bank. Second, the following conclusion was reached, ‘[n]or does the proposition that money deposited in an account becomes the property of a bank, necessarily militate against a legitimate claim by another party’. [53] Both propositions are borne out by a well-established authority. As to the first proposition, there are a variety of circumstances in which persons other than the 9 At para 42. 10 Supra, para 27. 11 At para 31. account holder may claim payment from the bank of the credit balance in an account. That entitlement may arise in different ways. As already indicated, when stolen money is deposited into an account or a deposit is made in error, the account holder is not entitled to claim the credit balance. The person from whom the funds originated may do so. [54] So too, in McEwan12 where an agent deposited the money of his principal into an account, upon the insolvency of the agent, the agent’s trustees had no claim to the balance in the account, the claim lay with the principal. In Dantex13, the court recognised that an agreement might regulate the use of an account and the entitlements of an account holder to the use of credits in the account. These cases were traversed in Joint Stock. [55] The cases also make it plain that there is no inconsistency in recognising that money deposited with a bank becomes the property of the bank and that persons enjoy personal rights against the bank to the credit balance on account deriving from the deposit made. What has sometimes created ambiguity is the description of an account holder ‘owning’ the moneys deposited into an account. That is not so. The bank is the owner of the money deposited, save only in the rather special case, cited in Dantex, that the depositor of money, deposited as a corpus and held separately, may vindicate the money.14 However, the money deposited with the bank gives rise to personal rights in respect of the credit that is thereby created in the books of the bank. 12 McEwen NO v Hansa 1968 (1) SA 465 (A). 13 Dantex Investment Holdings (Pty) Ltd v National Explosives (Pty) Ltd (In Liquidation) 1990 (1) SA 736 (AD) at 749H – 750A. 14 J Voet Commentarius ad Pandectas (2012) para 20.4.13. [56] Once this distinction is recognised, two questions arise. What is the nature of the personal right against the bank, and enjoyed by whom? In the standard case, the customer deposits money into their account and has a personal right against the bank to be paid the credit reflected on the account (with interest, if agreed) or otherwise to direct the bank as to who should be paid. The personal right is an incident of the contract that subsists between the customer and the bank. [57] However, as may be observed from the cases to which we have referred, the personal right to claim against the bank may not be enjoyed by the customer. The customer may be the agent of a principal in respect of the account, and the principal will then have the claim. Or the bank, the customer and a third party may have an agreement as to the rights of the third party to the use of the account and the credit balance on account. On one interpretation, Joint Stock is such a case. [58] More difficult is the position in a case such as the present where there is no privity as between FNB and Spar, nor is it claimed that Umtshingo was acting as the agent of Spar. On the evidence, however, Spar and Umtshingo had agreed that Spar was entitled to the proceeds of the businesses that it was running. Spar was entitled to these moneys and deposited them with FNB. The evidence also amply demonstrated that FNB knew of Spar’s entitlement to the moneys deposited. In these circumstances, Umtshingo had no right to claim the credits arising from these deposits. And, as set out above, FNB could not apply set off. [59] What rights, if any, does Spar have against FNB? It was submitted that Joint Stock may be understood on the basis that FNB’s knowledge of Spar’s entitlement to the funds founds Spar’s claim against FNB. This is not the correct way to interpret the holding in Joint Stock. It is not the knowledge of a bank that gives rise to the rights of the third party. It is the consequences of such knowledge that matters. Once it was apparent to FNB that its customer had no entitlement to the moneys deposited, two consequences, traversed above, follow. First, the customer, Umtshingo, had no claim against FNB in respect of the credit reflected in the accounts. Second, FNB could not apply set off, as there was no mutuality of debts as between FNB and its customer. [60] FNB was the owner of the funds deposited. Could FNB enjoy the benefit of that ownership, without any duty to account to Spar, absent an agreement between FNB and Spar? Joint Stock answered this question in the negative. It did so on the basis set out in Nissan.15 If the customer was not entitled to claim from the bank, then the third party was entitled to do so. The basis of that entitlement was explained in Nissan. [61] In Nissan, the appellant, in error, paid a substantial amount of money into the account of Maple which was duly credited. Maple was not entitled to the funds. Maple had no claim against the bank in respect of the funds. In Nissan, as also in Joint Stock, it was accepted by counsel that, if the customer had no claim, the appellant was entitled to payment. The basis of that acceptance in Nissan derives from the decision of this court in Perry NO, a case of the deposit of stolen funds into a bank account. The bank became the owner of the funds deposited. The bank resisted payment to the cessionary, who had taken cession of the claim from the person originally entitled to the funds deposited. The bank was not obliged to make payment to its customer because the funds deposited were stolen. As a result, the 15 Joint Stock para 42; Nissan paras 25-27. bank was enriched, and an enrichment action lay against it, in particular the condictio ob turpem vel iniustam causam. [62] In Perry NO, the funds deposited were stolen. In Nissan, the funds were deposited in error. The court in Nissan nevertheless required that, since the account holder credited with the deposit had no claim against the bank, payment must be made to the appellant who had paid in error. To do otherwise would permit of the unjustified enrichment of the bank. In Joint Stock, as in the present case, the funds deposited were neither stolen, nor deposited in error. The funds were deposited pursuant to an arrangement between the bank’s customer and the third party. Yet in Joint Stock, the court reached the same conclusion as did the court in Nissan: the bank owed a duty to pay the third party. That is so on the basis of the same underlying principle recognised in Perry NO. Since the bank incurred no liability to its customer, without an obligation to pay the third party, who had the original entitlement to the funds deposited, the bank would be unjustly enriched. [63] It must be acknowledged, as Perry NO’s case illustrates, that there is no small measure of difficulty in determining what condictio would be of application. But the general principle is clear. Once the bank has no liability to its customer in respect of the deposits made, the bank is enriched. The bank owns the deposits, and its assets have increased at the expense of the third party, whose funds were deposited. The third party is thereby impoverished. Absent an order upon the bank to make payment to the third party, the court would countenance the bank’s unjust enrichment. The recognition of this unjust state of affairs has led our courts to recognise a remedy against the bank to pay to the third party the amount standing to the credit of its customer’s account, as was done in Joint Stock. That remedy is, in this case, appropriate too. [64] Lastly, Spar described its claim as quasi-vindicatory. That characterisation should be avoided. The Bank is the owner of the funds deposited. Spar’s rights are not proprietary in nature. They are founded upon quite different legal principles, as set out. If Spar’s rights were quasi-proprietary, an entirely different set of issues would become relevant. Not least, how a quasi-proprietary right could prevail over the Bank’s ownership of the moneys deposited. [65] For these reasons, the appeal must fail in respect of claims 1 and 4. Analysis of Claims 2 and 3 [66] The core facts pertinent to these claims are these. It is common cause that during the period of Spar’s trading, it generated revenue which, through the credit card speedpoint channel, was electronically deposited into both accounts 655 and 309. Similarly, it is common cause that Mr Paolo caused disbursements out of these accounts of, respectively, R2,039,948.68 and R1,358,890.00. Umtshingo was liquidated and Central Route was deregistered. Spar could not recover its losses from Umtshingo. [67] The basis for Spar’s claim against FNB was described in the pleadings as a duty of care owed by FNB to take reasonable steps to protect Spar from loss as a result of Paulo withdrawing funds from the accounts. It is more accurately described as a legal duty. The plea denied the existence of such a duty. In the alternative, FNB pleaded that if such a claim is competent, and if FNB was in some degree negligent and that FNB’s negligence was causally connected to the harm suffered, Spar too was negligent. [68] The cause of action is predicated upon the legal duty of FNB to prevent Mr Paulo, as the controlling mind of Umtshingo, from making disbursements from Umtshingo’s accounts, into which Spar had deposited the funds generated by it. [69] Whether such a legal duty exists must commence with a consideration of the position of Mr Paulo. The evidence at trial supports two factual propositions, already addressed in the consideration of claims 1 and 4. First, Mr Paulo entered into an arrangement with Spar that permitted Spar to run the Umtshingo businesses for Spar’s benefit. Consequently, Mr Paulo knew that the proceeds of the businesses deposited into the Umtshingo accounts with FNB were Spar’s funds, and Umtshingo had no entitlement to these funds. Second, FNB knew of the arrangement between Umtshingo and Spar, and knew also that Umtshingo (and hence Mr Paulo) had no entitlement to the funds deposited. [70] When Mr Paulo made disbursements from Umtshingo’s accounts, his conduct amounted to theft. In Nissan,16 this court explained that an account holder has no entitlement to a credit resulting from a mistaken transfer into his bank account. Should the account holder, well knowing that the credit is not due to him, appropriate the amount credited to his account by withdrawing funds, the account holder is guilty of theft. [71] Mr Paulo knew that the funds deposited by Spar were the proceeds of the Umtshingo businesses to which Umtshingo had no claim. That was the arrangement he had struck with Spar. He knew, as a result, that Umtshingo had no claim to the credits generated by the deposits made by Spar into the accounts. Mr Paulo 16 Nissan para 25. nevertheless made disbursements from the accounts. Mr Paulo thereby appropriated the funds, knowing that neither he, nor Umtshingo, were entitled to the funds. Mr Paulo stole the funds. [72] The issue that arises is whether FNB’s knowledge that Umtshingo had no entitlement to the funds deposited by Spar, and nevertheless permitted Mr Paulo to make disbursements from the accounts, gave rise to any liability by FNB to Spar in delict. Clearly, since the actions of Mr Paulo amounted to theft, Spar had a cause of action against Mr Paulo and Umtshingo. The disbursements were wrongful. But Umtshingo was in liquidation, and Mr Paulo, no doubt, had no assets to satisfy any claim that Spar might have made against him. Whether FNB can be held liable for the wrongful conduct of Mr Paulo, depends upon whether FNB was a joint wrongdoer. [73] This issue was determined in Yorkshire Insurance Co Limited,17 recently affirmed in this court in Breetzke.18 In Yorkshire Insurance Co Limited, Harris, a professional trustee and liquidator, paid cheques in respect of estates under his administration into his personal bank account and stole the money. A delictual action was brought against the bank. Greenberg J held that Harris, in drawing the cheques, for an unauthorised purpose, commenced the process of misappropriation. The bank honoured the cheques, knowing that Harris had no right to draw them. The bank was a party to Harris’ unlawful conduct, and hence a joint wrongdoer. [74] Breetzke concerned a breach of trust. Wallis JA expressed the principle thus: 17 Yorkshire Insurance Co Limited v Barclays Bank (Dominion, Colonial & Overseas) 1928 WLD 199. 18 Breetzke and Others NNO v Alexander NO and Others [2020] ZASCA 97; 2020 (6) SA 360 (SCA). ‘Where the execution of a breach of fiduciary duty involves or requires the involvement or participation of a third party, and that third party has knowledge that the transaction in question involves a breach of fiduciary duty, it seems to me clear that the legal convictions of the community demand that the third party share the liability of the person breaching the fiduciary duty. That is not because they owe a similar duty to the injured party, but because by aiding, enabling or facilitating the breach they are themselves equally responsible for the injury caused to, or loss suffered by, the injured party.’ [75] Although Mr Paulo’s disbursements from the accounts were not a breach of fiduciary duty, they were plainly wrongful. The Bank enabled Mr Paulo’s conduct by allowing him to operate the accounts, well knowing that Umtshingo had no claim to the credits reflected in the accounts. Indeed, the Bank had assured Spar that the Bank had frozen the one account of which Spar had knowledge. The Bank was a joint wrongdoer owing a legal duty to Spar. Contributory negligence by Spar? [76] Did Spar blunder culpably? With hindsight, Spar, doubtless, appreciated that it could not rely on FNB to make proper and open disclosure, nor rely on FNB’s assurances. The notion of Spar’s contributory ‘negligence’ is ironic because nothing FNB did was as a result of negligence. Its conduct, as traversed above, was throughout, deliberate and partisan in its own interest. From the outset Spar wanted the accounts changed. It was blocked by both Mr Paulo and FNB who passed the blame to each other. The deliberate misleading of Spar by FNB about the truth of what was happening is the single most important fact to explain Spar’s conduct. Spar relied on FNB’s assurances of ‘the account being frozen’ which was a misrepresentation. This conduct by FNB lies at the core of its culpable facilitation of the theft by Mr Paulo. [77] When Spar was told that the limits on the only account it knew of, account 323, were lifted, it reacted immediately by an urgent application to freeze the funds. The contention that Spar should have done so sooner ignores the context. FNB officials discussed the misapprehension of Spar which their own conduct had brought about and resolved to preserve Spar’s ignorance. There is no merit in the submission that Spar was contributorily negligent in circumstances that were created by FNB’s conscious preference of its own interests, and cynical obfuscation of critical facts which render FNB a joint wrongdoer with Mr Paulo. Fault cannot be founded on the premise that a person could have avoided a loss, by its own timeous volition, if at the relevant time, it was not unreasonable for the person not to have taken that step. To argue that Spar could have been ‘more careful’ is a misdirected perspective. In this context the argument was advanced that the speedpoint devices should have been removed. However, this ignores the fact that Mr Paolo prevented that from happening. Spar’s conduct was not, in these circumstances, negligent nor a contributing cause of its loss. [78] Moreover, as the details of FNB’s conduct as a joint-wrongdoer with Mr Paulo make plain, it is incongruent to construe Spar’s conduct, as described, as being negligent in relation to the culpable conduct of a joint wrongdoer. [79] For these reasons, the appeal must be dismissed in respect of claims 2 and 3. Analysis of the prescription argument: claim 4. [80] The formulation of claim 4 was introduced by an amendment in July 2015. The reaction of FNB to that was to plead prescription, the claim relating, of course, to events in 2010 to 2011. The stance of FNB is not that Spar knew of the claim in 2010 or 2011. FNB accepts, as it must, that Spar was ignorant until 2015. Instead, it seeks to avoid liability by pleading that Spar could have learned of its claim, at the latest, in 2011 by using reasonable care. This dispute therefore is informed by s 12 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) . . . .’ [81] Spar alleges that FNB, within the meaning in s 12(2), prevented Spar from learning of the debt. The debt in question, it must be emphasised, is the consequence of the purported set off by FNB in respect of credits in account 309. It was by this act that FNB became a debtor of Spar. The debt is the sum of R898,744.92 by which FNB had been enriched and Spar impoverished between March 2010 and 8 May 2010 as a result of FNB’s purported set off. To know of the ‘debt’ it would have been necessary to know that (1) an identifiable sum of money purportedly set off, (2) from an identifiable account (3) by an identifiable person. [82] The trial court held that Spar had the necessary minimum knowledge of this debt by June 2011 because at that time Mr Paolo had made the affidavit alluded to in the traverse of the facts.19 A deficit in the funds in account 323 the statements of which account were disclosed in the interpleader application would, so the trial court 19 See above, para 33. held, have indicated that, when compared to the takings, money was missing. The court held that the revelation of two other accounts, but not account 309, should have prompted further and better enquiries by Spar. The key argument advanced on behalf of FNB is that Ms Hopley should have demanded further bank statements in 2011. However, this submission is meritless. There was no reasonable prospect of those statements being forthcoming because of the obdurate stance of both FNB and of Mr Paolo. The so-called ‘concession’ relied on from Ms Hopley that no ‘investigations’ were carried out by Spar, takes the matter no further because of FNB’s stance. [83] The majority of the full court disagreed that Spar could have learned of the debt at that time, and correctly so. It addressed specifically the notion that Spar could have used rule 35(12) in the interpleader application to access account 309. The full court correctly observed that account 309 was not mentioned in the affidavit of Mr Paolo, although he had referred to account 655 and to account ‘988’, the latter being a dormant account and of no relevance to the case. Thus, no demand to access account 309 could have been made. [84] As a result of the deliberate non-disclosure by FNB, even during the early stages of litigation, Spar had been misled to believe that Mr Paulo had disbursed money in the sum of R2,331,324.33, the amount initially claimed in claim 3. Only after the 2015 discovery of account 309 did it become evident that the ‘missing money’ had not been filched by Mr Paulo, but that FNB had purported to effect a set off, as it had in respect of account 323. It was impossible for Spar to identify FNB as a debtor until that information was disclosed. The amendment effected was to reduce the quantum in claim 3 and claim against FNB in claim 4. [85] These circumstances were a direct result of FNB’s wilful non-disclosure. FNB’s plea initially filed in August 2013 made reference to account 988, a dormant account, thereby perpetuating the misrepresentation. A request for discovery made by Spar in November 2013 was answered only in August 2014. Account 988 was not discovered by FNB in response to that request. On a further demand for better discovery, eventually the existence of account 309 was revealed in 2015. A plainer illustration of the circumstances contemplated in s 12(3) would be hard to unearth. Accordingly, the claim had not prescribed. [86] In summary, the law is as follows: (1) Where a deposit, to the knowledge of the bank, is made into the bank account of a customer to which the customer has no entitlement, the bank cannot set off its customer’s indebtedness to the bank against the credit in the customer’s account deriving from such deposit. The third party whose moneys were deposited enjoys a claim against the bank for the amount so credited. (2) A customer, with no entitlement to moneys deposited into their account, who knows that they enjoy no such entitlement, may not make disbursements from the account in respect of credits deriving from these moneys. To do so amounts to theft. A bank that knows that its customer enjoys no such entitlement and nevertheless permits its customer to make disbursements in these circumstances renders itself a joint wrongdoer. As such the bank owes a legal duty to the third party who was entitled to the moneys deposited and suffers loss as a result of the customer’s disbursements. [87] FNB wrongly misappropriated the funds as averred in claims 1 and 4 and is liable to pay Spar the amounts pleaded. [88] FNB wrongly allowed Paolo to misappropriate funds from the accounts as averred in claims 2 and 3 and is liable to pay Spar the amounts pleaded. [89] Accordingly, the appeal must fail. [90] The costs of Spar, including the costs of two counsel should be borne by FNB, and having regard to the issues debated, should include the costs of two counsel. The order The appeal is dismissed with costs including the costs of two counsel. ----------------------------------------------- Roland Sutherland Acting Judge of Appeal ----------------------------------------------- David Unterhalter Acting Judge of Appeal Appearances For the Appellant: D M Leathern SC (with him P A Swanepoel SC) Instructed by: Rorich Wolmarans & Luderitz, Pretoria Symington De Kok, Bloemfontein For the Respondent: J P Vorster SC (with him F P Strydom) Instructed by: Moss Marsh Geogiev, Mbombela, Weavind & Weavind, Pretoria, Peter Skein 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 2021 STATUS: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. FirstRand Bank Limited v The Spar Group Limited (1334/2019) [2021] ZASCA 20 (18 March 2021) Today the Supreme Court of Appeal (SCA) unanimously dismissed the appeal with costs including the costs of two counsel. This case was about banks, their customers, and third parties who have put money into the customers’ accounts. The respondent, Spar Group Ltd (Spar), conducted business as a franchisor of the Spar brand of retail grocers and the Tops brand of liquor vendors. Spar fell into a dispute with one of its franchisees, Umtshingo Trading 30 (Pty) Ltd (Umtshingo), whose controlling mind was Mr Paolo. Spar held a notarial bond over the assets of Umtshingo. Umtshingo defaulted on its obligations under the franchise agreement. In consequence, Spar obtained a provisional order from the local magistrates’ court to perfect its security. The terms of the notarial bond permitted Spar to take over the Umtshingo businesses and run them for its own account which it did. The single reservation was that Mr Paolo refused to de-link the speedpoint credit card devices of the stores from the bank accounts of Umtshingo. Spar ran the outlets on the terms of the unsigned draft agreement and in the course thereof, credited the stock on hand to Umtshingo and brought in new stock. Spar took several steps to try to get Mr Paolo to consent to a change or to get FNB to redirect the revenue to a Spar account. Spar’s failure to achieve these objectives resulted in substantial sums flowing into Umtshingo’s accounts. Mr Paolo retained control over the accounts and effected substantial disbursements. FNB’s conduct was twofold. First, the debit balances in two of the accounts were extinguished by FNB applying set off against the credits in these accounts that derived from the revenue generated by Spar and deposited into the accounts. Second, disbursements were made at Mr Paolo’s behest despite the credit balances being derived from the revenue generated by Spar’s trading. Spar claimed that because Umtshingo had no rightful interest or claim to the funds, FNB was not entitled to set off Umtshingo’s debts from Spar’s revenue. Moreover, FNB owed Spar a duty of care not to allow Mr Paulo to steal money from the accounts. Spar had four claims, two in relation to an improper set off by FNB, and two in respect of Mr Paulo causing money to be withdrawn from the Umtshingo accounts. FNB’s defences were that it lawfully appropriated the sums by way of set off because these were amounts due and payable to FNB by Umtshingo, that it was not liable to protect Spar from Mr Paulo withdrawals of money from the accounts, that in respect of one claim relating to set off, the claim had prescribed by the time it was made, and lastly, if there was any liability to Spar, Spar was contributorily negligent. The issues that arose for decision were these: (a) Was FNB entitled to set-off the credits that derived from the funds deposited into the accounts by Spar against Umtshingo’s debts owing to FNB? (b) Was FNB liable in delict to Spar for the losses it suffered when Mr Paulo caused sums to be withdrawn from these accounts, which funds derived from deposits into the accounts by Spar, and to which neither Mr Paulo, nor Umtshingo, had any rightful interest or claim? (c) Had one of four distinct claims, relating to set off, prescribed because it was instituted more than three years after the set off had occurred? Spar had sued FNB in the Gauteng Division of the High Court. At the conclusion of the trial, one claim relating to a set off was dismissed because it was held to have prescribed, and the other three claims were dismissed on the basis that FNB had not done anything to incur liability to Spar. On appeal to the full court of the Gauteng Division, these results were reversed by a majority decision. Spar was held to have proven its case in respect of all four claims. It was the majority judgment of the full court that was on appeal to this Court. This Court noted that there was no dispute as to Umtshingo’s indebtedness to FNB. The question was whether FNB was indebted to Umtshingo in respect of the credit balances. This Court held that although the deposit of the proceeds of these businesses into the accounts of Umtshingo gave rise to credits in the accounts of Umtshingo held with FNB, this did not mean that Umtshingo had a claim against FNB for the credit balance because those funds were the proceeds of the business conducted by Spar for its own benefit. FNB could not contend that Umtshingo’s indebtedness to the FNB could be set off against the credit balances. This Court held that once it was apparent to FNB that its customer had no entitlement to the moneys deposited, two consequences followed. First, the customer, Umtshingo, had no claim against FNB in respect of the credit balance reflected in the accounts. Second, FNB could not apply set off, as there was no mutuality of debts as between FNB and its customer. Therefore, the customer was not entitled to claim from the FNB but Spar was entitled to do so. In respect of the claims relating to withdrawal of funds from the accounts by Mr Paulo, the cause of action was predicated upon the legal duty of FNB to prevent Mr Paulo as the controlling mind of Umtshingo, from making disbursements from Umtshingo’s accounts, into which Spar had deposited the funds generated by it. FNB knew of the arrangement between Umtshingo and Spar and also knew that Umtshingo had no entitlement to the funds deposited. When Mr Paulo made disbursements from Umtshingo’s accounts, his conduct amounted to theft. The Bank enabled Mr Paulo’s conduct by allowing him to operate the accounts, well knowing that Umtshingo had no claim to the credits reflected in the accounts. The Bank was therefore a joint wrongdoer and breached a legal duty to Spar in this regard. As to the defence of contributory negligence by Spar, this Court held that Spar had relied on FNB’s assurances of ‘the account being frozen’ which was a misrepresentation as the existence of another account was deliberately concealed. Therefore, it was incongruent to construe Spar’s conduct, as being negligent in relation to the culpable conduct of a joint wrongdoer. As to the defence of prescription, the belated addition of a claim relating to a set off by FMB from a particular account was the result of Spar being denied knowledge of the existence of the account and of the set off until a much later moment. It was impossible for Spar to identify FNB as a debtor until that information was disclosed. These circumstances were a direct result of FNB’s wilful non- disclosure. Accordingly, prescription could not begin to run until that knowledge was acquired. For these reasons, the appeal was dismissed in respect of all claims with the costs of Spar, including the costs of two counsel to be borne by FNB. --The End--

1361

non-electoral

2010

THE SUPREME COURT OF APPEAL SOUTH AFRICA JUDGMENT Case No: 344/09 In the matter between: DEON VAN JAARSVELD Appellant and SUNETTE BRIDGES Respondent Neutral citation: Van Jaarsveld v Bridges (344/09) [2010] ZASCA 76 (27 May 2010) Coram: Harms DP, Nugent and Van Heerden JJA and Majiedt and Seriti AJJA Heard: 11 May 2010 Delivered: 27 May 2010 Summary: Breach of promise to marry – causes of action – compatibility with present-day public policy discussed – wrongfulness – damages ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: North Gauteng High Court (Pretoria) (Raulinga 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 amended to read: ‘Absolution from the instance with costs’. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ HARMS DP (NUGENT and VAN HEERDEN JJA and MAJIEDT and SERITI AJJA concurring) INTRODUCTION [1] This appeal relates to a claim for damages instituted by the respondent, Ms Sunette Bridges, against the appellant, Mr Deon van Jaarsveld, on the ground of a breach of promise to marry. The claim was upheld by the court below and it awarded an amount (in the words of the learned judge) of ‘only’ R110 000 in relation to iniuria. In addition it awarded R172 413 in respect of contractual damages. The award carried mora interest and costs. [2] The court below granted leave to appeal against its order but limited the issues on appeal to quantum. This court, however, notified the parties that it wished to hear argument on other relevant issues and decided to broaden the scope of the appeal.1 The one issue concerned the question whether the breach was contumacious – a requirement for delictual damages. The other arose from a dictum by Davis J in Sepheri v Scanlan 2008 (1) SA 322 (C) at 330I-331A: 1 Douglas v Douglas [1996] 2 All SA 1 (A) at 8-9; Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA 16 (A) at 23C-G. ‘In general I would agree with these views, namely, that our law requires a reconsideration of this particular action. It appears to place the marital relationship on a rigid contractual footing and thus raises questions as to whether, in the constitutional context where there is recognition of diverse forms of intimate personal relationships, it is still advisable that, if one party seeks to extract himself or herself from the initial intention to conclude the relationship, this should be seen purely within the context of contractual damages.’ [3] Courts have not only the right but also the duty to develop the common law, taking into account the interests of justice and at the same time to promote the spirit, purport and objects of the Bill of Rights.2 In this regard courts have regard to the prevailing mores and public policy considerations.3 Davis J felt the time had come for a reconsideration of the action but felt uncomfortable to take a lead in the matter. However, having had regard to the views expressed by the authors quoted by the learned judge (at 329G-I and 300H-I)4 to which can be added an incisive article by J M T Labuschagne,5 I do believe that the time has arrived to recognise that engagements are outdated and do not recognise the mores of our time, and that public policy considerations require that our courts must reassess the law relating to breach of promise. In what follows I intend to give some guidance to courts faced with such claims without reaching any definite conclusion because this case is not affected by any possible development of the law and can be decided with reference to two factual issues, namely, in relation to iniuria, whether the breach was contumacious and, secondly, whether Bridges has suffered any actual loss as a result of the breach. [4] A breach of promise may give rise to two distinct causes of action.6 The one is the actio iniuriarum. The ‘innocent’ party is entitled to sentimental damages if the repudiation was contumelious. This requires that the ‘guilty’ party, in putting an end to the engagement, acted wrongfully in the delictual sense and animo iniuriandi. It does not matter in this regard whether or not the repudiation was justified. What does matter is the manner in which the engagement was brought to an end. The fact 2 Linvestment CC v Hammersley [2008] 2 All SA 493 (SCA) para 25; Constitution s 39(2). 3 For example Hurwitz v Taylor 1926 TPD 81. 4 Van der Heever Breach of Promise and Seduction in South African Law (1954) p 120; June D Sinclair The Law of Marriage vol 1 (1996) p 313; D J Joubert ‘Die gevolge van troubreuk – ‘n kontemporêre beskouing’ 1990 (23) De Jure 201, especially p 213-215. 5 ‘Deïnjuriëring van verlowingsbreuk: Opmerkinge oor die morele dimensie van deliktuele aanspreeklikheid’ 1993 (26) De Jure 126. 6 Guggenheim v Rosenbaum (2) 1961 (4) SA 21 (W) at 36. that the feelings of the ‘innocent’ party were hurt or that she or he felt slighted or jilted is not enough. I shall revert to this issue. [5] The second cause of action is for breach of contract. Two aspects arise for discussion. The first is that an engagement may be cancelled without financial consequences if there is a just cause for the cancellation. Just cause is usually defined as any event or condition or actions of the other party which would jeopardise a long and happy marriage and which can induce any right-minded member of society to rescind the engagement.7 The origin of this restricted meaning is to be found in Canon Law and Germanic Law influences at a time when churches controlled the lives of people, when a woman was deemed to be of a lower status than a man, and when a party to a promise to marry could be obliged to marry by an action for specific performance. [6] The world has moved on and morals have changed. Divorce, which in earlier days was available in the event of adultery or desertion only, is now available in the event of an irretrievable breakdown of the marriage. Guilt is no longer an issue. There is no reason why a just cause for ending an engagement should not likewise include the lack of desire to marry the particular person, irrespective of the ‘guilt’ of the latter. Unwillingness to marry is clear evidence of the irretrievable breakdown of the engagement. It appears illogical to attach more serious consequences to an engagement than to a marriage. [7] The second aspect that has to be considered in the context of contractual damages is the justification for placing an engagement on a ‘rigid contractual footing’.8 It is difficult to justify the commercialisation of an engagement in view of the fact that a marriage does not give rise to a commercial or rigidly contractual relationship. [8] I do not accept the proposition that parties, when promising to marry each other, contemplate that a breach of their engagement would have financial consequences as if they had in fact married. They assume that their marital regime will be determined by their wedding. An engagement is in my view more of an 7 Schafer Family Law Service: Law of Marriage p 13 8 Compare Bull v Taylor 1965 (4) SA 29 (A). unenforcable pactum de contrahendo providing a spatium deliberandi – a time to get to know each other better and to decide whether or not to marry finally. [9] One has to distinguish in this regard between claims for prospective losses and those for actual losses. It is not easy to rationalize claims for prospective losses. One of the problems concerns the intended marital regime. It would be unusual for parties to agree on the marital regime at the time they promise to marry each other. If nothing was agreed, on what assumption must the court work? I believe that the court cannot work on any assumption, especially not one that the marriage would on the probabilities have been in community of property. And if the agreement was to marry in community, can one party not change her or his mind without commercial consequences? [10] An agreement to enter into an antenuptial contract is not binding because it must be entered into notarially. How can legal consequences flow from the refusal to enter into the notarial agreement? And what would the consequences be if the parties cannot agree on the detailed terms of the agreement? The matter becomes more complicated if one considers the claim for loss of support. In divorce proceedings the award is a matter of discretion; but in a breach of contract situation it becomes a matter of commercial entitlement. Imponderables abound. Prospective losses are ‘not capable of ascertainment, or are remote and speculative, and therefore not proper to be adopted as a legal measure of damage’.9 They depend on the anticipated length of the marriage and the probable orders that would follow on divorce such as forfeiture and the like. I do not believe that courts should involve themselves with speculation on such a grand scale by permitting claims for prospective losses. [11] Claims for actual losses are easier to justify but difficult to rationalize in terms of ordinary principles relating to the calculation of damages in the case of breach of contract. What usually springs to mind are costs or losses incurred by agreement, actual or by necessary implication, between the parties, such as those relating to wedding preparations. These losses do not flow from the breach of promise per se but from a number of express or tacit agreements reached between the parties 9 Holt v United Security Life Insurance & Trust Co (1909) 72 Atlantic Reporter 301 quoted in Mainline Carriers (Pty) Ltd v Jaad Investments CC 1998 (2) SA 498 (C) para 44. during the course of their engagement. To be recoverable, the losses must have been within the contemplation of the parties. The ‘innocent’ party must be placed in the position in which she or he would have been had the relevant agreement not been concluded; and what the one has received must be set of against what the other has paid or provided.10 Another example would be losses suffered by one, who in agreement with the other, relinquishes a post in anticipation of the wedding and is unable to find another post. Bridges, it might be mentioned, based her claim for financial losses on exactly this footing. THE DELICTUAL CLAIM [12] The parties were engaged on 29 July 2005. The wedding was set for 14 January 2006. Van Jaarsveld, by text message (sms), notified the appellant on 4 December 2005 that he was no longer prepared to go ahead with the wedding. (Although the parties had telephonic contact their usual mode of communication was by sms.) He wrote that he was sorry about his decision but he could not lie. He did not feel the same as before. He could not marry her in the light of his present feelings and that he could not bluff himself. He added that he knew that her mother would read the sms and he also apologised to her. He concluded by saying that Bridges was ‘’n pragtige mens’ and once again expressed his regret. This sms was preceded by an email sent to Bridges earlier that day during which he expressed his doubts about the wedding. She responded by email, requiring of him to make up his mind. He responded by sending the said sms. But he vacillated the next day when indicated to her by sms that she should post the invitations. However, a day later on 6 December he informed her in these terms that he was unable to proceed with the wedding: ‘Ek is so jammer dat ek alles so ver laat gaan het, ek is jammer as ek jou seer maak, maar ek is nie opgewonde nie en dis nie reg nie. Ek kan nie met jou trou nie.’ [13] Bridges accepted the repudiation with alacrity and on 9 December her attorneys sent him a letter of demand claiming damages in excess of R1m. Summons was issued during February 2006, claiming damages of R678 203.08. She also issued summons against his mother but that matter did no proceed. 10 Compare Probert v Baker 1983 (3) SA 229 (D) at 234C-235E. [14] It is necessary to revert to the beginning. Bridges calls herself a singer in the particulars of claim but she is also a lyricist and promoter and sees herself as a potential radio and television personality. She had a relatively successful career but her success was in part due to the fact that she was the daughter of her father, Mr Bles Bridges, a well-known romantic singer who had died a few years ago, and the business of her last husband. [15] She also had some marriages behind her. While married to her fourth husband her ‘involvement’ with Van Jaarsveld commenced. She also had two children. Not without relevance is the fact that within less than a month and before summons had been issued she already had a new paramour. [16] Van Jaarsveld was younger and a bachelor. He farmed on a family farm. He had no claim to the farm but only the expectation of inheriting the farm or part thereof. His family, particularly his mother, was not thrilled with the relationship, especially Bridges’ track record with husbands. She disliked Bridges’ values and regarded her dress code as immodest. There was a deep clash of principles. She also thought that Bridges wished to marry her son for money, which apparently belonged to the family business and not to him. [17] By the very nature of her career and her many husbands, Bridges’ involvement with Van Jaarsveld attracted media attention and she willingly gave a number of interviews, even before their engagement, about their relationship and her expectation that things would be different this time round. She was not going to be another Elizabeth Taylor, she said. Her engagement also led to further newspaper interviews and reports. They all speculated about the chances of success of the fifth marriage. [18] Bridges was aware of the fact that she was not acceptable to his family, and she put him to a choice: either his mother or her. His mother, especially, put him before a starker option: either Bridges and no farm or an end to the relationship. This gave rise, it would appear, to heated arguments between him and Bridges and him and his family, as well as to mood swings and indecisiveness about marrying or not. As appears from his emails, he realised that a marriage could not be a success in the circumstances, and he consequently terminated the engagement. [19] A breach of promise can only lead to sentimental damages if the breach was wrongful in the delictual sense. This means that the fact that the breach of contract itself was wrongful and without just cause does not mean that it was wrongful in the delictual sense, ie, that it was injurious.11 Logically one should commence by enquiring whether there has been a wrongful overt act. A wrongful act, in relation to a verbal or written communication, would be one of an offensive or insulting nature. In determining whether or not the act complained of is wrongful the Court applies the criterion of reasonableness. This is an objective test. It requires the conduct complained of to be tested against the prevailing norms of society. To address words to another which might wound the self-esteem of the addressee but which are not, objectively determined, insulting (and therefore wrongful) cannot give rise to an action for injuria. Importantly, the character of the act cannot alter because it is subjectively perceived to be injurious by the person affected thereby. [20] Applying that test it appears to me to be clear that neither sms was objectively insulting or contumacious. That ought to be the end of the inquiry. However, Bridges’ main complaint was the fact that since the engagement was news the calling off of the wedding made newspaper headlines. I fail to see how this could be injurious. It would have meant that Van Jaarsveld would never have been able to cancel the engagement without committing an iniuria. Her reputation was such that anything about her amatory life would have been newsworthy. Her divorces, too, were news but that could not have given rise to claims for damages. Importantly, according to the first newspaper report the news about the cancellation came from one of her friends. There is no suggestion that Van Jaarsveld had advertised the fact. [21] Her second complaint was that he did not end the relationship during a face- to-face meeting but chose to hide behind an sms. Once again, I fail to discern any contumacy in his use of an sms. They were part of a series between the parties building up to the inevitable. It was their normal manner of communication. A face- to-face meeting would have ended in recriminations and a confrontation about his family. The tone was also one of self-recrimination and was apologetic – the typical ‘it is about me and not about you’. He even apologised to her mother. 11 Ndamase v University College of Fort Hare 1966 (4) SA 137 (E) at 139G-140C. In what follows I am paraphrasing the words of Smalberger JA in Delange v Costa 1989 (2) SA 857 (A) at 861-862. [22] The third complaint concerned the interview Van Jaarsveld had with a newspaper after the action had been instituted. She had, apparently, already spoken to the media about their break-up towards the end of January. He sought to defend himself and his family against a number of rumours. He added that their problems began about the cost of the wedding and his inability to finance it, something she denied. That she had an expensive wedding in mind is clear from a newspaper report shortly after the engagement. Read in context of litigating parties the newspaper report does not appear to me to be derogatory and it did not establish any injurious intention on his part.12 It is also not appreciated how a non- contumacious breach could become injurious because of later events that, in themselves, are not injurious. [23] It is unnecessary to deal with the other makeweight arguments. The court below found that she was ‘very extravagant in character and language’ and ‘to say the least, she was hyperbolic in her testimony’. In the light of her history, her quick recovery in the arms of another, her eagerness to claim damages, Van Jaarsveld’s uncertainty about their future, the lack of prospects of a happy marriage on the farm, and the bad relationship with her future in-laws, convince me that any injury or contumacy was de minimis and can be discounted, and that the claim based on iniuria should have been dismissed. FINANCIAL LOSSES [24] The court below awarded R137 316 for her loss of income for the year subsequent to the intended marriage. Her case was that in view of the fact that she would have become a housewife after the wedding she scaled her commitments for performances for the year 2006 down. Her estimated loss of income, she said, amounted to the said amount [25] There are many problems with her evidence in this regard but it is not necessary to mention them because it is clear that she earned an amount of R200 000 that the court below did not take into account in determining her loss. [26] On 23 January 2006, Bridges entered into an agreement with a trust represented by one Van der Westhuizen. It was called an investment and profit 12 Compare the approach in Sepheri v Scanlan supra at 377H-I. sharing agreement. The trust had to pay her R200 000, which it did immediately. She undertook to produce a CD and a DVD, to give a number of performances, to write a book, and to produce a TV programme during that year. She was not obliged to repay the money; instead she and the trust would share the income in agreed percentages and it was anticipated that the trust’s basic share would exceed the amount of the outlay. [27] Bridges did not perform as required. No credible reason for her failure was given. At the time of the trial in May 2008 the contract was still extant. She testified that the contract was a loan, which she had to repay some time or other. That is incorrect. The only claim the trust had was for a share of profit. Her failure to perform cannot be laid at the door of Van Jaarsveld. I therefore conclude that the court below had erred in not taking this amount in consideration. Had it done so her claim for loss of income would have been dismissed. [28] The other amounts allowed by the court were the following: (a) R12 825 for wedding preparations. The amount was overstated not only because of a mathematical error but also because the court had failed to take into account repayments of deposits. The adjusted amount is R9 000; (b) R28 872 for wasted removal costs. She had sold her house and was about to move to the farm; (c) R6 000 for money spent by her renovating the farm house; and (d) R 2 400 being wasted costs in relation to the possible move of her child to a school proposed by Van Jaarsveld. [29] The court below deducted from this the sum of R15 000 being an amount paid by Van Jaarsveld as contribution to her removal costs. The court, however, failed to have regard to a further sum of R35 500 paid by him in respect of the costs of renovation (she could only prove R4 100 on this point) and the wedding preparations. Had the court taken this amount in account in calculating her loss it could not have awarded her any damages. She could not account properly for the latter amount and this amount must in my view be set off against any damages she may have suffered. I disagree with the court below that her evidence had to be accepted uncritically on this score simply because Van Jaarsveld did not testify. He could not give evidence on how she spent the money. [30] It follows that her claim should have been dismissed. The consequent order is: 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the court below is amended to read: ‘Absolution from the instance with costs’. ____________________ L T C HARMS Deputy President APPEARANCES APPELLANT/S P E Jooste (with him T Zietsman) Instructed by Friedman Scheckter, Port Elizabeth Honey Attorneys, Bloemfontein RESPONDENT/S: M C Erasmus SC Instructed by Stuart van der Merwe Inc, Pretoria Goodrick & Franklin, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 27 MAY 2010 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal D VAN JAARSVELD v S BRIDGES The Supreme Court of Appeal today upheld an appeal against a judgment of the high court in this matter. The high court had awarded Ms Bridges damages in the sum of R282 413 on the ground of breach of promise to marry. The award was set aside with costs. The court questioned whether the cause of action is, in all its respects, consonant with prevailing customs and public policy. In relation to her claim for sentimental damages the court found that the way in which the appellant, Mr Van Jaarsveld, had put an end to the engagement was not in the circumstances wrongful or contumacious, and that the award could not stand in the light of this. As far as her claim for actual loss is concerned, the court found that she had failed to prove that she had suffered any loss. The court below erred because it had omitted to have regard to income she had earned, and to all the amounts paid by Van Jaarsveld. ---ends---

1527

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT NO PRECEDENTIAL INTEREST Case No 590/06 KLAAS SEBETLELA MONAGENG Appellant and THE STATE Respondent Neutral citation: Monageng v The State (590/06) [2008] ZASCA 129 (01 OCTOBER 2008) Coram: MPATI P, BRAND, LEWIS, MAYA JJA and MHLANTLA AJA Heard: 29 August 2008 Delivered: 01 October 2008 Summary: Rape – appeal against conviction for child rape and sentence of 18 years imprisonment – appellant’s version not reasonably possibly true and properly rejected – no material misdirection on the part of the sentencing court and sentence imposed not ‘shocking’, ‘startling’ or ‘disturbingly inappropriate’ – no reason entitling the appeal court to interfere – conviction and sentence confirmed. ORDER On appeal from: High Court, Bophuthatswana Provincial Division (Hendricks J, Tlhapi AJ concurring and Landman J dissenting). The appeal against conviction and sentence is dismissed. JUDGMENT/S MAYA JA: (Mhlantla AJA concurring) [1] The appellant, a 37 year old man, was convicted in the Mogwase regional court (Mr E D Mogotse) of the rape of his 15 year old cousin. Acting in terms of section 52(1) of the Criminal Law Amendment Act 105 of 1997 (the Act),1 the regional magistrate referred the matter to the high court (Bophuthatswana Provincial Division) for sentence. The high court (Gura J) confirmed the conviction and, having found that substantial and compelling circumstances 1 Section 52 (1) provides: ‘If a regional court, following on – (a) a plea of guilty; or (b) a plea of not guilty, has convicted an accused of an offence referred to in – (i) Part 1 of Schedule 2; or (ii) Part II, III or IV of Schedule 2 and the court is of the opinion that the offence concerned merits punishment in excess of the jurisdiction of a regional court in terms of section 51 (2), the court shall stop the proceedings and commit the accused for sentence as contemplated in section 51 (1) or (2), as the case may be, by a High Court having jurisdiction.’ Rape of a girl under the age of 16 years is one of the offences listed in Part I of Schedule 2 of the Act for which a sentence of life imprisonment is competent. existed which justified the imposition of a sentence less than the life imprisonment prescribed by the Act,2 sentenced the appellant to 18 years’ imprisonment. The appellant successfully sought leave to appeal to the Full Court against the conviction and sentence. In a split decision, the Full Court (Hendricks J, Tlhapi AJ concurring and Landman J dissenting) dismissed the appeal. The present appeal is with the special leave of this court. [2] The essential facts which led to the appellant’s conviction are, to a large extent, common cause although it was sometimes difficult to follow the sequence of the events, which occurred after the complainant reported that she had been raped, from the record, particularly from the defence version, mainly because of the poor manner in which evidence was elicited from the witnesses. The only major point of divergence in the versions of the complainant and the appellant relates to the rape itself which the appellant denied. The appellant and the complainant are maternal first cousins living in the same locality. On 26 September 2003 the complainant, a high school student, was preparing for a church camping trip at which she was to undergo a confirmation examination. She and a younger cousin went to the appellant’s house to borrow a bag from his wife. They found the appellant preparing to do his washing outdoors. His wife was not home. He instructed the younger girl to fetch a bicycle from a house in the neighbourhood – it is not clear from the evidence how far this homestead was from the appellant’s – and asked the complainant to fetch a bucket from the house. 2 Section 51 provides: ‘(1) Notwithstanding any other law but subject to subsections (3) and (6), a High Court shall – (a) if it has convicted a person of an offence referred to in Part I of Schedule 2; or (b) if the matter has been referred to it under section 52 (1) for sentence after the person concerned has been convicted of an offence referred to in Part I of Schedule 2, sentence the person to imprisonment for life. (2) … (3) (a) If any court referred to in subsection (1) or (2) is satisfied that substantial and compelling circumstances exist which justify the imposition of a lesser sentence than the sentence prescribed in those subsections, it shall enter those circumstances on the record of the proceedings and may thereupon impose such lesser sentence. ’ [3] According to the complainant, she had just found the bucket in the bedroom when the appellant came in and locked the door. He grabbed her and pushed her onto the bed. She screamed and struggled to free herself but he was too strong for her to resist. He told her that he had long been waiting for her to grow up. Holding her down on her back, he undressed and raped her. He would not stop despite her screams which were induced by pain, and only withdrew from her when she threatened to report him to her mother. He apologised and let her out of the room. The other child still had not returned. On the way home she was called by the appellant’s sister who gave her a blouse for which she no longer had any use. Further along she was called into her grandmother’s homestead by an uncle and remained there for a short while. She made no report to these adults because she wanted to first tell her immediate family. [4] She said that upon her arrival at home, she found her mother preparing to leave on a trip. She said nothing to her out of fear, presumably of tearing the family apart because the appellant is her nephew. She washed herself and discovered that she was bleeding from her painful vagina, which felt as if it was scratched. She left for her camping trip on the following day and, after the weekend, returned to school where she boarded. She still had not told anyone about the rape incident. However, she was unable to cope with her school work in the days that followed because the memory of the rape haunted her and she was constantly weepy and could not leave her room. On 4 October, she finally phoned one of her brothers, Donald, in Pretoria, with whom she shared a close relationship and told him that the appellant had raped her. Donald said he was going to tell their parents. Indeed, her father phoned her shortly afterwards and asked her to confirm Donald’s report, which she did. Donald and their elder brother fetched her from school on the same day. At home they found a gathering of the family at which demand was made of the appellant to pay a fine of 17 head of cattle. On the following day she was taken to a district surgeon who examined her. [5] The doctor’s evidence was, in my view, not particularly helpful and not much reliance can be placed on it by either party. He said that he found no evidence of trauma or abnormality although the complainant had no hymen – the absence of which does not necessarily point to sexual activity – and suffered from ‘very mild depression’. He stressed that his examination was not meant to establish whether or not the complainant had been raped but merely to check if she had contracted any diseases or had been impregnated. He said there were steps that he did not conduct in his examination because of its purpose. He could neither confirm nor exclude rape in the circumstances. [6] Donald’s account of the events, subsequently corroborated by their father, David, tallied with the complainant’s version. He confirmed receiving a telephone call from the complainant who sounded troubled and reluctantly reported that she had been raped by the appellant. He immediately returned home to inform their parents who promptly dispatched him and his older brother to fetch the complainant from boarding school. By the time they arrived home, the family meeting constituted by their parents, certain male elders including Mr Steve Monageng, the appellant, the appellant’s wife and his sister was well in progress. Steve informed them that the appellant had been questioned and admitted the rape. Steve then sought their view on a solution and they suggested legal action. A debate ensued because some of the other members wanted the matter to be resolved within the family. Corporal punishment was suggested by their mother but payment of the fine, which the appellant’s wife undertook to pay, was finally agreed upon. He then drafted a document embodying the agreement, tendered in evidence by consent, which everyone, including the appellant, willingly signed. The original text of the agreement which bore seven signatures was in seTswana and it was translated into the record as follows: ‘Rape matter between [the appellant] and [the complainant] on 4 October 2003. Date of the incident 26 September 2003. Agreement 1. A fine of 17 herd of cattle. 2. The time in which the cattle will be paid out, a three month period ….’ [7] According to David the news of the rape threw him and his wife into turmoil. They called the family meeting because they did not know how to handle the problem. He reported to the gathering that the complainant alleged that she had been raped by the appellant. The appellant kept quiet. He was then asked by one of the elders, Mr Alex Monageng, why he had raped the child. The appellant initially denied the accusation but upon persistent questioning by Alex he said he did not rape her but merely locked her in the house and only suggested sexual intercourse. At this juncture Steve asked the appellant if he knew that locking a person up in itself constituted a serious offence and said that the meeting could not continue in the absence of the appellant’s wife. Alex then went to fetch her. On her arrival Steve informed her about the accusation. She questioned the appellant in their presence and he admitted the rape. At that stage Donald and the complainant arrived and Steve informed them of the events thus far. As the appellant’s guilt had been established, Steve proposed that he should be punished. No one was keen to involve the police. David then demanded the fine and a written agreement which he intended to use against the appellant in a prosecution. The appellant voluntarily signed the agreement along with everybody. David said that he did not wait for the fine to be paid and subsequently laid a complaint with the police. [8] The appellant’s version when he testified was that he sent the complainant indoors to fetch a bucket which he was going to use to rinse his washing. He followed her because she was taking too long. He said that he found her sitting on a bed looking at a photo album with the bucket next to her. He took the bucket, held her on the shoulder and told her that ‘she was so beautiful’. The complainant asked him what he meant and threatened to report him to her mother. He apologised and the complainant then left. He denied admitting the rape at the meeting and called Steve to corroborate his version. He said that he agreed to pay the fine and signed the agreement with the intention of paying the fine and thereafter laying a complaint with the authorities that he had been falsely accused once medical proof absolving him became available. [9] Steve, clearly a critical witness, was regrettably very poorly examined. This appears to be an unfortunate result of the presiding officer’s rather impatient interjections, during his examination-in-chief, which suggested that events at the meeting were not in dispute. This obviously disconcerted the prosecutor such that he all but abandoned questioning the witness. Consequently, it seems, Steve was not cross-examined. He did make the point, however, that the appellant denied the rape and that after the agreement of payment of a fine was concluded the appellant requested medical proof on the understanding that Steve would pursue the payment of the fine only after such proof became available. [10] The trial court, having cautioned itself that the complainant was a single, child witness, found her a satisfactory witness who, in its view, had no reason to falsely implicate the appellant. It found her version credible and rejected the appellant’s evidence on the basis that it was so improbable that it could not reasonably possibly be true. The question for decision is whether the State established the appellant’s guilt beyond reasonable doubt. [11] In argument before us, the appellant’s counsel levelled a number of criticisms against the manner in which the trial court assessed the evidence – which he said was decided purely on probabilities – and its findings which were confirmed by the sentencing court and the court below. He contended that the complainant’s evidence was inherently improbable and her conduct inconsistent with trauma because she did not report the incident promptly; the adults that she saw directly after the rape seem not to have observed anything untoward in her appearance; she was able to attend the church camp and no physical injuries were found. It was further contended that the written agreement, which according to the trial court supported the State version, amounted to a confession. In the event, so it was argued, its admission did not comply with the statutory provisions governing the admissibility of confessions3 as its voluntariness had not been proved. An objection that the complainant’s testimony had been improperly admitted because she had not been properly sworn as a witness was, prudently, not pursued before us. [12] It must be pointed out, before evaluating the evidence, that the trial court patently misdirected itself in some respects when assessing the evidence. In some instances the evidence was misstated and findings were made which were not supported by the evidence. It is, however, not necessary to deal with these misdirections in any detail as they do not fundamentally impact on the trial 3 Section 217(1) of the Criminal Procedure Act 51 of 1977 (the Act) provides: Evidence of any confession made by any person in relation to the commission of any offence shall, if such confession 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, be admissible in evidence against such person at criminal proceedings relating to such offence: Provided – (a) that a confession made to a peace officer, other than a magistrate or justice, or, in the case of a peace officer referred to in section 334, a confession made to such peace officer which relates to an offence with reference to which such peace officer is authorised to exercise any power conferred upon him under that section, shall not be admissible in evidence unless confirmed and reduced to writing in the presence of a magistrate or justice; and (b) that where the confession is made to a magistrate and reduced to writing by him, or is confirmed and reduced to writing in the presence of a magistrate, the confession shall, upon the mere production thereof at the proceedings in question- (i) be admissible in evidence against such person ….’ court’s reasoning and conclusion. Of more importance is its failure to record its impressions of the witnesses, except for the complainant, and startlingly finding, without giving any reasons, that Steve’s evidence was irrelevant. It does appear, however, that its findings of facts predominantly depended not on personal impressions of witnesses but upon inferences from the facts and upon probabilities. This, therefore, leaves this court at large to reconsider the evidence and draw its own inferences from the record.4 [13] Turning to the submissions made on the appellant’s behalf, it is so that the trial court tested the evidence against the inherent probabilities. There is nothing wrong with this approach. As was reiterated in S v Chabalala,5 the proper approach to assessing evidence is ‘to weigh up all the elements which point towards the guilt of the accused against all those which are indicative of his innocence, taking proper account of inherent strengths and weaknesses, probabilities and improbabilities on both sides and, having done so, to decide whether the balance weighs so heavily in favour of the State as to exclude any reasonable doubt about the accused’s guilt’. The inherent probabilities therefore play a critical role in the enquiry. [14] But whilst it is entirely permissible for a court to test an accused’s evidence against the probabilities, it is improper to determine his or her guilt on a balance of probabilities. The standard of proof remains proof beyond reasonable doubt, ie evidence with such a high degree of probability that the ordinary reasonable man, after mature consideration, comes to the conclusion that there exists no reasonable doubt that an accused has committed the crime 4 R v Dhlumayo 1948 (2) SA 677 (A) at 698; Louwrens v Oldwage 2006 (2) SA 161 (SCA) para 14; Union Spinning Mills (Pty) Ltd v Paltex Dye House (Pty) Ltd 2002 (4) SA 408 (SCA) para 24. 5 2003 (1) SACR 134 (SCA) para 15. charged.6 An accused’s evidence therefore can be rejected on the basis of probabilities only if found to be so improbable that it cannot reasonably possibly be true.7 [15] Motive to incriminate an accused being one of the relevant factors for consideration, the foremost question to my mind is why the complainant, assisted by her father and brother, would implicate a close relative and neighbour unless their evidence was true. The appellant himself confirmed that relations between him and the complainant were normal. The grudge that he alleged David bore against him is not borne out by the facts. David readily confirmed that he once reprimanded the appellant after he was accused of attempted rape but denied any animosity towards the appellant. [16] I have no difficulty accepting David’s version in this regard because the record is replete with evidence which shows that the two families were close knit up to the day of the meeting. For example, the complainant had visited the appellant’s wife on the very day of the incident; Donald found his mother visiting at the appellant’s home on his return from Pretoria to relay the complainant’s disclosure; on the appellant’s own version he was watching television with the complainant’s parents at their home having gone there to borrow a lawnmower when the family members called to the meeting, unbeknown to him, arrived. It was common cause that no one at the meeting, even the complainant’s mother, was keen to have the appellant criminally charged. This includes David as well because he delayed laying a criminal charge despite his uncontested evidence that he insisted on a written agreement to secure evidence to prosecute the appellant which, in my view, is borne out by the fact that he did not wait for the appellant to pay the fine within the agreed 6 R v Mlambo 1957 (4) SA 727 (A) at 738A; S v Phallo 1999 (2) SACR 558 (SCA) paras 10 and 11. 7 S v Shackell 2001 (2) SACR 185 (SCA) para 30; S v V 2000 (1) SACR 453 (SCA) para 3. three-month period and had him arrested a mere three weeks after the meeting. [17] If the elaborate and similar accounts given by Donald and David about the chain of events which took place at the family meeting are untrue then it must be accepted that they conspired together to fabricate those events. I can see no reason on the evidence why they would have done so. This is particularly so bearing in mind that parts of David’s version exculpated the appellant and that Donald – who was not at all challenged in cross-examination except to be told that the appellant denied making an admission of guilt – readily stated that he was not present when the appellant admitted the rape. If their intention was to secure the appellant’s conviction at whatever cost, it would have been sufficient for them simply to say that the appellant admitted the offence. To my mind, it is utterly improbable that they would have gone to such lengths to incriminate the appellant. This finding does not redound to the credit of the defence version, including Steve’s version, in this regard. [18] As to the nature of the written agreement, I do not agree that it is a confession as it clearly does not fit the requirements of s 217 of the Act. In my view, it bears the hallmarks of an informal admission.8 In view of the fact that it was tendered in evidence with the appellant’s consent, and his own evidence which made it clear that he signed it quite willingly, fully intending to carry it out, contrary to what was put to David that he was pressured to sign, I am of the firm opinion that the trial court was correct in admitting it and according it evidential weight. 8 In terms of s 219A of the Act ‘[e]vidence of any admission made extra-judicially by any person in relation to the commission of an offence shall, if such admission does not constitute a confession of that offence and is proved to have been voluntarily made by that person, be admissible in evidence against him at criminal proceedings relating to that offence….’ [19] It may be asked how the gathering could have got to the stage of fixing a fine as punishment if the appellant had not admitted to wrongdoing. Another question that arises when one considers the value of 17 cattle, is why an innocent man, apparently of humble means – he was a locomotive driver in the mines earning a measly monthly salary of R4 800 – would bind himself to pay what to him must be a fortune for a crime he did not commit. The reason he gave, that he planned to complain to the authorities after paying the fine and the matter had been investigated to show that he had been falsely accused, simply makes no sense. Incidentally, this evidence does not support the scenario contended for in argument that his wife agreed to pay the fine out of fear that he would be imprisoned. Similarly, the appellant’s version which was not put to David and Donald, that his wife actually defended him at the meeting saying she would have noticed if he had done something wrong and that she is the one who demanded medical proof, is not borne out by the evidence. [20] I find it difficult to accept the appellant’s and Steve’s evidence that payment of the fine was conditional upon production of medical proof in view of the fact, on their own version, that the agreement which, significantly, does not reflect this alleged important term, was signed before it was suggested that the complainant be taken for a medical examination. That any medical report might exonerate the appellant seems to me to have been an afterthought. Not to be overlooked is the district surgeon’s evidence that the complainant was brought to him to be checked, not to establish rape, but for diseases she may have contracted and any other pathologies she may have sustained during a sexual assault. To my mind this, coupled with the evidence corroborated by the appellant himself that David was extremely concerned at the meeting that he might have infected her with HIV-Aids, shows that the complainant was taken for medical examination merely to safeguard her health and not as part of a deal struck at the meeting. [21] This, in my view, makes a lie of the condition alleged by the defence. Equally, the submission made on the appellant’s behalf that it was unlikely that he would have insisted on the complainant’s medical examination if he had raped her, cannot stand. In any event, the submission overlooks the appellant’s own evidence that this was Steve’s suggestion, which he then supplemented in cross-examination by adding that he asked Steve after the meeting to request a copy of the medical report from David – a request he said was refused, casting further doubt on the alleged condition. [22] The appellant’s account of the events which took place at his home was far from convincing. As the trial court pointed out, it is improbable that instead of chastising the complainant for keeping him waiting for the bucket, he would have paid her a compliment. If he had done no more than tell the complainant that she was beautiful, why would she have been offended and why would the appellant have felt compelled to apologise to her for an innocent remark? Sending the other child away from his house also indicates that he did not have an innocent purpose in mind. [23] Much was made by the appellant’s counsel of the complainant’s apparent ability to act normally after the rape and her delay in reporting it. It has been firmly established in a number of studies on the impact of violence, including rape, against women that victims display individualised emotional responses to the assault.9 Some of the immediate effects are frozen fright or cognitive dissociation, shock, numbness and disbelief.10 It is therefore not unusual for a victim to present a façade of normality. 9 S Bollen et al ‘Violence Against Women in Metropolitan South Africa: A study on impact and service delivery’ Institute for Security Studies (1999) Monograph No 41. 10 S Ullman & R A Knight ‘Women’s Resistance Strategies to Different Rapist Types’ (1995) 22 No 3 Criminal Justice & Behaviour 263, 280; S Katz & M A Mazur Understanding the Rape Victim: A Synthesis of Research Findings (1979) 172, 173. M Symonds ‘Victims of Violence: Psychological effects and after-effects’ (1975) 35 (1) American Journal of Psychoanalysis 19 - 726, 22. [24] It is further widely accepted that there are many factors which may inhibit a rape victim from disclosing the assault immediately. Children who have been sexually abused, especially by a family member, often do not disclose their abuse and those who ultimately do may wait for long periods and even until adulthood for fear of retribution, feelings of complicity, embarrassment, guilt, shame and other social and familial consequences of disclosure.11 Significantly, the newly passed Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 provides, in s 59, that ‘in criminal proceedings involving the alleged commission of a sexual offence, the court may not draw any inference only from the length of any delay between the alleged commission of such offence and the reporting thereof’. Raising a hue and cry and collapsing in a trembling and sobbing heap is not the benchmark for determining whether or not a woman has been raped. There was thus nothing unusual about the complainant’s behaviour and her explanation for not immediately reporting the appellant is plausible. [25] It was argued that the complainant’s version was not supported by the medical evidence and that absence of physical injuries was a further indication that there had been no rape. I find no merit in this contention. It needs first to be pointed out that physical injuries are not always a consequence of rape. This is so because physical force is not necessarily used in rape – the more common consequences are therefore those related to reproductive and mental health and social well-being.12 That being said, the relevant evidence in this case needs to be considered in its proper context. Despite its neutrality, the doctor’s evidence did not exclude the possibility of rape in view of the time lapse and the fact that the complainant had since washed. Nor did the doctor exclude the possibility 11 T B Goodman-Brown et al ‘Why Children Tell: A Model of Children’s Disclosure of Sexual Abuse’ Child Abuse & Neglect 27 (2003) 525-540. 12 E Krug et al ‘Sexual Violence, World Report on Violence and Health’ World Health Organisation, (2002). that she could have sustained minor vaginal injuries which would have healed by the time of the examination. The infliction of injuries to the genitalia, he said, largely depends on the degree of force exerted during the rape. The complainant’s direct evidence that she felt pain in her vagina as if it was scratched and bled must be viewed against that background. [26] Other criticisms including that it is improbable that the appellant would have stopped raping her simply because she threatened to tell her mother, conduct which I find entirely reasonable, were wisely not pursued with any marked degree of enthusiasm. No other cogent reason was advanced against the trial court’s credibility findings in respect of the complainant and its assessment of her evidence and the rest of the State version. [27] The complainant’s version of the rape, which as the court below pointed out was clear and straightforward, was unshaken in cross-examination. And in so far as the events after the rape were concerned, she was corroborated by David, Donald and indeed the defence witnesses. The cogency of her evidence, its corroboration in so far as the events following the rape are concerned, David’s evidence that the appellant admitted the rape hence the decision to exact a fine from him and the agreement relating to payment of the fine all show that the defence version is inherently so improbable as to be rejected as false. I am thus satisfied that the State proved the appellant’s guilt beyond reasonable doubt. There is, therefore, no basis to disturb the trial court’s finding of guilt. [28] As to sentence, the high court’s finding that there were substantial and compelling circumstances in the matter justifying the imposition of a lesser sentence than life imprisonment was not in contention between the parties. Thus, the issue before us is whether a lighter sentence should have been imposed on the appellant. [29] In deciding whether the sentence warrants our interference it should be considered that this court’s power to alter sentences is limited as the infliction of punishment lies in the discretion of the sentencing court. A court of appeal may not simply substitute a sentence because it prefers it and will be entitled to interfere only if the sentencing court materially misdirected itself or the disparity between its sentence and the one which this court would have imposed had it been the trial court is ‘shocking’, ‘startling’ or ‘disturbingly inappropriate’.13 [30] It was contended on the appellant’s behalf that the sentencing court had misdirected itself materially by finding that the appellant had raped his own child because ‘[i]n the setting of a seTswana family, a maternal uncle … is in the same position as a father’ and that the sentence of 18 years’ imprisonment is too harsh. [31] Regarding the first leg of the appellant’s submission, the only misdirection committed by the sentencing court, in my view, which cannot by any stretch of the imagination be regarded as material, was its reference to the seTswana culture. One would reasonably imagine that in any civilized cultural setting, a much older male relative represents a father figure and protector to his child relatives. In any event, the evidence in this case amply shows that the appellant, who the complainant and Donald called ‘uncle’, was a father figure to her. There is, further, no indication that the sentencing court placed undue weight on this factor. [32] As to the propriety of the sentence imposed, I do not agree that it is so harsh that it ought to be ameliorated by this court. In my view, the sentencing court properly considered the gravity and prevalence of rape, the interests of the 13 S v Malgas 2001 (1) SACR 469 (SCA) para 12. community, particularly its demand for heavy sentences for child rapists, and the appellant’s personal circumstances which, as indicated above, it found sufficiently weighty to warrant reduction of the prescribed sentence of life imprisonment. [33] As the sentencing court found, there are serious aggravating circumstances present in the case. The appalling and outrageous crime committed by the appellant was worsened by the fact that his young victim is a close blood relative whom he had a duty to protect. In addition to the trauma which a rape victim necessarily suffers from the brutal invasion, the young girl was burdened with a fear of reporting the incident because of their relationship. She was a virgin and he robbed her of her innocence and the wonder and joy of experiencing womanhood when she was ready. His utterances that he had been waiting for the complainant to grow up show clearly that the offence was not impulsive. He obviously planned to rape the complainant when the opportunity, which he craftily created by sending the other child away, arose. [34] Regrettably, as often happens in these cases, no evidence of the true extent of the mental and psychological harm and scarring sustained by the complainant was led, bar the district surgeon’s diagnosis of ‘very mild depression’ shortly after the rape and her own testimony of her disturbed emotional state before she confided in Donald. Such evidence is highly relevant for the sentencing process and cannot simply be assumed by a sentencing court. I say this mindful that in the case of an emotionally resilient victim who, for some or the other reason, has not been devastated by being raped, that fact should not detract from the seriousness of the offence. It is nonetheless undoubted in this case that the complainant was seriously traumatised by the sexual assault. [35] Against these aggravating factors, the sentencing court weighed the appellant’s personal circumstances – that he was a first offender at the mature age of 37 years and had little education; that he was married and had a young child; that he was in steady employment and had been in custody for seven months before his sentence. The sentencing court found in his favour that the complainant did not seem to have suffered serious physical injuries from the assault and that the violence involved in the commission of the rape was no more than that inherent in the crime of rape. [36] I am not persuaded that the sentencing court misdirected itself in any significant respect. Bearing in mind that the Legislature has ordained life imprisonment as the sentence that should ordinarily and in the absence of weighty justification be imposed for the offence committed by the appellant and the courts’ obligation to respect and not pay mere lip service to that view,14 it hardly seems to me a sentence of 18 years’ imprisonment is disproportionate in the circumstances of this case. Any sentence that I might have imposed had I been in the sentencing court’s position is, in my view, not sufficiently disparate from the sentence imposed by the high court to warrant interference on appeal. The appeal against sentence must, therefore, fail. [37] For all these reasons, the appeal against conviction and sentence is dismissed. _______________________ MML MAYA JUDGE OF APPEAL 14 S v Malgas para 25. LEWIS JA (concurring in part in this judgment) [38] I have read the judgments of my colleagues Mpati, Brand and Maya. I agree with Maya JA that the appeal against conviction should be dismissed for the reasons that she has given. However, I consider that Mpati P’s view on sentence must be followed. A sentence of 18 years’ imprisonment would, for the reasons that the President gives, be disproportionate to the crime committed, and therefore unjust. I would impose a sentence of 12 years’ imprisonment. ________________ C H LEWIS JUDGE OF APPEAL MPATI P (dissenting ) [39] I have had the privilege of reading the judgements of my colleagues Brand and Maya. I agree with Brand JA that the appeal should succeed and that the appellant’s conviction and sentence should be set aside. Brand JA however agrees with Maya JA that in the event of the appeal against conviction being dismissed this court would not be entitled to interfere with the sentence of 18 years’ imprisonment imposed by Gura J. I disagree. In my view the sentencing court omitted to consider at least two important aspects, which, to my mind, should have served as a basis for ameliorating the sentence imposed. As things presently stand, the sentence is, in my view, disproportionate to the offence. [40] I must, from the outset, associate myself with the views expressed by Nugent JA in Bongani Phillip Vilakazi v The State15 that rape ‘is a repulsive crime’, ‘an invasion of the most private and intimate zone of a woman and strikes at the core of her personhood and dignity’.16 As such, persons who make themselves guilty of it must be punished accordingly. Courts are therefore expected to give effect to the legislative intent as expressed in the minimum sentencing provisions of the Criminal Law Amendment Act 105 of 1997 (the Act) and should not proceed as if it was ‘business as usual’.17 [41] In the present matter I must, for purposes of this judgment, accept the factual findings of my colleague Maya, hers being the judgment of the majority, except for one aspect in her summation of the complainant’s testimony, which is in my view incorrect. I deal with it below (para 4). Although the complainant testified before the trial court that she was fifteen years old (at the time of the trial) she was in fact sixteen. She was born, according to her own evidence, on 19 December 1987.18 But whether the difference of one year would have had any impact in the sentencing court’s assessment of an appropriate sentence is difficult to tell. I do think, though, that it was something to be taken into consideration. In his judgment on sentence Gura J consistently referred to the complainant as a 14 year old. At one point he says the following: ‘Law abiding citizens, the community at large, expects protection from Courts against rapists. Especially where victims of rape are young children as complainant in this case, a 14 year old.’ 15 Vilakazi v The State (576/07) [2008] ZASCA 87 (2 September 2008). 16 At para 1. See too S v Chapman 1997 (3) SA 341 (SCA) 345A-B. 17 S v Malgas 2001 (1) SACR 469 SCA. 18 A birth certificate was handed in to Gura J which seemed to prove that the complainant was 16 years old as at the date of trial on 9 June 2004. She was in fact 15 years 9 months when she was raped on 26 September 2003. An important factor, however, is that the complainant was under the age of 16 years when she was violated. In such a case, s 51(1) of the Act ordains a sentence of life imprisonment unless there are substantial and compelling circumstances which would justify the imposition of a sentence less than life imprisonment.19 [42] That there were substantial and compelling circumstances justifying the imposition of a sentence which is less than the life imprisonment ordained by the Legislature in this case is not in issue. And I agree with my colleague Maya that the misdirection referred to by her (para 30) is not as material as would by itself warrant an interference with the sentencing court’s exercise of its discretion. I also have no quarrel with the aggravating features as set out by her (para 33). But there is an aspect which my colleague mentions earlier in her judgment with which I do not entirely agree. In setting out the complainant’s evidence she says (para 3): ‘Holding her down on her back, he (appellant) undressed and raped her. He would not stop despite her screams . . . and only withdrew from her when she threatened to report him to her mother.’ The complainant did not testify that the appellant ‘would not stop despite her screams’. Her evidence was that after he had undressed her around her private parts the appellant ‘then started to rape’ her. When asked why she said the appellant raped her she said ‘[h]e took his penis and inserted it inside my vagina . . . and I screamed and cried . . .’. She then testified that she told him that she was going to tell her mother, whereafter ‘he then alighted from me’ and said he was sorry. [43] It is not clear from the complainant’s testimony whether she 19 Per s 51(3). threatened to tell her mother immediately after the appellant had penetrated her or whether this was after some time thereafter. As was the case in Vilakazi20 the evidence in this case was led in a casual manner with the result that very important aspects were left unexplained. The cross- examination of witnesses was no exception. But as the evidence stands, it is susceptible to an interpretation that favours the appellant, which is that he withdrew from the complainant when she threatened to report him to her mother, which may have been immediately after he had penetrated her. This, to my mind, is a factor to be considered in the overall assessment of an appropriate sentence. The appellant did not continue when she screamed and threatened to report him to her mother. This the sentencing court overlooked. [44] A second and perhaps more important factor which the sentencing court overlooked is the following: During his testimony the complainant’s father was asked what made him conclude that the appellant be fined 17 cattle and how he had arrived at that figure. His answer is recorded thus: ‘Because of the complainant saying he is a relative and I was not supposed to cause him to be in prison your worship.’ It is clear from this that the complainant, despite the trauma and all other unpleasant and humiliating experiences a rape victim has to go through, she did not wish the appellant to be visited with imprisonment. This attitude on the part of the complainant, taken together with what I have said in para 5, the fact that she did not sustain any serious physical injuries and the fact that the appellant, at 37 years of age, is a first offender, lead me to conclude that the sentence of 18 years’ imprisonment imposed by Gura J is disproportionate to the offence. It is also important to remember 20 Above footnote 1. that but for the fact that the complainant was a mere three months (in fact less that three months) away from her 16th birthday, the appellant, being a first offender, would have faced the minimum sentence of 10 years’ imprisonment. [45] Taking all these factors into consideration, I am of the view that a sentence of 12 years’ imprisonment would have been appropriate in the circumstances. I would accordingly have allowed the appeal on sentence. ___________ L MPATI PRESIDENT BRAND JA (dissenting) [46] I have had the benefit of reading the judgment of my colleague, Maya JA, ('the main judgment'), but I regret that I cannot agree with her approach to the evidence or with her conclusions that the appeal against conviction should fail. My evaluation of the evidence leaves me with a lingering sense of disquiet as to the appellant's guilt and it is this sense of disquiet – technically described as reasonable doubt – which compels me to disagree. [47] In evaluating the evidence a general difficulty I experienced was that the case had been so badly presented on both sides that in some instances it is virtually impossible to determine what the witness was trying to say. Moreover, on occasion, there appears to have been some lack of communication between the witness and the interpreter. I do not say that to cast any aspersions. What I am saying is that because I sometimes do not understand what the witness said, my hesitancy to convict is enhanced. [48] Central to the judgment of my colleague Maya appears to be her finding that the appellant admitted the rape at the family meeting which was held on 4 October 2003. This finding clearly rests on the testimony of the complainant's father, David. As is pointed out in the main judgment (para 17) the complainant's brother, Donald, expressly stated that he was not present when the appellant was supposed to have made the admission. Nor did the complainant herself give any evidence to this effect. David is therefore the only witness who gave evidence supporting the admission. [49] Now it goes without saying that an admission by the appellant would lend vital support to the State case. My problem is that the admission is denied by the appellant and, as I see it, not borne out by the evidence of David. It is true that according to David's original version under examination in chief, the appellant initially denied that he had raped the complainant, but then admitted that he had done so. In cross-examination, however, he qualified his evidence as follows: 'And at no stage did the accused admit his guilt? – The time when he admitted or the stage when he admitted the guilt was when he signed that document your worship, that is when he admitted for the first time. That is the first time? – That is when he had agreed or rather when he had admitted the guilt and we were signing when he had just admitted the guilt your worship.' [50] This leaves me with the distinct impression that David was not relying on an express admission, but an admission implied by the conduct of the appellant in signing the document in which he undertook to pay seventeen cattle. On the face of it, the inference is quite understandable. The obvious implication of the undertaking by itself and without more would indeed be that the appellant admitted his guilt. But there is more. The appellant's evidence, which cannot really be controverted and which is not inherently improbable, is that it was his wife who suggested that he should pay the cattle, because, so she said, even if he did not commit the rape, the possibility of a conviction could not be excluded. The notion that the undertaking was inspired by the appellant's wife is supported to an extent by the following evidence of Donald: 'Yes, how many cattle [was suggested]? – Seventeen your worship. What was the accused's response to this? – He did not say anything your worship I only remember his wife replying that it was OK.' Later on he said: 'And it was then agreed that the accused should pay 17 head of cattle? – It was . . . his wife that agreed to that your worship. His wife your worship.' [51] What is more, according to the appellant, his undertaking to pay the cattle was then expressly made subject to the condition that the fact of rape be borne out by a medical certificate following upon a medical examination of the complainant. The suspensive condition to the undertaking, as it were, of a medical examination bearing out that the complainant was indeed raped, is specifically confirmed by the evidence of Steve. In the main judgment (para 20) my colleague Maya appears to reject this part of Steve's evidence out of hand (see also para 17). I can see no possible basis for doing so. During the course of the State case it was intimated that Steve would testify on behalf of the State. He appears to have played the leading role at the meeting. No reason is suggested why he would perjure himself. In fact, he was not even cross-examined by the prosecutor at all. It is true, as my colleague Maya explains (in para 9) that the prosecutor may have been influenced by the clear misdirection on the part of the trial magistrate that his evidence was not relevant. But this misdirection cannot possibly be held against Steve. Nor can it be held against the appellant that his witness was interfered with by the court while giving testimony on an aspect of vital importance. It follows that in my view, Steve's evidence must be accepted as a beacon on which we can take our bearing. [52] To the extent that Steve's evidence was allowed on this subject, he seems to suggest that the inconclusive nature of the medical certificate which was eventually obtained was the reason why the seventeen cattle were not delivered, which in turn led to the matter being reported to the police. This is supported by the evidence that as a fact, the matter was only reported to the police after the inconclusive medical report had been obtained. David's explanation in this regard that he required an undertaking by the appellant solely as proof of rape, is difficult to accept. [53] The suggestion in the main judgment (paras 20 and 21) that the condition of a medical certificate was merely an afterthought was never made in cross- examination to either the appellant or Steve. Nor is it based on any factual foundation laid at the trial. And as Cloete JA pointed out in S v Heslop 2007 (4) SA 38 (SCA) para 22: 'It goes without saying that it is a requirement of the fair trial guaranteed by s 35(3) of the Constitution . . . that if a court intends drawing an adverse inference against an accused, the facts upon which this inference is based must be properly ventilated during the trial before the inference can be drawn.' [54] Once it is accepted that the appellant's undertaking was made subject to the stated condition, as in my view it must, certain consequences seem to follow. One of these is that the inference of an implied admission, which my colleague Maya draws from the undertaking (para 19), would no longer be valid. The answer to the rhetorical question she raises as to why an innocent man, apparently of humble means, would bind himself to pay what to him must be a fortune for a crime he did not commit, could very well be this: he believed, as he said, that he would not have to pay. [55] This immediately leads to the further consequence derived from the condition of a medical examination, namely, that the appellant must have thought, as he said, that the outcome of the medical examination would be in his favour. And that he therefore thought, as he said, that the complainant was not raped. To this inference, which appears to me both inevitable and destructive of the State's case, I find no answer in the main judgment. [56] As to the complainant's delay in reporting the alleged rape and the reference by my colleague Maya (para 23) to the extensive research done on the reaction of rape victims in general, I am mindful of the caution sounded by Nugent JA in S v M 2006 (1) SACR 135 (SCA) para 278 about the 'imprinting of behavioural stereotypes or conceptual models' upon the evidence in a particular case. As I understand it, it means, in short, that we must be careful not to replace old stereotypes with new ones. I respectfully agree. Nonetheless, I share the view of my colleague Maya that on the facts of this case, the apparent lack of an immediate response on the part of the complainant would by no means justify the inference that she had not been raped. What I do say, however, is that evidence of distress or emotional agitation on the part of the complainant, immediately after the event, could perhaps have served to tip the scales in favour of the State (see eg S v Hammond 2004 (2) SACR 303 (SCA) para 22. Absent any the evidence of this kind, the position is thus no different from the role played by the medical evidence in this case (for which see para 25 of the main judgment). It is neutral. It does not support either version. There is no objective fact to tip the scales in favour of the complainant's version. [57] My colleague Maya finds support for the complainant's version in the testimony of Donald and David (para 16 and 17). For purposes of my evaluation, I accept the evidence of Donald without qualifications. But as I see it, there is very little difference of any consequence between his version and that of the appellant. For that matter, it may therefore just as well be said that he corroborated the appellant's version. The same essentially holds true of David, save for the dispute between him and the appellant as to whether the undertaking by the latter was subject to the condition of a medical certificate or not. On this aspect the appellant is supported, as I have said, by the evidence of Steve, which we have to accept. In this light, I find no foundation for the proposition in the main judgment (para 17) that it is 'utterly improbable that they [Donald and David] would have gone to such lengths to incriminate the appellant'. In short, I do not believe they went to any lengths at all. [58] I have the same difficulty with my colleague Maya's more general statement in the same vein (para 27) that: 'In so far as the events after the rape were concerned, she [the complainant] was corroborated by David, Donald and indeed the defence witnesses.' As is pointed out earlier in the main judgment (para 2) the only major point of divergence in the versions of the complainant and the appellant relates to the rape itself which the appellant denied. The complainant's version as to what happened after the event was not in dispute. But how can one refer to 'corroboration' with regard to that which is common cause? As was said in S v Gentle 2005 (1) SACR 420 (SCA) para 18: '[B]y corroboration is meant other evidence which supports the evidence of the complainant . . . on issues in dispute . . . [T]he fact that the complainant's evidence accords with the evidence of other State witnesses on issues not in dispute does not provide corroboration.' [59] Moreover, and more significantly, there is nothing in the complainant's own version – as 'corroborated' by the other evidence – as to what happened after the event which supports her allegation that she was raped. And that underscores my ultimate problem in this case, namely, that there is nothing in the objective facts nor in the evidence of other witnesses – apart from the complainant – which corroborates her version in so far as it is in dispute. [60] Another consideration in favour of the State's case referred to by my colleague Maya (para 15) relates to the absence of any apparent motive on the part of the complainant to implicate an innocent close relative. In my view this is self-evidently a consideration against the acceptance of the appellant's version. Equally self-evident, however, is the fact that this consideration on its own cannot justify a conviction. There is no reverse onus, as it were, on the accused in a rape case to show cause why he would be falsely accused. [61] Finally, my colleague Maya finds support for the State case in what she regards as improbabilities in the appellant's version as to what took place at his home on that day (para 22). Though I am not convinced that all these suggested improbabilities rightfully qualify as such, I do not find it necessary to dwell on each of them in detail. Suffice it, in my view, to say that even if all these were to be accepted as improbabilities, they do not even come close to the standard required for the rejection of an accused's version in a criminal case, namely, that it is so improbable that it cannot reasonably possibly be true. [62] These are essentially the reasons why I cannot support the conclusion arrived at by my colleague Maya that the appeal against the conviction should fail. Lest there be any misunderstanding, let me make myself clear. I believe that our courts are duty-bound to do everything in their power to protect the vulnerable sections of the community who fall prey to sexually inappropriate behaviour. I therefore share the view of those who believe that rapists, and particularly rapists of young children, should be punished severely. But this does not mean that we can disregard or diminish the time honoured safeguards of our criminal law that are aimed at protecting the rights of an accused person. This must be so, for the mere thought of sending an innocent man to prison fills one with trepidation. [63] As to the appeal against sentence, I agree with my colleague Maya that if the conviction of the appellant were to stand, this court would not be entitled to interfere with the sentence of eighteen years' imprisonment imposed by the trial court. [64] It follows that in my view the appeal should be upheld and that the appellant's conviction and sentence should be set aside. _________________ F D J BRAND JUDGE OF APPEAL APPEARANCES: For Appellant: D J Combrink Instructed by: Du Toit Attorneys, Mmabatho Lovius Block Attorneys, Bloemfontein For Respondent: G S Maema Instructed by: The DPP, Mmabatho The DPP, 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 October 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. * * * MONAGENG V THE STATE The Supreme Court of Appeal today dismissed an appeal against a judgment of the Bophuthatswana Provincial Division in which the appellant, a 37 year old man, had been convicted of the rape of his 15 year old cousin and sentenced to undergo 18 years’ imprisonment. The majority of the court held that the appellant’s version was not reasonably possibly true and that it had been properly rejected by the trial court. The majority of the court held further that the sentencing court did not misdirect itself in imposing sentence and that 18 years’ imprisonment was neither shocking, startling nor disturbingly inappropriate in the circumstances of the case.

3174

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT NOT REPORTABLE Case number: 447/06 In the matter between: D B BOTHA Appellant and GIYOSE t/a PARAGON FISHERIES Respondent CORAM: FARLAM, COMBRINCK and CACHALIA JJA HEARD: 11 MAY 2007 DELIVERED: 31 MAY 2007 Summary: Contract – undisclosed principal – when agent may sue in own name Neutral citation: This judgment may be cited as Botha v Giyose t/a Paragon Fisheries [2007] SCA 73 (RSA) ___________________________________________________________________ COMBRINCK JA: [1] This appeal has its origin in a disputed sale of a fast-food business conducted in Queenstown in the Eastern Cape. Mr Botha, the appellant (the plaintiff in the magistrates’ court), claimed he had sold the business to Mr Giyose (the respondent/defendant) for R90 000 in February 2003. The latter denied the existence of such an agreement. [2] The appellant instituted action against the respondent in the Queenstown magistrates’ court claiming payment of R90 000. The respondent, in his plea, alleged he had taken over the premises from which the business had been conducted after the appellant had abandoned the business. He had, he averred, not entered into any agreement with the appellant. I shall return later to deal more fully with the pleadings. [3] The appellant was the only witness to testify at the trial. The respondent closed his case without leading any evidence. The magistrate accepted the appellant’s evidence and her findings of fact were not challenged by the respondent in his subsequent appeal to the Full Bench of the High Court, Eastern Cape Division. The respondent in this court filed a notice advising he abides the decision. There was therefore no appearance for him before us. [4] The undisputed facts found were that the appellant had indeed sold the business, formerly known as ‘Skippers’ but at the date of sale known as ‘Food for Africa’, to the respondent. The agreement was orally concluded on 31 January 2003, the terms being: (i) the merx was the business as a going concern together with all fixtures, fittings and equipment; (ii) the purchase price was R90 000; (iii) the price was payable by way of an initial amount of R45 000 payable immediately; (iv) the balance in 24 equal monthly instalments of R1 875 payable on the first day of each and every succeeding month, the first payment to be made on 3 February 2003; (v) interest at 5% per annum payable on the amount of R45 000 over 24 months. At the instance of the respondent it was subsequently agreed that he pay the initial amount on or before 12 March 2003. The appellant handed over possession of the business to respondent at the beginning of February 2003. The respondent concluded an agreement of lease with the owner of the building in which the business was conducted and commenced trading. He failed to make any payment. [5] The magistrate found in favour of the appellant and made the following order: ‘1. That the Contract of Sale between the parties is considered to be validly cancelled. 2. That judgment is granted in favour of the Plaintiff in the amount of R90 000,00 same representing the damages suffered by the Plaintiff as a result of the defendant’s breach of contract. 3. That interest at the rate of 15,5% p.a. shall run with effect from 19/03/2003 same being the date that the defendant fell into mora. 4. That the Defendant is ordered to pay all costs on an attorney and client scale upon presentation of a taxed bill of costs.’ [6] The respondent, as mentioned earlier, appealed against the judgment. He noted a number of grounds in his notice of appeal but restricted his argument in the court a quo to a single ground and that is that the appellant had failed to prove that he had locus standi in iudicio. The issue arose as a consequence of questions put to the appellant by his attorney (Mr Malan) at the end of the examination in chief. The following exchange took place: ‘MR MALAN: Your Worship, I only need two minutes more. Mr Botha, you, your wife and your one son also have a closed corporation which you run? PLAINTIFF: That’s correct, Your Worship. MR MALAN: Can you tell the court what the name of the cc is? PLAINTIFF: The name of the closed corporation is Dacawi Investments. MR MALAN: Your Worship, that is Dacawi Investments CC. Who are the members? PLAINTIFF: The members are myself, my wife and my son. MR MALAN: Name of your son? PLAINTIFF: Willem Cornelius Botha. MR MALAN: Mr Botha, the business you sold to Mr Giyose, did it belong to you or to the cc? PLAINTIFF: The business was under the cc’s name, Dacawi Investments. MR MALAN: Were you fully authorised to act on behalf of the cc by the members? (Answer inaudible)’ Despite lengthy cross-examination, no questions were asked concerning this aspect. At a stage the appellant handed in a written resolution passed by Dacawi Investments CC to the effect that the appellant’s authority to sell the business on behalf of the close corporation was confirmed. The document is dated 1March 2004. [7] The issue argued in the court a quo was whether the appellant acting as agent for an undisclosed principal (Dacawi Investments CC) was entitled to sue the third party (the respondent) in his own name. The learned acting judge referred in his judgment to the leading case of Cullinan v Noord-Kaaplandse Aartappelkernmoerkwekers Koöperasie Bpk 1972 (1) SA 761 (A) and accepted that it laid down that a sale agreement concluded between an agent acting for an undisclosed principal and a third party was valid and enforceable by the agent in his own name. Later in his judgment he, however, said the following: ‘To the extent that the evidence reads that the respondent was at all material times relevant to the conclusion of the sale agreement and the bringing of the action acting on behalf of the close corporation cannot be interpreted otherwise than that he was an agent.’ He then referred to the case of Gravett NO v van der Merwe 1996 (1) SA 531 (D) and quoted the passage at p 537 G-J. He concluded: ‘Applying the case of Gravett, supra, to the present matter shows that the respondent was not entitled to act in his personal capacity on behalf of the close corporation. Further, in my view is that as in Gravett’s case the fact that respondent brought the action on behalf of an undisclosed principal was an afterthought; hence the argument was only raised at appeal stage. According to the summons as well as evidence led in the court a quo plaintiff did not consider himself as an agent of an undisclosed principal. The conclusion must inevitably be that the respondent failed to prove that he had the necessary locus standi at the time when he initiated the action against the appellant. Therefore, the court a quo erred in this regard.’ The appeal was therefore allowed and the order in the magistrates’ court set aside and an order of absolution from the instance substituted. [8] It would appear that the doctrine of the undisclosed principal was not fully understood. The rights of the agent as against the third party are succinctly summarised by Joubert, LAWSA 2ed paras 228 and 231 as follows: Par 228: ‘In a standard situation of representation the representative acquires no rights and incurs no liabilities from the contract concluded by him or her on behalf of his or her principal. The rights and obligations come into being between the principal and the third person. In an undisclosed principal situation the intermediary and the third person create vincula iuris between themselves by the contract concluded in their own names, but also so it is said, alternative vincula iuris between the undisclosed principal and the third person.’ Par 231: ‘The contract is concluded between the third person and the intermediary acting in his or her own name. The third person is in terms of the contract liable to the intermediary. He or she cannot avoid liability to the intermediary on the ground that he or she is liable to the undisclosed principal, unless and until the undisclosed principal elects to hold him or her liable.’ The reliance on Gravett NO v Van der Merwe, supra, was misplaced. What Booysen J meant in the passage quoted is better stated in Sentrakoop Handelaars Bpk v Lourens 1991 (3) SA 540 (W) (a case relied upon by Booysen J as authority for his proposition) where Marais J said the following (at 545D): ‘I am therefore of the view that both on principle and on the authorities it is not proper for an agent to sue as representing his principal by suing in his own (that is the agent’s own) name, where the claim being enforced is that of the principal and the principal is the true plaintiff. This does not, of course, apply where the agent has the right to sue in his own name, as is the case where he has contracted on behalf of an undisclosed principal and sues on the relevant contract.’ The appellant throughout the negotiations and conclusion of the agreement acted in his personal capacity. No mention was made of the close corporation. It seems clear that what happened, (as so often does with lay persons), is that the appellant did not see the close corporation as a separate legal entity and considered that he and the close corporation were one and that he was entitled personally to sell the business. The appellant’s attorney raised the question of authority in passing and only when he became aware of the existence of the close corporation, it appears, did the question of authority arise and the resolution was prepared to regularise the transaction. The question of locus standi was in any event not properly raised on the pleadings, contrary to the finding of the court a quo. The resolution was clearly an attempt at ratification. As stated in Durity Alpha (Pty) Ltd v Vagg 1991 (2) SA 840 (A) at 843A authority to act on behalf of an undisclosed principal must exist at the time of conclusion of the agreement. There can be no ratification. [9] The appeal in so far as the single issue of locus standi is concerned should not have succeeded. That however, is not the end of the matter. There is another aspect which was overlooked by the magistrate and the court a quo. [10] In his particulars of claim, after pleading the existence of the contract, its terms and the failure to pay, the appellant continued with the following allegations: ‘7. Despite demand Plaintiff has persisted in his failure or refusal to pay. 8.1 In the premises Plaintiff is entitled to cancel the sale agreement and hereby cancels the said sale agreement. 8.2 Alternatively, Plaintiff is entitled to cancel the sale agreement by virtue of Defendant’s breach of material terms thereof, and hereby cancels the said sale agreement. 9. As a result of Defendant’s aforesaid breach of the sale agreement Plaintiff has suffered damages in the amount of R90’000.00, plus interest thereon a temporae morae. Wherefore Plaintiff prays for judgment against the Defendant in the following terms: a. an order declaring the sale agreement to have been validly cancelled; b. Payment of the sum of R90’000.’ c. interest on R90’000.00 a temporae morae; d. costs of suit; e. further or alternative relief.’ When asked in a request for further particulars how the damages were computed the reply was: ‘The amount of R90 000 constitutes the purchase price agreed to by the parties.’ [11] It is trite that once there is a breach of a contract the innocent party has an election to claim enforcement or cancellation and damages. The two are inconsistent with each other and mutually exclusive. The innocent party cannot approbate and reprobate the contract. (Christie, The Law of Contract in South Africa 5ed p 540.) In the present case appellant claimed cancellation and payment of the purchase price which is impermissible. On cancellation his remedy was restitution (return of the business) and damages. He could not claim that the purchase price represented his damages. Unfortunately the magistrate was not alive to the problem. The court a quo, so it appears from the judgment, was under the impression that appellant had elected to enforce the contract and was claiming the purchase price. [12] The next question is whether the appellant was entitled to any relief, and if so what form of relief he was entitled to. The appellant in his particulars of claim alleged that he had by letter dated 9 May 2003 placed the respondent in mora and when the latter failed to heed the demand within the stipulated 22 days, he was entitled to cancel the agreement. In evidence, however, he testified that the letter which was sent by registered post was returned unclaimed. His attorney then formally withdrew the allegation that demand had been made. In doing so he in effect conceded that the cancellation was invalid. What remains is appellant’s claim for payment of the purchase price and his prayer for alternative relief. The parties did not agree on an acceleration clause. Consequently the full purchase price could not be claimed. What the appellant’s evidence did establish was that the initial payment of R45 000 and the instalments payable in February, March, April, May and June were not paid (summons was issued on 2 June 2003). In my view the appellant is entitled to judgment for these amounts together with the agreed interest of 5%. The appellant’s evidence in regard to interest was terse in the extreme. All he said was that he had stipulated for 5% interest on the balance (of R45 000) over 24 months. Implicit in that is that the interest was payable monthly on the reducing balance. What also must follow is that the payment of 5% interest ceased after two years. Thereafter it seems the appellant is entitled to interest at the statutory rate of 15,5%. [13] The final issue is that of costs. The magistrate granted the appellant costs on the scale as between attorney and client. In the light of respondent’s conduct in contesting the action when he had no real defence this order was justified. I consider that, having regard to the fact that the respondent was entitled to a measure of success in the court a quo, (to the extent afforded him in this judgment) a fair order should be that each party bear his own costs in that court. [14] 1. The appeal is upheld with costs. 2. The order in the court a quo is set aside and each party shall pay his own costs in that appeal. 3. The magistrates’ court order is set aside and substituted by the following: ‘(a) there will be judgment for the plaintiff as follows: (i) payment of the amount of R45 000; (ii) interest thereon at the rate of 15,5% per annum from the 13th March 2003 to date of payment; (iii) payment of the amount of R1 875 being the February 2003 instalment; (iv) interest thereon at the rate of 5% per annum from 4 February 2003 to 1 January 2005; (v) payment of the amount of R1 875 being the March 2003 instalment; (vi) interest thereon at the rate of 5% per annum from 2 March 2003 to 1 January 2005; (vii) payment of the amount of R1 875 being the April 2003 instalment; (viii) interest thereon at the rate of 5% per annum from 2 April 2003 to 1 January 2005; (ix) payment of the amount of R1 875 being the May 2003 instalment; (x) interest thereon at the rate of 5% per annum from 2 May 2003 to 1 January 2005; (xi) payment of the amount of R1 875 being the June 2003 instalment; (xii) interest thereon at the rate of 5% per annum from 2 June 2003 to 1 January 2005; (xiii) interest at 15.5% per annum on R9 375 from the 2 January 2005 to date of payment; (xiv) costs of suit on the scale as between attorney and client.’ COMBRINCK JA CONCUR: FARLAM JA) CACHALIA JA)

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Thursday, 31 May 2007 Status: Immediate BOTHA v GIYOSE t/a PARAGON FISHERIES In February 2003 Mr Botha sold his fast food business to Mr Giyose for R90 000. Mr Giyose took-over the business but made no payment, claiming Mr Botha had abandoned the business and he had taken over the abandoned business, Mr Botha successfully sued Mr Giyose for payment of the R90 000 in the Queenstown Magistrates’ court. On appeal to the High Court, Grahamstown the court found that the business belonged to a close corporation of which Mr Botha was a member and that he should have sued in the name of the close corporation. The Supreme Court of Appeal set aside the High Court’s judgment on the basis that Mr Botha was entitled to sue in his own name. It further held that as Mr Botha had not lawfully cancelled the contract he was only entitled to payment of the initial amount of R45 000 and the monthly instalments which had fallen due as at the date of institution of action in the magistrates’ court. --- end ---

2372

non-electoral

2013

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 189/2012 Reportable In the matter between: BHP BILLITON PLC INCORPORATED FIRST APPELLANT HILLSIDE ALUMINIUM (PTY) LTD SECOND APPELLANT and JAN GEORGE DE LANGE FIRST RESPONDENT MEDIA 24 LIMITED SECOND RESPONDENT ESKOM HOLDINGS LIMITED THIRD RESPONDENT MOTRACO-COMPANHIA DE TRANSMISSAO DE MOCAMBIQUE SARL FOURTH RESPONDENT MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT FIFTH RESPONDENT Neutral citation: BHP Billiton PLC Inc v De Lange (189/2012) [2013] ZASCA 11 (15 March 2013) Coram: Mthiyane DP, Cloete, Mhlantla, Leach and Petse JJA Heard: 8 November 2012 Delivered: 15 March 2013 Summary: Promotion of access to Information Act 2 of 2000 ─ Right of access to information in the hands of Eskom, a public body ─ compliance with s 78(2) ─ point in limine that application to compel out of time dismissed by majority of the SCA. _____________________________________________________________________ ORDER On appeal from: South Gauteng High Court, Johannesburg (Kgomo J sitting as court of first instance): 1 The appeal is dismissed save for paragraphs 166.4.1 and 166.4.2 of the order of the court a quo which are set aside and replaced with the following: ‘1 The first respondent (Eskom) is ordered to pay the costs of the application including the costs of two counsel.’ 2 No order is made as to costs on appeal. ___________________________________________________________ JUDGMENT MTHIYANE DP (MHLANTLA AND PETSE JJA CONCURRING): [1] This appeal arises from a successful application by the first and second respondents (Media 24) against the appellants (Billiton) in the South Gauteng High Court (Kgomo J) in terms of the Promotion of Access to Information Act 2 of 2000 (PAIA). Media 24 had made a request to Eskom Holdings Limited (Eskom), the third respondent, for information concerning two contracts concluded during the 1990’s that Eskom has with Billiton, for the supply of electricity to two smelters that produce aluminium. These smelters are the Hillside smelters of Richards Bay and Mozal smelter of Maputo, Mozambique both of which belong to the Billiton group of companies. In terms of these contracts Mozal is entitled to receive electricity from the 1990’s until March 2026 and Hillside, until 2028, at a lower rate than the standard tariff. [2] In terms of the Constitution everyone has the right of access to any information held by the State.1 PAIA is national legislation contemplated in s 32(2) of the Constitution that was introduced to give effect to the right of access to information. Section 11(1)(a) and (b) of PAIA provides: ’11 Right of access to records of public bodies (1) A requester must be given access to a record of a public body if─ (a) that requester complies with all the procedural requirements in this Act relating to a request for access to that record; and (b) access to that record is not refused in terms of any ground for refusal contemplated in Chapter 4 of this Part.’2 The information sought by Media 24 is in the possession of Eskom, a ‘public body’ mentioned in s 11(1) of PAIA. Because the information is in the possession of a public body, Media 24 is not required to give reasons why the information is sought. The position would be otherwise if the information relating to the two contracts was in Billiton’s possession. In that event Media 24 would have had to show that it requires the information for the exercise or protection of its rights.3 [3] Although Media 24 was not obliged to give its reasons for requesting the information, given that such information is in the hands of a public body, they can be readily deduced from the extent of the public interest generated by the subject matter of these two contracts. The contracts relate, after all, to the supply of electricity by Eskom and the problems experienced by it. 1 See s 32(1)(a) of the Constitution. 2 Chapter 4 sets out various grounds for refusal of access to records which are not relevant to the determination of this matter. As will become clearer later in the judgment access to information relating to the two contracts was refused on the basis of ss 36(1)(b) and 37(1)(a) of PAIA. 3 Section 32(1)(b) of the Constitution. [4] To all intents and purposes Eskom is the sole provider of electricity in this country. The two smelters, Hillside and Mozal, consume 5.68 per cent of Eskom’s total base load electricity capacity. In 2008 the electricity supply was repeatedly interrupted and the country was afflicted by regular power outages. Eskom was unable to sustain a consistent electricity supply and was obliged to resort to load shedding. Its lack of capacity was compounded by the unhealthy financial situation in which it found itself, as reflected in its financial statements for the year ended 31 March 2009. According to its financial statements for the year ended 31 March 2009, Eskom incurred an operating loss of R3,2 billion. In addition in that same year of its financial statements, Eskom reflected a further loss (on embedded derivatives) of R9,5 billion. [5] The deponent to Media 24’s founding affidavit4, averred that ‘the operating loss of R3,2 billion is an actual loss made by Eskom in the financial year concerned’ and stated further that [t]he loss of R9,5 billion on embedded derivatives represents the assessment by Eskom of the likely losses that it will incur due to exposure to embedded derivatives over future years’. Media 24 is of the view that the embedded derivatives arise entirely out of the contracts that Eskom has with Billiton. [6] In its answering affidavit Billiton, through its deponent,5 did not deny that Eskom suffered an operating loss of over R3,2 billion. Billiton accepted Eskom’s financial statements for the year ended 31 March 2009 and averred that they spoke for themselves. As to ‘embedded derivatives’, again the loss was not denied but the deponent averred that the ‘loss’ in respect of embedded derivatives did not arise solely from the contracts. 4 Jan George de Lange. 5 Johanna Smit dated 14 May 2010. The deponent then went on to disclose that the effect of the pricing formula stipulated in the contract was simply that the price paid by Billiton for electricity in terms of the contract was lower than the standard tariff. Billiton then argued that from ‘an accounting perspective’, the contracts were ‘not loss making’ and were contributing towards Eskom’s operating profits, albeit at smaller margins than might have otherwise been the case. [7] The situation in which Eskom found itself and the perceived relationship between these contracts and the problems Eskom experienced gave rise to considerable public interest, which culminated in parliamentary debates, where the appropriateness of these contracts was questioned. Other factors that bothered the public representatives and the public were, according to Billiton: (a) The gross disparities between the amounts paid by ordinary consumers for electricity; (b) The effect of these contracts on the substantial losses incurred by Eskom; (c) The effect of the contracts on the substantial tariff increases, imposed at Eskom’s request, on the ordinary South African consumers; and (d) The relationship between the present contracts and power outages suffered by the public in South Africa since 2008. [8] Against this backdrop and the heightened public interest regarding these two contracts, Media 24, seeking to inform the South African public on the issue, submitted a request for access to information in terms of PAIA to Eskom on 30 June 2009. In that request it sought the following documents─ ‘25.1 The bulk purchase agreement for the supply of electricity by Eskom to the Hillside Aluminium Smelter in Richards Bay; 25.2 The bulk purchase agreement for the supply of electricity by Eskom to the Mozal Aluminium Smelter in Maputo; 25.3 The total and final invoices containing the amounts due by Billiton to Eskom in respect of the electricity for the smelters for a period of three years.’ [9] On 29 July 2009 Eskom refused the request, advancing various grounds for its refusal. For purposes of this judgment it is not necessary to discuss these grounds. [10] Media 24 did not pursue Eskom’s refusal of this request. It averred that, notwithstanding, it considered Eskom’s refusal to be unlawful and incorrect. It took the view that it would be more ‘appropriate and prudent’ to submit a ‘narrower and more specific’ request for information. [11] This it did on 18 September 2009, and in this request Media 24 sought: ‘1. All and any documents, or relevant extracts of documents, evidencing the formula for and/or manner of the determination of the price for the supply of electricity by Eskom Holdings Limited or its affiliates to: a. BHP Billiton Plc or any of its affiliates or Hillside Aluminium Limited for the operation of the Hillside Aluminium Smelter in Richards Bay, South Africa; and b. BHP Billiton Plc or any of its affiliates or Mozambique Transmission Company SARL or Mozal SARL for the operation of the Mozal Aluminium Smelter in Maputo, Mozambique. 2. All and any documents, or relevant extracts of documents, evidencing the identities of all signatories to all written agreements between Eskom Holdings Limited or its affiliates and any other party, for the supply of electricity to: a. BHP Billiton Plc or any of its affiliates or Hillside Aluminium Limited for the operation of the Hillside Aluminium Smelter in Richards Bay, South Africa; and b. BHP Billiton Plc or any of its affiliates or Mozambique Transmission Company SARL or Mozal SARL for the operation of the Mozal Aluminium Smelter in Maputo, Mozambique. 3. All and any documents or relevant extracts of documents, evidencing the date of commencement and date of termination of all written agreements between Eskom Holdings Limited or its affiliates and any other party, for the supply of electricity to: a. BHP Billiton Plc or any of its affiliates or Hillside Aluminium Limited for the operation of the Hillside Aluminium Smelter in Richards Bay, South Africa; and b. BHP Billiton Plc or any of its affiliates or Mozambique Transmission Company SARL or Mozal SARL for the operation of the Mozal Aluminium Smelter in Maputo, Mozambique.’ [12] On 20 October 2009, Media 24 received a response from Eskom to the effect that Eskom had decided to extend the period in which to reply to its request for access to information. [13] By letter dated 13 November 2009, Eskom communicated its decision to Media 24 acceding to some of its information and refusing access in other aspects. The relevant portion of the letter reads as follows: ‘SECTION A: GRANTING ACCESS Upon consideration of your request for access to information on behalf of Media 24 (trading as Sake24), we have decided to grant access to the following record(s): 1. Identities of all signatories 1.1 The signatories to the electricity supply agreement for Hillside are Eskom Holdings Limited and Hillside Aluminium Limited. 1.2 The signatories to the electricity supply agreement for Mozal are Eskom Holdings Limited, Mozambique Transmission Company (Motraco), Electricidade de Mocambique E.P and Swaziland Electricity Company. SECTION B: REFUSAL Upon consideration of your request for access to information, on behalf of Media 24 (trading as Sake 24), we believe that access to the following records should be refused on the ground set out below: 1. The formula for and/or manner of the determination of the price for the supply of electricity 1.1 Having applied our mind, upon consideration of your request, and after been (sic) declined on consent to release the information, Eskom will not disclose: 1.1.1 any documents or relevant extracts of the documents relating to the formula and/or manner of the price determination for the supply of electricity for the operation of Hillside on the grounds set out in sections 36(1)(b) and (c) and 37(1)(a) of the Promotion of Access to Information Act No 2 of 2000 (the Act); and 1.1.2 any documents or relevant extracts of the documents relating to the formula and/or manner of the price determination for the supply of electricity for the operation of Mozal on the grounds set out in sections 36(1)(b) and (c) and 37(1)(a) of the Promotion of Access to Information Act No 2 of 2000 (the Act). 1.2 The requested documents or the relevant extracts thereof contain both general and specific commercial, financial and technical information of a highly confidential nature belonging to the BHP Billiton Group, the disclosure of which will cause significant harm to the commercial and financial interest of the BHP Billiton Group. The BHP Billiton Group believes that the disclosure of such confidential information will put the BHP Billiton Group at a disadvantage in its contractual negotiations both in South Africa and Mozambique and prejudice it in commercial competition. 1.3 Should Eskom disclose the documents or relevant extracts of the documents relating to the formula and/or manner of the price determination, Eskom will be in breach of a duty of confidence owed to either Hillside Aluminium Limited or Motraco. 2. The date of commencement and date of termination of all written agreements─ 2.1 Having applied our mind, upon consideration of your request, and after been (sic) declined consent to release the information, Eskom will not disclose: 2.1.1 any documents or extracts of documents evidencing the commencement and termination dates of written agreements for the supply of electricity for the operation of Hillside on the grounds set out in sections 36(1)(b) and (c) and 37(1)(a) of the Promotion of Access to Information Act No 2 of 2000 (the Act); and 2.1.2 any documents or extracts of documents evidencing the commencement and termination dates of written agreements for the supply of electricity for the operation of Mozal on the grounds set out in sections 36(1)(b) and (c) and 37(1)(a) of the Promotion of Access to Information Act No 2 of 2000 (the Act) 2.2 The requested documents or the relevant extracts thereof contain both general and specific commercial, financial and technical information of a highly confidential nature belonging to the BHP Billiton Group, the disclosure of which will cause significant harm to the commercial and financial interest of the BHP Billiton Group. The BHP Billiton Group believes that the disclosure of such confidential information will put the BHP Billiton Group at a disadvantage in its contractual negotiations and prejudice it in commercial competition. 2.3 Should Eskom disclose the requested information, Eskom will be in breach of a duty of confidence owed to Hillside Aluminium Limited or Motraco.’ [14] Media 24’s second request concerned the following parts of the agreement:  The pricing formulae;  The signatories to the agreements; and  The date of commencement and dates of termination of the agreements. [15] It was as a result of Eskom’s refusal that Media 24 launched the application in the high court. Eskom elected to abide the decision of the court. In this court, Billiton no longer contends that there was any lawful basis for refusing the request in respect of the signatures and the dates of commencement and termination of the contracts. Despite this, however, it refuses to provide the information concerned by relying on a point in limine to the effect that Media 24’s second request was out of time. [16] In respect of the pricing formulae, Billiton submits that the request was lawfully refused in the light of ss 36(1)(b), 36(1)(c) and 37(1)(a) of PAIA. Media 24 joins issue with Billiton in this regard. First, it asserts that none of the grounds of refusal relied on by Billiton justified the refusal of the request under PAIA. Second, if any of the grounds of refusal had been established, the information still had to be provided pursuant to the ‘mandatory disclosure in the public interest’ right in s 46 of PAIA. Third, it advances certain interpretations of s 37(1)(a) and the public interest override provision in s 46 of PAIA. In the view I take of the matter, it is not necessary to deal with the second and third contentions of Media 24. [17] The appeal, which is before this court with its leave, raises four issues. The first is the point in limine taken by Billiton. Billiton averred that Media 24’s second request was out of time and consequently it was precluded from asserting its right of access to information under PAIA. The second relates to the grounds of refusal in respect of the request in so far as it relates to the disclosure of the signatories to the two contracts and the dates of commencement and the dates of termination of the contracts. The third is the public interest issue. The fourth and final issue pertains to the constitutional challenge. [18] It follows that if the point in limine is decided in favour of Billiton, that would dispose of the matter entirely. If not, but the arguments advanced by Media 24 in respect of ss 36(1)(b), 36(1)(c) and 37(1)(a) are upheld, it is unnecessary to traverse the issues relating to the s 46 public interest override provisions and the constitutional challenge. I turn to the issues and propose to deal with them in turn. Point In Limine [19] In the appeal before us, Billiton persisted in its point in limine. It argued that the application to the high court was launched on 18 March 2010, which is more than 180 days after the refusal of the initial request on 29 July 2009. It contended that the application was out of time and that Media 24 is accordingly time barred. In its turn, Media 24 averred that at the time the application was launched the 180 days had not expired. It argued that the second request was refused in November 2009 and consequently when the application was launched in March 2010, the 180 days had not expired. [20] The dispute between the parties revolves around whether the second request and the first request is one and the same request. If it is, then it is indeed hit by the 180-day deadline. See Brűmmer v Minister for Social Development 2009 (6) SA 323 (CC) para 46. If not, Media 24 is not precluded from asserting its right of access to information in terms of PAIA. [21] The resolution of the above question is a factual issue and entails examining the contents of both requests. In regard to the contents of the two requests there is, in my view, a marked difference. In the first request Media 24 sought the documents, referred to in para 8 above: ‘25.1 The bulk purchase agreement for the supply of electricity by Eskom to the Hillside Aluminium Smelter in Richards Bay; 25.2 The bulk purchase agreement for the supply of electricity by Eskom to the Mozal Aluminium Smelter in Maputo; 25.3 The total and final invoices containing the amounts due by Billiton to Eskom in respect of the electricity for the smelters for a period of three years.’ The second request refers only to the pricing formulae, the signatories to the agreements and the dates of commencement and dates of termination of the contracts. In my view the two requests are not the same. I therefore conclude that Media 24 was not out of time and accordingly the point in limine falls to be dismissed. [22] I now turn to Billiton’s refusal of access to information based on ss 36(1)(b), 36(1)(c) and 37(1)(a) of PAIA. The first two provisions provide for the mandatory protection of commercial information of a third party. The third - s 37(1)(a) - refers to mandatory protection of certain confidential information and protection of other confidential information of a third party. While Eskom abides the decision of the court, it is not prepared to disclose information in its possession relating to the two contracts. If such a disclosure occurs it will lead to the consequences contemplated in the above sections. [23] In terms of s 36(1) the information officer of a public body (such as Eskom) is obliged to refuse a request for access to a record of the body (here, information relating to the contracts) if the record contains ‘(b) financial, commercial, scientific or technical information, other than trade secrets of a third party, the disclosure of which would be likely to cause harm to the commercial or financial interest of that party’ (emphasis added); or ‘(c) information supplied in confidence by a third party the disclosure of which would be reasonably expected’ (emphasis added) – ‘(c)(i) to place that party at a commercial disadvantage in contractual or other negotiations’; or ‘(c)(ii) to prejudice that party in commercial competition.’ [24] In s 37(1)(a), a public body is obliged to refuse a request for access to a record of the body if such disclosure would constitute an action for breach of a duty of confidence owed to a third party (emphasis added). [25] The information that Billiton seeks to protect from disclosure relates that relating to the ‘pricing formulae’. It contends that if this information is supplied to Media 24 it will fall into the hands of its competitors and consequently cause harm6 to it as contemplated in ss 36(1)(b) and (c) of PAIA. As I understand the law, a party relying on these provisions must provide a basis to substantiate its reliance. (See President of the Republic of South Africa v M & G Media Limited 2012 (2) SA 50 (CC) para 15. A party who relies on these provisions to refuse access to information has a burden of establishing that he or she or it will suffer harm as contemplated in ss 36(1)(b) and (c). The party upon whom the burden lies, in this case, Billiton, must adduce evidence that harm ‘will and might’ happen if Eskom parts with or provides access to information in its possession relating to the contracts. The burden lies with the holder of the information and not with the requester.7 [26] In Transnet this court explained the degree of proof that is required as follows: ‘[42] It follows that the difference between (b) and (c) of s 36(1) is to be measured not by degrees of probability. Both involve a result that is probable, objectively considered. The difference, in my view, is to be measured rather by degrees of expectation. In (b), that which is likely is something which is indeed expected. This necessarily includes, at least that which would reasonably be expected. By contrast, (c) speaks of that which “could reasonably be expected”. The results specified in (c) are therefore consequences (i) that could be expected as probable (ii) if reasonable grounds exist for that expectation.’8 [27] In the high court, Kgomo J noted that Billiton’s stance ‘rests’ on the premise that the pricing information requested is ordinarily 6 Transnet Ltd & another v SA Metal Machinery Co (Pty) Ltd 2006 (6) SA 285 (SCA) para 41. 7 President of the Republic of South Africa v M & G Media Limited 2012 (2) SA 50 (CC) para 15. 8 Supra note 6 para 42. unavailable to its competitors. Billiton fears that its disclosure will harm its financial and commercial interests by informing other industry participants of the production costs of the smelters. It concludes therefore that that is the reason why all aluminium producers vigorously protect information relating to their electricity costs. The same line of argument was pursued by Billiton in the appeal before us. But as pointed out by counsel for Media 24, the papers demonstrate that the premise on which this argument is based is false or at the very least, substantially overstated. The record shows, however, that the information Billiton seeks to withhold is not currently unavailable to Billiton’s competitors. There is a significant amount of information about electricity and other costs of aluminium that is readily available to those who can afford to pay for it. Media 24 put up a brochure by a company called Brook Hunt, which is dedicated to providing specific and continually updated information about costs of aluminium smelters. The costs of purchasing this information from Brook Hunt would be approximately R200 000 ─ an amount well beyond the means of an average South African consumer of electricity supplied by Eskom, and consumers undoubtedly have a public interest in the information in the hands of Eskom, which affects the payment and consumption of electricity supplied by Eskom. [28] In the circumstances, if the information of the kind described above is already in the public domain, as Media 24 has demonstrated, I do not see how giving access to it would result in the perceived harm to Billiton. The harm relied on by Billiton is not of the kind that would be ‘likely’ to occur or ‘reasonably’ be expected to occur. (See Transnet para 42.) Besides Billiton has already admitted that in terms of the pricing formula, it pays less for electricity than the standard tariff. [29] As to whether the information is protected from disclosure under s 36(1)(c), it is my view that the stance adopted by Billiton is without merit. The information requested by Media 24 is not ‘information supplied in confidence’ as the section requires. Billiton concluded an agreement with the State entity and the specific information sought constitutes a term in an agreement with the State entity. It is significant that Billiton makes no effort in its heads of argument to explain how s 36(1)(c) is applicable. [30] Turning to s 37(1)(a) of PAIA, a public body such as Eskom is obliged to refuse access ‘if the disclosure of the record would constitute an action for breach of a duty of confidence owed to a third party in terms of an agreement’. Eskom is on record as stating that there is no express provision in either of the contracts that imposes a duty of confidentiality in relation to the provisions of the contracts. It relies on its ‘general’ practice of not disclosing such information and then makes reference to a confidentiality agreement signed between Eskom, Hillside and Billiton. However Billiton appears to accept that the agreement concerned applies only to the supply of electricity to another site. Billiton relies squarely on a statement, in its affidavit, that the ‘parties’ unanimously and continuously accepted that they owe each other reciprocal duties of confidentiality, not to disclose any commercial or operationally sensitive or confidential information arising from those agreements. [31] I agree with counsel for Media 24 that this is insufficient to ‘constitute an action for breach of a duty of confidence’ as contemplated in s 37(1)(a) in the event of a disclosure of the records sought by Media 24. There is no reference in any of the agreements to a term to substantiate the ‘general practice referred to above’. In my view s 37(1)(a) is inapplicable and does not avail Billiton in its attempt to avoid disclosure of the information sought by Media 24 in terms of the provisions of PAIA. [32] In the event of the appeal being dismissed both counsel were agreed that this is not a case in which the unsuccessful party, in the event of it being Billiton, should be ordered to pay costs. In the result the appeal is dismissed. There will be no order as to costs. [33] The final issue is costs in the high court. Eskom persisted in its refusal to disclose the information sought. Its counsel advanced argument opposing the application notwithstanding its decision to abide the decision of the court. The high court, however, mulcted Billiton with the costs of suit and merely ordered Eskom to pay costs up to the filing of its answering affidavit. In this court, both parties submitted that the high court ought to have ordered the State entities to pay such costs. I agree. [34] In the result the following order is made: 1 The appeal is dismissed save for paragraphs 166.4.1 and 166.4.2 of the order of the court a quo which are set aside and replaced with the following: ‘1 The first respondent (Eskom) is ordered to pay the costs of the application including the costs of two counsel.’ 2 No order is made as to costs on appeal. ____________________ K K MTHIYANE DEPUTY PRESIDENT CLOETE JA (LEACH JA CONCURRING): [35] I have had the advantage of reading the judgment of the learned Deputy President. I regret that (save for the alteration to the costs order made by the high court) I cannot concur in the process of reasoning followed, the conclusion reached or the order made. In my view the point in limine taken by Billiton is decisive; Billiton should in any event succeed on the merits; and the appeal should be allowed. [36] Section 78(2) of PAIA provides that a requester such as Media 24 has 30 days to apply to a court for the sort of relief it seeks in these proceedings. The reported judgment of the Constitutional Court in Brümmer v Minister for Social Development 2009 (6) SA 323 (CC) reflects that the court ordered, inter alia, that: ‘(e) The words “within 30 days” in s 78(2) of the Promotion of Access to Information Act 2 of 2000 are declared to be inconsistent with ss 32 and 34 of the Constitution and s 78(2) is declared to be invalid for that reason. (f) The declaration of invalidity made in para (e) above is suspended for a period of 18 months from the date of this order [13 August 2009] to enable Parliament to enact legislation to correct the inconsistency which has resulted in the declaration of invalidity. (g) Pending the enactment of legislation by Parliament or the expiry of the period referred to in para (f) above, whichever occurs first, the words “within 30 days” in s 78(2) of the Promotion of Access to Information Act 2 of 2000 shall be replaced by the words “within 180 days from the date when the requester receives notice of the decision on internal appeal”. (h) Pending the enactment of legislation by Parliament or the expiry of the period referred to in para (f) above, whichever occurs first, a court considering an application contemplated in s 78(1) of the Promotion of Access to Information Act 2 of 2000 shall have the power to extend or condone non-compliance with the period of 180 days referred to in para (g) above.’ I have obtained a copy of the judgment filed at the Constitutional Court and it appears from p 47 thereof that para (g) of the order does not contain the words ‘on internal appeal’. It would further appear from the judgment itself that the reference to ‘s 78(1)’ in para (h) of the order should have been, or should have included, a reference to ‘s 78(2)’ and the appeal was argued by both sides on that basis. Parliament did not enact the legislation contemplated in the order within the period of suspension laid down in para (f) of the order and has not done so since. [37] The first request by Media 24 to Eskom was made on 30 June 2009 and it was refused on 29 July of the same year. The full and exact terms of the request were for: ‘a) The terms and Conditions (ie “The Bulk Purchase Agreement”) between Eskom Holdings and its affiliates, and Gencor/Alusaf for the supply of electricity by Eskom Holdings and its affiliates, to Alusaf, an affiliate of BHP Billiton plc, formerly Gencor, for the operation of the Hillside aluminium smelter in Richards Bay, South Africa. b) The Terms and Conditions (ie “The Bulk Purchase Agreement”) for the supply of electricity by Eskom Holdings to Mozal, an affiliate of BHP Billiton plc, for the operation of the Mozal aluminium smelter in Maputo, Mozambique. c) The total and final invoices containing the total and final amounts due by BHP Billiton plc or its affiliates for the supply of electricity to the said Hillside aluminium smelter and the Mozal aluminium smelter for the financial years ending March 2007, March 2008 and March 2009.’ Shorn of verbiage, Media 24 wanted access to the contracts between Eskom and Billiton for the supply of electricity and the invoices in respect thereof for three years. [38] The second request was made on 18 September 2009 and refused some two months later on 30 November. The terms of this request are set out in para 11 of the judgment of the Deputy President. What was requested was the pricing formula in the contracts for the supply of electricity by Eskom to Billiton together with the duration of, and the identity of the signatories to, the contracts. [39] The reason for the second request, preceded by some background, is given in Media 24’s founding affidavit as follows: ’On 30 June 2009, I submitted a request for access to information in terms of PAIA to Eskom. I refer to this as the “initial request”. I stress that this initial request is not the subject of the present application and I mention it simply by way of background. A copy of the initial request is attached . . . . In that request I sought the following documents: The bulk purchase agreement for the supply of electricity by Eskom to the Hillside Aluminium Smelter in Richards Bay; The bulk purchase agreement for the supply of electricity by Eskom to the Mozal Aluminium Smelter in Maputo; The total and final invoices containing the amounts due by Billiton to Eskom in respect of the electricity for the smelters for a period of three years. On 29 July 2009, Eskom refused this initial request. A copy of its letter refusing the request is attached . . . . It relied on a variety of grounds for its refusal. Notwithstanding the fact that I and the second applicant considered Eskom’s refusal to be unlawful and incorrect, we ultimately took the view that it would be more appropriate and prudent for a narrower and more specific request for information to be filed. Accordingly, we did not pursue any review in respect of Eskom’s decision in relation to the initial request.’ [40] Billiton dealt with these allegations in the answering affidavit as follows: ‘I deny that, properly analysed, the initial request is not the subject of the present application. On a perusal of the two request documents, it is clear that the only difference is in the wording used to describe the record sought by [Media 24]. That difference however is illusionary ─ what is sought in [the second request] is inseparably part of and included in [the first request]. Put differently, [the first request] sought all the terms of [the electricity supply agreements] while [the second request] seeks some, but not all of, those self same terms. In the circumstances I respectfully submit that the application is out of time and should be dismissed on that basis alone.’ [41] Media 24 in the replying affidavit in turn responded as follows: ’I deny the contents of this paragraph. [Media 24] persist[s] in their view that the first request is not the subject of the present application. As is explained in . . . the founding affidavit, [Media 24] took the view that it would be more appropriate and prudent for a narrower and more specific request for information to be filed than the first request. Accordingly the second request was drawn up and filed.’ [42] An analysis of the terms of the first and second requests shows that despite different wording, all of the information requested in terms of the second request, and more particularly that requested in paragraph 1 thereof (which, I emphasize, is the only information with which this appeal is concerned), was also requested in terms of the first request. Counsel representing Media 24 specifically and correctly conceded in oral argument that this was so; to use counsel’s own phrase, ‘the signatures, duration and pricing formula were embraced by the first request’. [43] Media 24 was only entitled to obtain the information refused if it brought court proceedings to compel the furnishing of the documents within 180 days of the refusal. The refusal was communicated on 29 July 2009. The court proceedings culminating in this appeal were commenced more than 180 days later, on 18 March 2010. There was no application for condonation as contemplated in para (h) of the order in Brümmer. That to my mind is the end of the matter. [44] I wish to emphasise that the second request cannot be categorized as a new or a different request. The documents requested were more limited than the documents requested in the first request ─ but it is common cause that they were covered by the first request. That being so, refusal of the documents sought in the first request of necessity entailed refusal of the documents sought in the second request. The greater includes the lesser. And the lesser must be taken to have been refused not only as a matter of plain logic, but also because of the provisions of s 28(1) of PAIA which provides: ‘(1) If a request for access is made to a record of a public body containing information which may or must be refused in terms of any provision of Chapter 4 of this Part, every part of the record which─ (a) does not contain; and (b) can reasonably be severed from any part that contains, any such information must, despite any other provision of this Act, be disclosed.’ [45] What Media 24 should have done, if it considered that it required only part of the documents that it had requested in terms of the first request, was to limit the application to compel ─ not make another but limited request. If the position were otherwise, it would defeat the time limit which the Constitutional Court laid down in Brümmer ─ for a requester could then make a series of requests for progressively narrower categories or portions of documents, and thereby obtain successive periods of 180 days in respect of each request. That would be manifestly absurd. [46] The fact that Eskom treated the second request as an independent request cannot redound to the disadvantage of the appellants or serve to circumvent the provisions of PAIA. Media 24’s counsel relied on the following dictum in Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province 2008 (2) SA 481 (SCA) para 17: ‘Moreover, our law permits condonation of non-compliance with peremptory requirements in cases where condonation is not incompatible with public interest and if such condonation is granted by the body in whose benefit the provision was enacted . . . .’ (The principle is discussed in more detail in SA Eagle Insurance Co Ltd v Bavuma 1985 (3) SA 42 (A) at 49G-50D.) The argument was that Eskom had by its conduct tacitly waived compliance with the 180-day period. But the time period was not enacted solely for the benefit of the public body (in the present matter, Eskom) but also for the benefit of the third party (in the present matter, Billiton) so that after the lapse of the period, the third party could legitimately assume the danger to have passed and regulate its affairs on that basis, without having thereafter again (and possibly repeatedly) to seek, in terms of chapter 5 of PAIA, to prevent disclosure of information that had already been refused by the public body. [47] The objects of the Act are spelt out in s 9, and include the following: ‘(a) to give effect to the constitutional right of access to─ (i) any information held by the State; and (ii) any information that is held by another person and that is required for the exercise or protection of any rights; (b) to give effect to that right ─ (i) subject to justifiable limitations, including, but not limited to, limitations aimed at the reasonable protection of privacy, commercial confidentiality and effective, efficient and good governance . . . .’ (Emphasis added.) One of the limitations is the time period for compelling the furnishing of the information sought by court proceedings. By amending the period of the time limit in PAIA, the Constitutional Court in Brümmer necessarily recognised the constitutionality of this very provision as amended. I repeat that in this matter there was no application for condonation. Media 24’s attitude therefore amounts to this: We have not brought ourselves within the constitutionally justifiable parameters laid down in PAIA for compelling information that has been refused; we make no excuse for that; but we want the information anyway. [48] I am perfectly conscious of the public debate that surrounds the provision of electricity by Eskom to Billiton. It is already known that Eskom supplies about six per cent of the electricity generated by it to Billiton, and at a rebated rate. It is not necessary to consider what access to the precise manner of determination of the price paid by Billiton to Eskom for electricity would contribute to that debate. A refusal to allow access to that information is not to stifle the debate, but rather to enforce a specific requirement of a statute that (I say yet again) the Constitutional Court has held passes constitutional muster (once amended) , and thereby to uphold the rule of law. [49] Although it is strictly speaking unnecessary for me to do so, I would briefly record my respectful disagreement with the majority judgment on the merits as well. No argument was addressed to this court based on s 35(1)(c) and it can therefore be ignored. [50] So far as s 36(1)(b) is concerned, the brochure produced by Brook Hunt refers to ‘details of power source and energy costs variables’ and ‘comprehensive cost leagues and graphs showing historic and forecast costs . . . to allow clients to assess change in costs’, and the spreadsheet annexed to the Deutsche Bank report entitled ‘Aluminium: Where is fair value?’ (also annexed to the replying affidavit) gives as its source of information ‘Brook Hunt, DB estimates’. That indeed is what Brook Hunt produces ─ information on which estimates can be based. That is a far cry from the precise manner in which the cost of electricity from Eskom paid by Billiton has in the past been and will in the future be calculated, which is the information Media 24 seeks. Nor do I believe that Media 24 can remotely be said to have rebutted the detailed and motivated evidence of Dr Von Szczepanski of Billiton that in the aluminium business globally, the prices paid for inter alia electricity are a closely guarded secret because otherwise the producer would be at a severe competitive disadvantage. The very fact that Brook Hunt produces estimates of such prices (and it is not the only company that does so) that it sells at a considerable cost, bears out this statement and negates any conclusion that the prices are ‘in the public domain’. [51] In any event, these being motion proceedings, Billiton’s evidence must be accepted: President of the Republic of South Africa v M & G Media Ltd 2011 (2) SA 1 (SCA) paras 13 and 14. The rule applies equally to the situation where the onus is on the respondent, in casu, Billiton, as this court has repeatedly said in at least 15 reported judgments spanning the last quarter of a century ─ starting with Ngqumba v Staatspresident; Damons NO v Staatspresident; Jooste v Staatspresident 1988 (4) SA 224 (A), and continuing, most recently, with President of the RSA v M & G Media Ltd that was decided in the context of PAIA and is therefore directly in point. The rule is dictated not by the incidence of the onus but by the nature of the proceedings the applicant, in casu, Media 24, has chosen to institute. Therefore whilst I accept, as pointed out by the Deputy President in para 26 of his judgment, that a party who relies on s 36(1)(b) of PAIA has a burden of establishing that it will suffer harm as contemplated in the section; and whilst I also accept the degree of proof required as set out by the Deputy President in para 27 of his judgment, the position is this: in the event of a conflict of fact (and save in exceptional circumstances as mentioned in President of the RSA v M & G Media Ltd, para 13, that are not present here) the question whether Billiton has discharged the onus must be decided on the facts put forward by it. It has manifestly discharged the evidential burden to allege sufficient facts that will justify refusal of the information sought by Media 24, as required by President of the RSA v M & G Media Ltd, para 14; and as Media 24 did not seek a reference to evidence or to trial on this (or any other) point, the veracity of Billiton’s evidence must be accepted. [52] So far as s 37(1)(a) is concerned, the requirements of that section were in my view satisfied by the following evidence. Eskom said: ‘Eskom owes a duty of confidentiality to its customers in relation to information concerning the contractual arrangements between them.’ Billiton said: ‘The parties unanimously and continuously accept that in respect of the [electricity supply agreements] they owe each other reciprocal duties of confidentiality, not to disclose any commercially or operationally sensitive or confidential information arising from those agreements. More particularly, Eskom has since inception of the agreements acknowledged that, particularly the pricing information is extremely sensitive and confidential and that disclosure thereof would be severely detrimental to Billiton. Eskom has at all times been aware that all aluminium producers protect, as far as possible, information as to their electricity costs. This practice applies to all aluminium producers, across the globe and has done so for decades.’ This evidence was met in each case by Media 24 with a bald denial in the replying affidavit. There was accordingly no genuine dispute of fact and I repeat that these are motion proceedings. The principle in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634I- 635C is therefore applicable and ─ there being no suggestion that the evidence of the appellants is inherently not credible, or so far-fetched or clearly untenable that the court would be justified in rejecting it merely on the papers ─ that evidence must be accepted: President of the Republic of South Africa v M & G Media Ltd, para 13. [53] For these reasons I would allow the appeal and alter the order of the court a quo to read: ‘The application is dismissed’. _______________ T D CLOETE JUDGE OF APPEAL PETSE JA (MHLANTLA JA CONCURRING): [54] I have had the advantage of reading the judgments of my colleagues, Mthiyane DP and Cloete JA. I respectfully agree with the order proposed by the learned Deputy President and his reasoning. I am, however, with equal respect, unable to agree with either the reasoning or the conclusion reached by Cloete JA. [55] Regrettably I have found it necessary to add my own observation in relation to the point in limine. The difference in the approaches of my colleagues seems to me to lie in their interpretation of the content of the first and second requests by Media 24 to Eskom made on 30 June 2009 and 18 September 2009 respectively. [56] My colleague Cloete JA is of the view that since the information required in terms of the second request was embraced by the first request it would defeat the time limit which the Constitutional Court laid down in Brummer ‘for a requester to then make a series of requests for progressively narrower categories or portions of documents, and thereby obtain successive periods of 180 days in respect of each request’. [57] To my mind the question whether repeated requests for information in terms of PAIA would constitute abuse or amount to substantially the same request and thus calculated to circumvent the provisions of s 78(2) of PAIA is an issue which can only properly be determined on a case-by- case basis in the context of the facts of each case. [58] Although the information covered by the second request would have been encapsulated in the first request had Eskom not declined the latter one should, however, not lose sight of the fact that the former required limited information and was not as extensive as the first request. [59] Moreover Eskom itself regarded and understood the second request to be distinct from the first one. It requested more time to deal with it and consulted Billiton in regard thereto. Thus Billiton could not have been under any illusion that Media 24 was still pursuing the matter albeit to a limited extent only. Accordingly there would have been no basis, as my colleague Cloete JA suggests, for Billiton (as the third party) to legitimately assume the danger to have passed and regulate its affairs on that assumption. [60] The proposition by my colleague Cloete JA that Media 24 could and should have instituted proceedings to compel Eskom – once its first request had been declined – but limit such application to only part of the documents it had requested in terms of the first request, with respect, pays insufficient regard to one of the cardinal objects of PAIA which, in terms of s 9(d) thereof, is to establish voluntary and mandatory mechanisms or procedures to give effect to that right [right of access to a record of a public or private body] in a manner which enables persons to obtain access to records of public and private bodies as swiftly, inexpensively and effortlessly as reasonably possible. (Emphasis added.) [61] I therefore conclude that, on the facts of this case, Media 24 should not be penalised for adopting a pragmatic approach which, to my mind, accords with the objects of PAIA when it made the second (but limited) request rather than bringing an application in court to compel which would not have been a swift, inexpensive and effortless manner of gaining access to the information required. Hence my concurrence in the judgment and order of the learned Deputy President. ______________________ X M PETSE JUDGE OF APPEAL LEACH JA (CLOETE JA CONCURRING): [62] Having enjoyed the benefit of reading the judgments prepared by my colleagues in this matter I find myself unable to agree with the reasoning and conclusion of Mthiyane DP and Petse JA in regard to the objection in limine. And although I agree with Cloete JA on this issue, I am constrained to set out reasons of my own for reaching a contrary conclusion. [63] It is accepted by all that the information to which these proceedings relate, namely, certain of the information contained in the request of 18 September 2009, had been amongst that sought by way of the original request of 30 June 2009. The refusal on 29 July 2009 of the original request thus resulted in the information sought in the second request, and particularly that to which these proceedings relate, having been refused at that stage. Consequently, while my colleague Petse JA is perfectly correct in his finding that the second request related to information ‘encapsulated in’ and was not ‘as extensive’ as the first request, this leads me to a contrary conclusion on the point in limine. [64] The point in limine can only be dismissed if the limited information sought by way of the second request had not already been sought and refused. As I have said, everyone accepts that the information in the second request was contained in the first request and I can see no basis for finding that this information was not refused along with the other information sought in the first request. The more limited nature of the second request cannot alter that simple fact. Accordingly the expiry period for the bringing of an application under s 78(2) of PAIA started running on 29 July 2009, and was still running when, some six weeks later, the second request was lodged seeking certain of the information originally refused. [65] Furthermore, the fact that Eskom requested more time and consulted with Billiton after the second request had been lodged does not mean that Billiton was not entitled to assume that the period under s 78(2) which commenced to run on 29 July 2009 would lapse after 180 days. Billiton knew that the information sought in the second request had earlier been refused. The fact that certain of that information had again been requested does not mean that it had to treat the matter as if the period for an application under s 78(2) had not commenced to run in respect of such information. It must be remembered that Billiton’s interest in the information asked for differed from that of Eskom. Billiton feared that disclosure would harm its financial and commercial interests in a competitive industry and it was entitled to have those interests protected to the extent that PAIA required persons seeking information to do so within the time period that Act prescribed. Eskom’s attitude to the second request was irrelevant to that issue. [66] Furthermore I do not see how the objectives of s 9(d) of PAIA should lead to the mechanisms and procedures prescribed by that Act being ignored. The question is not whether there had been an abuse of the procedures laid down by the Act calculated to circumvent s 78(2) but whether there had been compliance with the Act. Not only did Media 24 not comply but, in addition, by repeating part of its request for information already refused rather than proceeding to seek such information by way of an application under s 78(2), it disregarded the remedy PAIA provided. I fail to see how this can be regarded as a ‘pragmatic approach’ in line with s 9(d) of PAIA to seek that information swiftly, inexpensively and with less effort. The opposite seems to me to be the case. [67] For these reasons and those set out by Cloete JA in his judgment, I would uphold the objection in limine and, for that reason alone, uphold the appeal. Strictly speaking that conclusion renders it unnecessary to venture an opinion on the remaining issues raised in the appeal but, for completeness, I should record that I find myself in respectful agreement with the reasoning of Cloete JA set out in paras 50 to 52 of his judgment. [68] For the above reasons I, too, would allow the appeal and alter the order of the court a quo in the manner suggested by Cloete JA. _____________________ L E LEACH JUDGE OF APPEAL APPEARANCES For Appellants: FA Snyckers SC (with him KS McLean) Instructed by: Mervyn Taback Incorporated, Johannesburg bbers, Bloemfontein For Respondents: GJ Marcus SC (with him S Budlender) Instructed by: Willem de Klerk Attorneys, Johannesburg Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 15 March 2013 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. BHP BILLITON PLC INCORPORATED v DE LANGE (189/2012) [2013] ZASCA 11 (15 MARCH 2013) Today (15 March 2013) the Supreme Court of Appeal by majority dismissed an appeal by BHP Billiton PLC Incorporated and Hillside Aluminium (Pty) Ltd, both of which conduct business as smelters in Richards Bay and Maputo respectively. The appeal was against an order of the South Gauteng High Court (Kgomo J) in which they and Eskom were ordered to furnish Media 24 with certain information relating to two contracts in respect of the supply of electricity. Under these two contracts these companies consumed 5.68 per cent of Eskom’s total base load electricity capacity and were entitled to receive electricity from the 1990’s until March 2026 and Hillside until 2028, at a lower rate than the standard tariff. According to Media 24, Eskom incurred an operating loss of R3,2 billion in the 2008 financial year. And a further loss of R9,5 billion on embedded derivatives, which represented the assessment by Eskom of the losses that it was likely to incur due to exposure to embedded derivatives over future years. Media 24 is of the view that the embedded derivatives arise entirely out of the contracts that Eskom has with Billiton. Eskom initially refused to furnish the requested information, but later agreed to furnish information concerning the identities of the signatories to the agreements and the dates of commencement and termination of the agreements. In so far as the pricing formulae are concerned, it elected to abide the decision of the court. Media 24 initially requested the information on 30 June 2009. On 20 July Eskom refused the request advancing various grounds for its refusal. Media 24 did not persist in its request. On 18 September 2009, Media 24 submitted another request, couched in much narrower terms than the earlier one. On this occasion Eskom agreed to furnish information concerning the identities of the signatories and dates of the commencement and termination of the contracts, but elected to abide the decision of the court in respect of the remainder of the information. Billiton and Hillside opposed the application on two main grounds. The first was that the application to compel Eskom to furnish the requested information in terms of s 78(2) of the Promotion of Access to Information Act was out of time and Media 24’s application should, on that ground alone, be dismissed. The two companies contended that the second request was the self-same request that had been made on 30 June 2009. The minority of the SCA agreed with this stance. The majority of the court held that the two requests were separate and distinct and that Media 24 was not out of time. The majority held that the point in limine (to the effect that Media 24’s application to compel compliance with s 78(2) was out of time) fell to be dismissed. The second point relied on by Billiton and Hillside, namely that they would be prejudiced if information concerning the two contracts, especially the pricing formulae, was disclosed, was also rejected by the majority of the court. The majority of the court held that the decision of the high court to dismiss the point in limine and to compel disclosure of information in terms of the Promotion of Access to Information Act 2 of 2000 was correct. Accordingly, the SCA, by majority, dismissed the appeal but ordered Eskom to pay the costs of the application in the high court. The SCA made no order as to costs on appeal.

3887

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 764/2021 In the matter between: SAMSUNG ELECTRONICS SA (PTY) LTD APPELLANT and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE RESPONDENT Neutral citation: Samsung Electronics SA (Pty) Ltd v The Commissioner for the South African Revenue Service (Case no 764/2021) [2022] ZASCA 126 (28 September 2022) Coram: PONNAN, PLASKET and HUGHES JJA and MOLEFE and SIWENDU AJJA Heard: 30 August 2022 Delivered: 28 September 2022. Summary: Customs and Excise Act 91 of 1964 – classification of smartphone as a ‘telephone for cellular networks’ for customs duty. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mngqibisa-Thusi J, sitting as court of first instance): The appeal is dismissed with costs, including those of two counsel. JUDGMENT Ponnan JA (Plasket and Hughes JJA and Molefe and Siwendu AJJA concurring): [1] The question that arises for determination in this appeal is whether the Samsung Galaxy S7, commonly referred to as a smartphone (the product), is a ‘telephone for cellular networks’ or ‘other apparatus for the transmission or reception of voice, images or other data’. [2] The amount of customs duty payable upon importation depends on the tariff heading (TH) or sub-heading in Part 1 of Schedule 1 to the Customs and Excise Act 91 of 1964 (the Act), under which the product is to be classified. The respondent, the Commissioner for the South African Revenue Service (the Commissioner), is empowered by s 47(9)(a)(i)(aa) to determine tariff headings or subheadings under which imported goods shall be classified. On 27 September 2017, the Commissioner notified the importer of the product, Samsung Electronics SA (Pty) Ltd (the appellant), of a tariff determination made the previous day that the product, which had been imported and entered on a bill of entry dated 4 October 2016, was to be classified under TH 8517.62.90 as ‘machines for the reception, conversion and transmission or regeneration of voice, images or other data’ (the first determination). The effect of the first determination meant that the product attracted no ad valorem duty upon importation. [3] Section 47(9)(d)(i)(bb) empowers the Commissioner to amend or withdraw any determination, if it was made in error, and make a new determination. On 20 November 2017, the Commissioner notified the appellant that he was considering withdrawing the first determination with retrospective effect. On 11 April 2018, the Commissioner did indeed withdraw the first determination as having been made in error, and determined that the product would be classified under tariff heading 8517.12.10 as ‘telephones for cellular networks or for other wireless networks, designed for use when carried in the hand or on the person’ (the second determination). [4] The appellant unsuccessfully appealed against the second determination to the Gauteng Division of the High Court, Pretoria (the high court) under s 47(9)(e) of the Act. The matter was heard by Mngqibisa-Thusi J on 11 and 12 November 2019. Sixteen months were to elapse before the learned judge delivered judgment on 18 March 2021, in which she upheld the Commissioner’s second determination. The further appeal to this Court is with her leave. [5] The appeal is concerned with the proper interpretation of the competing tariff headings in Part 1 of Schedule 1 of the Act. The essence of the dispute between the parties is whether, prior to 1 April 2018, the product was correctly classifiable under TH8517.62.90 (as contended by the appellant) or TH8517.12.10 (as contended by the Commissioner). [6] Section 47(8)(a) of the Act provides, inter alia, that the interpretation of any tariff heading or tariff subheading in Part 1 of Schedule 1, the general rules for the interpretation of Schedule 1 and every section note and chapter note in Part 1 of Schedule 1, shall be subject to the International Convention on the Harmonized Commodity Description and Coding System (the Harmonised System) done in Brussels on 14 June 1983 and the explanatory notes to the Harmonised System issued by the Customs Co-Operation Council, Brussels (now known as the World Customs Organisation (WCO)) from time to time. The Harmonised System is a multipurpose international product nomenclature developed by the WCO. It serves as the basis for customs tariffs and for the compilation of international trade statistics of over two hundred countries (of which 158 countries are contracting parties to the Convention) and economies. It comprises more than 5000 commodity groups; each identified by a six-digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. The maintenance of the Harmonised System is a WCO priority and includes measures to secure uniform interpretation of the Harmonised System and its periodic updating in the light of developments in technology and changes in trade patterns.1 [7] As observed in Commissioner for the South African Revenue Service v Toneleria Nacional RSA (Pty) Ltd: See World Customs Organization What is the Harmonized System available from http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx. See also World Customs Organization The new 2022 Edition of the Harmonized System has been accepted available from http://www.wcoomd.org/en/media/newsroom/2020/january/the-new-2022-edition-of-the-harmonized-system-has- been-accepted.aspx ‘The Harmonised System . . . is constructed on the basis that from the outset it includes all products in the course of trade, whether in existence or still to be invented and manufactured. In other words, there are no gaps that need filling or updating. Every product is capable of being classified using the process of classification described above. If a product is thought to sit uncomfortably within the applicable tariff heading or subheading, that may justify an approach to the Harmonised System Committee of the World Customs Organisation for a revision of the relevant tariff heading or sub- heading, but that is not a matter for a national court. The Harmonised System is the product of international agreements between states, and like any international agreement it should as far as possible be interpreted uniformly by national courts. It should not be subjected to an approach to interpretation the proper purview of which is purely domestic legislation.’2 [8] The General Rules for Interpretation that are referred to in s 47(8)(a) of the Act: (i) are applied in a hierarchical fashion – rule 1 takes precedence over rule 2, rule 2 over rule 3 etc.; (ii) establish classification principles which, unless the text of headings, sub-headings or section or chapter notes otherwise require, are applicable throughout the Harmonised System nomenclature; and (iii) provide a step-by-step basis for the classification of goods within the Harmonised System so that, in every case, a product must first be classified in its appropriate 4-digit heading, then to its appropriate 1-dash sub-division within that heading and only thereafter to its appropriate 2-dash sub-heading under the 1-dash sub-division. This principle applies without exception throughout the Harmonised System. [9] Interpretative Rules 1, 3 and 6, which are relevant for present purposes, provide: Rule 1 2 Commissioner for the South African Revenue Service v Toneleria Nacional RSA (Pty) Ltd [2021] ZASCA 65; [2021] 3 All SA 299 (SCA); 2021 (5) SA 68 (SCA) para 25. ‘The titles of Section, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:’ Rule 3 ‘When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.’ Rule 6 ‘For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.’ [10] As it was put in Distell Ltd v Commissioner of South African Revenue Service: ‘In Secretary for Customs and Excise v Thomas Barlow and Sons Ltd Trollip JA referred to Rule 1 of the Interpretative Rules which states that the titles of sections, chapters and sub-chapters are provided for ease of reference only and that, for legal purposes, classification as between headings shall be determined according to the terms of the headings and any relative section or chapter notes and (unless such headings or notes otherwise indicate) according to paragraphs 2 to 5 of the Interpretative Rules. He pointed out that this rendered the relevant headings and section and chapter notes not only the first but also the paramount consideration in determining which classification should apply in any particular case. The Explanatory Notes, he said, merely explain or perhaps supplement the headings and section and chapter notes and do not override or contradict them. In International Business Machines SA (Pty) Ltd v Commissioner for Customs and Excise, Nicholas AJA identified three stages in the tariff classification process: “first, interpretation – the ascertainment of the meaning of the words used in the headings (and relative section and chapter notes) which may be relevant to the classification of the goods concerned; second, consideration of the nature and characteristics of those goods; and third, the selection of the heading which is most appropriate to such goods.” There is no reason to regard the order of the first two stages as immutable.’3 [11] The competing tariff sub-headings in this case are: ‘8517.12 - Telephones for cellular networks or for other wireless networks’ ‘8517.62 - Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.’ The full heading of TH 8517 is: ‘Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network) (excluding transmission or reception apparatus of heading 84.43, 85.25, 85.27 or 85.28).’ This is broken down at the fifth digit as follows: ‘8517.1 – Telephone sets, including telephones for cellular or for other wireless networks’ ‘8517.6 – Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local area or wide area network)’. 3 Distell Ltd and Another v Commissioner of South African Revenue Service [2010] ZASCA 103; [2011] 1 All SA 225 (SCA) para 22. 8517.62, which is a subheading of 8517.6, refers to ‘Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus’. The selection in TH 8517.62.90 of ‘other’ is the identification of the product as an unspecified machine under this heading. [12] It was said in Commissioner, SARS v Komatsu Southern Africa (Pty) Ltd (Komatsu): ‘It is clear from the authorities that the decisive criterion for the customs classification of goods is the objective characteristics and properties of the goods as determined at the time of their presentation for customs clearance. This is an internationally recognised principle of tariff classification. The subjective intention of the designer or what the importer does with the goods after importation are, generally, irrelevant considerations. But they need not be because they may in a given situation be relevant in determining the nature, characteristics and properties of the goods.’4 [13] In Commissioner for the South African Revenue Service v The Baking Tin (Pty) Ltd, this Court had occasion to clarify the last sentence of the quoted excerpt from Komatsu, which had been invoked in support of the argument that ‘the intention of the designer, or the use to which the goods are put, may affect what appear to be the objective characteristics of the goods and thus change their classification.’ It did so in these terms: ‘It seems to me, however, that the court was suggesting no more than that light may be thrown on the characteristics of the article by subjective factors. The principle remains the same: it is not the intention with which they are made, nor the use to which they may be put, that characterise the containers in question. It is their objective characteristics. Thus the mere fact that the containers 4 Commissioner, South African Revenue Service v Komatsu Southern Africa (Pty) Ltd [2006] ZASCA 156; [2007] 4 All SA 1094 (SCA); 2007 (2) SA 157 (SCA) para 8. are regarded as disposable by The Baking Tin, and perhaps other suppliers and manufacturers in the chain, does not necessarily make them disposable by nature.’5 [14] Notwithstanding an unnecessarily voluminous record, the appellant’s case rests on the following two essential propositions: first, although the product performs the function of a cellular telephone, it is a multifunctional machine; and, second (and this is linked to the first), by reason of its multifunctional nature, the product’s principal function is not that of a telephone for cellular networks. In the alternative, if the principal function cannot be identified, the invocation of general rule 3(c) requires a tariff heading with a later numerical order. [15] The appellant accordingly contends that it is necessary to identify a ‘principal function’ and that in interpreting ‘telephones for cellular network’ the correct starting point is to identify a meaning for a ‘telephone’ from dictionaries and to then marry that to the concept of ‘cellular network’. However, the context requires an interpretation to give meaning to the expression ‘telephones for cellular networks’ as one composite concept rather than interpreting the word ‘telephone’ in accordance with its historical meaning, whilst simply ignoring the expression ‘cellular networks’. In this regard, it is important to recognise that whilst recourse to authoritative dictionaries is a permissible and often helpful method available to courts to ascertain the ordinary meaning of words, judicial interpretation cannot be undertaken, in the words of Schreiner JA, by ‘excessive peering at the language to be interpreted without sufficient attention to the contextual scene’. 6 5 Commissioner for the South African Revenue Service v The Baking Tin (Pty) Ltd [2007] ZASCA 100; [2007] SCA 100 (RSA); [2007] 4 All SA 1352 (SCA); 2007 (6) SA 545 (SCA) para 13. 6 Jaga v Dönges N O and Another; Bhana v Dönges N O and Another 1950 (4) SA 653 (A); [1950] 4 All SA 414 (A) at 423; Fundstrust (Pty) Ltd (In Liquidation) v Van Deventer 1997 (1) SA 710 (A) at 726H- 727B. [16] The appellant ignores to a large extent the wording of TH 8517.60 and the explanatory notes to the tariff heading or that most of the ‘other functions’ of the product are completely unrelated to TH 8517.60. Thus, in attempting to identify a ‘principal function’ the appellant overlooks the objective characteristics of the product, which identify that the product’s principal function is a telephone for cellular networks. The appellant’s analysis, commences with the use of dictionaries, some dating to the 1980s to explain the meaning of a ‘telephone’. It focuses on the transmission and reception of sound or voice/speech as the defining feature of a telephone. Whilst this may well have been true at the time of the grant of a patent to Alexander Graham Bell in the late 19th century, what a telephone is and what a telephone does has changed with the evolution of technology. The definition of a ‘telephone’ advanced by the appellant relates to the early technology referred to as ‘plain old telephone service (POTS)’. Telephony has since evolved to digital telephony – the communication of digital data, where voice is digitised and transmitted as data, which gave rise to VoIP (Voice over Internet Protocol) technology. [17] The Oxford English Reference Dictionary (2ed) (1996) defines a ‘cellphone’ as ‘a small portable radio telephone having access to a radio system’. It contains no entry for mobile phone or smartphone. The Concise Oxford English Dictionary (11ed) (2004) defines both a ‘cellphone’ and ‘cellular phone’ as a ‘mobile phone’. The same definition is to be found in the 12th edition (2006). A ‘mobile phone’, in turn, is defined as ‘a portable telephone using a cellular radio system’.7 And, a 7 Similar meanings are ascribed to the word ‘cellphone’ in the the Merriam-Webster and Collins dictionaries. The former defines it as ‘a portable usually cordless telephone for use in a cellular system’ (https://www.merriam- webster.com/dictionary/cell%20phone) and the latter as ‘a phone that you can carry with you and use to make or ‘smartphone’ is described as a ‘mobile phone which incorporates a palmtop computer or PDA (personal digital assistant)’. [18] The description of the product as a smartphone is not the use of a colloquialism. The concept of a smartphone as a word in the English language has been established over a period of time relative to a rapidly evolving technology. It has come to be defined as: ‘a cell phone that includes additional software functions (such as email or an Internet browser)’;8 ‘a mobile phone that can be used as a small computer and that connects to the internet’;9 and ‘a mobile telephone with computer features that may enable it to interact with computerized systems, send e-mails, and access the web’.10 The 12th edition of the Concise Oxford English Dictionary describes it as - ‘a mobile phone that is able to perform many of the functions of a computer, typically having a relatively large screen and an operating system capable of running general-purpose applications’. [19] A smartphone has thus come to be understood as a modern type of mobile phone or cellular phone. Contrary to the thesis advanced by the appellant, namely that a smartphone is an apparatus that has evolved to the point of no longer being a cellular phone, but rather some other apparatus that operates over a cellular network, the language of the appellant and the appellant’s literature produced in evidence indicate that a smartphone (including the product) is simply an evolved and more advanced cellphone than earlier cellphones. receive calls wherever you are’ https://www.collinsdictionary.com/dictionary/english/cellphone. 8 Merriam-Webster available from https://www.merriam-webster.com/dictionary/smartphone. 9 Cambridge Dictionary available from https://dictionary.cambridge.org/dictionary/english/smartphone. 10 Collins Dictionary available from https://www.collinsdictionary.com/dictionary/english/smartphone. [20] The explanatory notes of the tariff heading divide telephones into line telephone sets and telephones for cellular networks or for other wireless networks. The description of line telephone sets primarily accords with original telephony, the conversion of sound to signal, which is transmitted and the receipt of the transmission and conversion of the signal back to voice. However, the development of technology, which incorporates the capacity for reception and transmission of data such as the incoming caller’s number, date, time and duration of call or that many of these devices utilise a microprocessor or digital integrated circuits for the operation, is also recognised. The correct approach (which is far more appropriate), is to give meaning to the expression ‘telephones for cellular networks’ as a single concept (which it is), rather than a combination of two concepts, namely that of a ‘telephone’ (with the meaning ascribed to it in an earlier era) conjoined with a ‘cellular network’. [21] The explanatory notes describe the second group as telephones for cellular networks and other wireless networks. They have as their key feature the reception and emission of radio waves, which are received and re-transmitted by base stations or satellites and includes cellular phones or mobile phones. The transmission is not limited to voice or voice conversions. From the inception of the early cellular phone operating on the GSM (Global System for Mobile Communication) network, a telephone for cellular network was capable of transmitting not only voice but also data and images. The appellant’s expert acknowledges that text messages and pictures commonly known as SMS (Short Message Service) and MMS (Multimedia Messaging Service) can be sent and received by means of the GSM network. [22] The evidence shows that cell phones were originally designed for simple voice communications. With the convergence of technology, most modern cell phones have additional capabilities to record spoken messages, send and receive text messages, take and display photographs or video, play music, surf the Internet, perform road navigation or immerse the user in virtual reality. The trend has thus been toward mobile phones that integrate mobile communication and computing needs. The appellant accordingly accepts that from the inception of cellular telephony the functionality of a cellular telephone includes not only the transmission and reception of voice but also the transmission and reception of images and other data. [23] It follows in this context that the function of the telephone for a cellular network is not dictated only by ‘voice’. When reading the second part of TH 8517 and the reference to ‘other apparatus’ for the transmission and reception of voice, images or other data the context becomes apparent. This is that the first part refers to telephones for cellular networks that transmit and receive voice, images and other data, whilst what is contemplated in the second part of the heading is other apparatus, which like cellular telephones, transmit and receive voice, images and other data but are not telephones. The appellant appears to implicitly assume that the transmission and reception of images and other data is not a cellular telephony function and the fact that the product is capable of transmitting and receiving images and other data over the Internet generally demonstrates a function inconsistent with it being a telephone for a cellular network. [24] The division of the tariff heading into two principal parts separated by the semi-colon followed by the words ‘other apparatus’ clearly indicates a mutually exclusive division. Telephones fall into the first part (8517.1) and what is covered by the second part (8517.6) are ‘other apparatus’ that is to say machines which are other than telephones. The significance of this is that if something is a telephone it cannot also be something ‘other than a telephone’. By reason of the context and wording, indicating that the divisions are mutually exclusive, a machine or apparatus cannot be prima facie classifiable under both 8517.1 and 8517.6. If it is prima facie classifiable under 8517.1, it cannot also be classifiable under 8517.6. This has an important consequence for the possibility of applying general rule 3. This, because general rule 3 can only be invoked where goods are prima facie classifiable under two or more headings. General rule 3 provides for cases in which there is an overlap – a product might arguably fall within the description of two different tariff headings. If the product is prima facie classifiable under 8517.1, there is no scope for an overlap because the context and express wording of TH 8517 does not allow for any overlap. [25] The appellant seeks a classification under 8517.62.90 that the product is not a telephone for a cellular network but rather some sort of undefined other Internet browsing apparatus that is not a telephone. However, the objective characteristics of the product demonstrate that it is a telephone facility network: (i) the design is such that it is small enough to be carried in the hand or on the person with a large high resolution touch screen of approximately 5 inches (or 13 centimetres); (ii) it has a speaker at one end which is audible when placed against the operator’s ear and at the other end has a microphone to receive speech or voice from the operator’s mouth; (iii) it has slots for the insertion of a sim card to operate as a telephone and communicate on a cellular network; and (iv) it has electronic keypads and software which enable the user to dial a telephone number to initiate a telephone call and to terminate a telephone call. [26] The fact that the product can connect to the Internet and browse the Internet like a computer, either over a cellular network or WLAN (Wireless Local Area Network) does not make it more like a traditional laptop or desktop computer with which it shares Internet browsing functionality. Its size, construction and sim card capacity dictate that it is still a telephone. It is merely an advanced telephone following the natural progression of rapid technological advancement and although shares many features of communication technology common to computers, it clearly identifies as a telephone and not as some other apparatus. [27] Accordingly, the most appropriate heading at the time of the determination was TH8517.12.10. It follows that the conclusion reached by the high court that the respondent’s second determination is correct, is inescapable. Consequently, the appeal must fail. [28] In the result, the appeal is dismissed with costs, including those of two counsel. _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES For appellant: C E Puckrin SC (with J P Vorster SC) Instructed by: Cliffe Dekker Hofmeyr Inc, Sandton Lovius Block Inc, Bloemfontein For respondent: J Peter SC (with W Mothibe) Instructed by: State Attorney, Johannesburg 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: 28 SEPTEMBER 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Samsung Electronics SA (Pty) Ltd v The Commissioner for the South African Revenue Service (Case no 764/2021) [2022] ZASCA 126 (28 September 2022) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high court). The issue before the SCA was whether the Samsung Galaxy S7, commonly referred to as a smartphone (the product), is a ‘telephone for cellular networks’ or ‘other apparatus for the transmission or reception of voice, images or other data’. The amount of customs duty payable upon importation depends on the tariff heading (TH) or sub- heading in Part 1 of Schedule 1 to the Customs and Excise Act 91 of 1964 (the Act), under which the product is to be classified. The respondent, the Commissioner for the South African Revenue Service (the Commissioner), is empowered by s 47(9)(a)(i)(aa) to determine tariff headings or subheadings under which imported goods shall be classified. On 27 September 2017, the Commissioner notified the importer of the product, Samsung Electronics SA (Pty) Ltd (the appellant), of a tariff determination made the previous day that the product, which had been imported and entered on a bill of entry dated 4 October 2016, was to be classified under TH 8517.62.90 as ‘machines for the reception, conversion and transmission or regeneration of voice, images or other data’ (the first determination). The effect of the first determination meant that the product attracted no ad valorem duty upon importation. Section 47(9)(d)(i)(bb) empowers the Commissioner to amend or withdraw any determination, if it was made in error, and make a new determination. On 11 April 2018, the Commissioner withdrew the first determination as having been made in error, and determined that the product would be classified under tariff heading 8517.12.10 as ‘telephones for cellular networks or for other wireless networks, designed for use when carried in the hand or on the person’ (the second determination). The appeal is concerned with the proper interpretation of the competing tariff headings in Part 1 of Schedule 1 of the Act. The essence of the dispute between the parties was whether, prior to 1 April 2018, the product was correctly classifiable under TH8517.62.90 (as contended by the appellant) or TH8517.12.10 (as contended by the Commissioner). The competing tariff sub-headings in this case were: ‘8517.12 - Telephones for cellular networks or for other wireless networks’ ‘8517.62 - Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.’ The appellant sought a classification under 8517.62.90 that its smartphone product is not a telephone for a cellular network but rather some sort of undefined other Internet browsing apparatus that is not a telephone. The SCA held that the objective characteristics of the product demonstrate that it is a telephone facility network: (i) the design is such that it is small enough to be carried in the hand or on the person with a large high resolution touch screen approximately of 5 inches (approximately 13 centimetres); (ii) it has a speaker at one end which is audible when placed against the operator’s ear and at the other end has a microphone to receive speech or voice from the operator’s mouth; (iii) it has slots for the insertion of a sim card to operate as a telephone and communicate on a cellular network; and (iv) it has electronic keypads and software which enable the user to dial a telephone number to initiate a telephone call and to terminate a telephone call. The fact that the product can connect to the Internet and browse the Internet like a computer, either over a cellular network or WLAN (Wireless Local Area Network) does not make it more like a traditional laptop or desktop computer with which it shares Internet browsing functionality. Its size, construction and sim card capacity dictate that it is still a telephone. It is merely an advanced telephone following the natural progression of rapid technological advancement and although shares many features of communication technology common to computers, it clearly identifies as a telephone and not as some other apparatus. As a result, the court held that the most appropriate heading at the time of the determination was TH8517.12.10. ~~~~ends~~~~

4095

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 580/2022 In the matter between: M M APPELLANT (obo E L M) and MEMBER OF THE EXECUTIVE COUNCIL FOR HEALTH: EASTERN CAPE RESPONDENT Neutral citation: M M v MEC for Health; Eastern Cape (580/2022) [2023] ZASCA 130 (12 October 2023) Coram: SALDULKER, MOCUMIE, HUGHES and GOOSEN JJA and MALI AJA Heard: 16 August 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down are deemed to be delivered on 12 October 2023. Summary: Delict – medical negligence – damages – claim for damages arising out of alleged medical negligence of hospital staff- whether the hospital should be held liable for the damages suffered by the minor child-negligence and causation not established. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Bisho (Van Zyl DJP, Schoeman J and Noncembu AJ, sitting as court of appeal). 1. The appeal is dismissed with no order as to costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Saldulker JA (Mocumie, Hughes, and Goosen JJA and Mali AJA concurring): [1] The appellant, Mrs MM, instituted an action against the respondent, the Member of the Executive Council for Health (MEC) of the Eastern Cape Government in the Eastern Cape Division of the High Court, Bhisho (high court), for damages arising from a brain injury sustained by her minor child (referred to herein as ELM), after his birth at Frere hospital, East London. The appellant’s case was based on the breach of a duty of care and negligence towards her and ELM by the hospital staff. The matter came before Tokota J, who found in favour of the appellant, and ordered that the respondent pay such damages as may be proved by the appellant. The respondent was granted leave to appeal to the full bench of the division on a limited issue, and on petition to this court, it was granted leave against the whole judgment. The full court (Van Zyl DJP, Schoeman J and Noncembu AJ), upheld the appeal of the MEC, set aside the high court’s order, and replaced it with an order dismissing the appellant’s claim with costs. This appeal is with the special leave of this court. [2] The salient facts are as follows. On 18 October 2010, the appellant was admitted to Frere hospital and gave birth at 18h25 to ELM by way of an emergency caesarean section. [3] After his delivery, ELM was transferred to the nursery ward with mild respiratory distress, and on the following day, he was placed with the appellant in the maternity ward. A day later, on 20 October 2010, it was observed that ELM may have jaundice, and this diagnosis was confirmed by a laboratory report during the morning of the same day, which showed that the total serum bilirubin level (TSB) of ELM was 506 micromol/L. This was registered at 07h41, approximately 37 hours post ELM’s delivery. ELM was then transferred to the nursery ward where Dr Harper, a paediatrician, was consulted, and supportive treatment commenced with ELM receiving intravenous haemoglobin and intensive phototherapy. Further tests were performed on 20 October 2010, and during the morning of the 21st. These results indicated no significant drop in ELM’s TSB levels, in that the TSB level reduced to 498 micromol/L, and on the morning of 21 October 2010, at 08h24 the TSB level was 493 micromol/L. An entry in the hospital records on 21 October was to the following effect: ‘No significant drop in total serum bilirubin overnight despite triple phototherapy and polygam. Blood for exchange transfusion ordered from PE. At this stage neonatal is neurologically sound with no signs of kernicterus and no seizure’. [4] Blood was ordered from the National Blood Services (the blood bank) for a blood exchange transfusion to be performed. Before the arrival of the blood, and approximately at midday on 21 October 2010, the appellant requested that ELM be transferred from Frere Hospital to Life Beacon Bay Hospital, a private facility in East London. The transfer was preceded by the drafting of a referral letter to the attending paediatrician at the private hospital, Dr Paul, the relevant paragraph reading as follows: ‘Baby requires exchange transfusion blood ordered from PE (560mls whole blood) as none available in East London. Estimated time of arrival at blood bank is 17h00.’ ELM was admitted to Life Beacon Hospital at 14h50. At 20h00 the blood transfusion was commenced. Throughout the time that ELM was at Frere Hospital, and until the blood transfusion, he did not show any symptoms of neurological complications. [5] It is not disputed that ELM was diagnosed with dystonic cerebral palsy and profound developmental delay complicated by epilepsy, intellectual disability, and a hearing defect. The cause of the cerebral palsy was hyperbilirubinemia, which was the result of very high levels of TSB in ELM’’s blood during the neonatal period. The hyperbilirubinemia occurred as a result of the incompatibility between the appellant’s blood group (O+) and that of ELM (B+) which caused haemolysis - the destruction of ELM’s red blood cells resulting in an increase in his TSB levels. The hyperbilirubinemia in turn caused bilirubin encephalopathy and subsequent brain dysfunction known as kernicterus. [6] The question is whether the negligence of the hospital staff caused or contributed to the injury suffered by ELM. In the high court, the matter came before Tokota J. The parties agreed to an order for a separation of the issues of merits and quantum in terms of Rule 34, and the matter proceeded on the merits and causation. During the trial, the appellant led the evidence of Dr Lombard, whilst the respondent presented the evidence of Dr Harper, the paediatrician who attended to ELM at Frere Hospital. [7] At the trial the parties agreed that a joint minute drawn up by two expert paediatricians, Drs Lombard and Mzizana, be filed which recorded inter alia the following: ‘1. [ELM] has been diagnosed with dystonic cerebral palsy and profound developmental delay complicated by epilepsy, intellectual disability and a hearing defect. It is agreed that the cause of [ELM’s] cerebral palsy was hyperbilirubinemia in the neonatal period which caused bilirubin encephalopathy and subsequently kernicterus. The hyperbilirubinemia occurred due to an incompatibility between Ms [MM]’s blood group (O+) and that of [ELM] (B+) which caused hemolysis (destruction of red blood cells) resulting in an increase in the total serum bilirubin (TSB). . . . 2. ABO blood group determination is not done routinely as an antenatal test. It is, however, possible that first-born infants can be affected. . . . 3. Bilirubin encephalopathy is a preventable condition. . . . 4. The MRI findings of abnormal signal intensities in the globus pallidi reported by Dr Zikalala and Prof Lotz are usually seen in kernicterus, due to deposition of bilirubin. . . . 5. The supportive treatment that [ELM] received at the Frere Hospital was appropriate, but the ordering of the blood for an exchange transfusion was delayed for an unacceptable period. Published guidelines recommend that an immediate exchange transfusion should be done if the baby’s TSB is more than 85 micromol/L above the threshold for exchange. [ELM] had a TSB that was 141 micromol/L above the recommended threshold for an exchange transfusion at approximately 37 hours of life on 20-10-2010. Published guidelines further recommend that infants who present with TSB above the threshold should have an immediate exchange transfusion done if the TSB is not expected to be below the threshold after 6 hours of intensive phototherapy, but in [ELM’s] case the TSB was only repeated 11 hours later and at that stage it was still 103 micromol/L above the threshold. Dr Mzizana agreed, but also note that he still remained neurologically sound at that stage. . . . 6. Blood was only ordered for an exchange transfusion at least 21 hours after [ELM] presented with a TSB that was high enough to qualify for an immediate exchange transfusion. It is of note that the baby was described as neurologically sound at that stage. . . . 7. The arrival of blood for the exchange transfusion from the blood bank was delayed, but it was still possible to commence the procedure approximately 10 hours after the blood was ordered. If the blood had been ordered on the morning of the 20-10-2010 the transfusion could have been done that same evening. That was the best opportunity to prevent the development of bilirubin encephalopathy. [Dr Mzizana agreed that] it is also noteworthy that the exact duration of exposure to hyperbilirubinemia to cause bilirubin encephalopathy is unknown and timing of when encephalopathy will occur cannot be predicted; and the parents’ request to transfer to private hospital caused further delay. [Dr Lombard agreed] and is of the opinion that if the blood had been ordered immediately on the morning of 20-10-2010 the procedure could have been done before the transfer was requested.’ [8] Later, Dr Mzizana attempted to retract the agreement in the foregoing para 6 of the joint minute, that blood was only ordered for an exchange transfusion at least 21 hours after ELM presented with a TSB level that was high enough to qualify for an immediate exchange transfusion. This, she explained, was because there was no factual evidence to support this assertion. [9] According to both the paediatricians the published medical guidelines recommend an immediate exchange blood transfusion should an infant’s TSB be more than 85 micromol/L above the threshold level. The TSB for ELM was 141 micromol/L above the recommended threshold at approximately 37 hours of life on 20 October 2010. [10] Thus, in terms of the foregoing published medical guidelines, infants who present with TSB levels above the threshold should have an immediate exchange transfusion if the TSB is not expected to be below the threshold after 6 hours of intensive phototherapy. In the case of ELM, after 11 hours of treatment, his TSB was still above the threshold. The foregoing chart below indicates when, how, and in which circumstances and at what age of the baby in hours, blood transfusions are required for infants with high TSB levels. [11] The appellant’s case on the pleadings, was that the hospital staff at Frere hospital had allowed ELM to develop kernicterus in that they failed to prevent bilirubin encephalopathy from developing when they had ample opportunity to do so. It was further alleged that the hospital staff failed to initiate a blood exchange transfusion when signs of bilirubin encephalopathy were present. I quote excerpts from para 7 of the plaintiff’s particulars of claim wherein it was alleged inter alia that the hospital: ‘7.6 They failed to act generally as would be expected of medical practitioners when complications arose; . . . 7.9 They failed to take heed of the fact that [ELM] was at high risk for developing kernicterus due to inter alia maternal blood incompatibility, and failed to act accordingly; 7.10 They allowed [ELM] to develop kernicterus; 7.11 They failed to prevent bilirubin encephalopathy from developing when they had sufficient opportunity to do so; 7.12 They failed to initiate exchange transfusion when signs of bilirubin encephalopathy were present;’ [12] The main focus of the appellant’s case, although not pertinently pleaded, was that the hospital staff were negligent for not immediately ordering the blood for a transfusion for ELM, when in fact the laboratory test results on 20 October 2010 showed that ELM’s TSB levels placed him at a high risk of hyperbilirubinemia. Instead, so the appellant contended, they waited until the following day, 21 October 2010 to order the blood for the transfusion. The case for the appellant, however, as appears from para 7.12 above, was that the respondent failed to initiate an exchange transfusion when signs of bilirubin encephalopathy were present, and not that the blood was not ordered. The focus of the appellant’s case, which was advanced at the trial was that there was a delay of some 21 hours in the ordering of the blood after finding that ELM’s TSB level was above the threshold level for exchange. [13] In contrast, the respondent’s case was that fresh whole blood was ordered on 20 October 2010, and the delay in receiving the blood necessary for an immediate exchange transfusion, was not attributable to negligence on the part of the hospital, but rather on the non-availability of fresh whole blood in East London. Frere hospital does not supply blood and it was out of the hospital’s control that no blood was available. ELM had no signs of neurological compromise or problems at 19h30 on 21 October 2010 after his transfer to Life Beacon Bay hospital. The neurological symptoms manifested during the exchange procedure which commenced at approximately 21h00 at the private facility. In order to properly transfuse ELM, Life Beacon Bay would have had to transfuse a total blood volume of 576 millilitres, whereas it was common cause that only 390 millilitres was transfused to ELM. [14] On the issues of negligence and causation, the high court found that the hospital staff at Frere Hospital were negligent, in that, once ELM had been diagnosed with jaundice, the hospital staff at Frere hospital should have ordered blood immediately. The failure to act immediately contributed and caused the harm suffered by the appellant. Furthermore, the hospital staff treated ELM by other measures to reduce the bilirubin levels. Only when such measures were no longer viable, was the decision made, the following day, to order the blood transfusion. The high court found, as a fact, that the blood was only ordered on 21 October 2010. Consequently, it held that bilirubin encephalopathy developed, resulting in ELM developing cerebral palsy. The high court rejected the respondent’s evidence that the blood was ordered on 20 October 2010. It held that it was incumbent upon the respondent to have pleaded that blood was ordered on 20 October 2010 for ELM. [15] On appeal, the full court (Van Zyl DJP, Schoeman J and Noncembu AJ) dismissed the appellant’s case and held that there was no evidence to support a conclusion that the blood would have been received on the same day, 20 October 2010. It held that in the absence of evidence of the availability of blood at the blood bank, and the time it would have taken for it to be dispatched and taken to East London, it was nothing more than speculation that it would have been received on the 20th and not on the 21st especially since the order was made on the 20th. The full court reasoned that the opinion expressed by the two paediatricians Drs Lombard and Mzizana in their joint statement that the ordering of the blood was unduly delayed, was based on the assumption that the blood was only ordered on 21 October 2010. The opinion postulated by the two paediatricians was qualified by a further agreement in the joint minutes that the exact duration of the exposure to bilirubinaemia to cause bilirubin encephalopathy was unknown. This then begged the question as to what was reasonably foreseeable, in the circumstances, in deciding the issue of negligence, and whether the negligent conduct of the hospital staff at Frere hospital caused or contributed to the injury suffered by ELM. Pertinently the full court reasoned as follows: ‘[19] Turning then to deal with the issues raised at the trial, the first question is whether the hospital staff were negligent in the manner advanced by the respondent at the trial. Negligence is established if a reasonable person would foresee the reasonable possibility of his or her conduct injuring another person and causing that person to suffer patrimonial loss, and would take steps to guard against such occurrence.1 The requirements for negligence are applied to a reasonable person in the position of a defendant. This means that the specific qualities of a defendant, such as specialised skill and knowledge, which he or she possessed at the time, must be considered in assessing his or her conduct against the requirements for negligence.2 [20] The relationship between a plaintiff and a defendant that possess specialised skill and knowledge may consequently require a standard of care from the defendant that is different to what that standard would otherwise be. It is however not expected of such a defendant to exercise the highest possible degree of professional skill.3 What is expected is the general level of skill and diligence which is possessed and would ordinarily be exercised by a reasonable member of the branch of the profession to which he or she belongs under similar circumstances. Applied to the facts of the present matter, liability will only be imposed if it is found that the injury sustained by ELM was reasonably foreseeable, and that the hospital staff had failed to provide the level of skill and competence that could otherwise expected to be provided by a reasonable health care worker in similar circumstances.’ [16] I turn to consider the issues of negligence and causation. It is trite that negligence is established if a reasonable person would foresee the reasonable possibility that his/her conduct would injure another person causing that person to 1 Kruger v Coetzee 1966 (2) SA 428 (A) at 430 E. 2 Van Wyk v Lewis 1924 AD 438 at 444. 3 Mitchell v Dixon 1914 AD 519 at 525. suffer patrimonial loss, and would take reasonable steps to guard against such occurrence. [17] Dr Harper testified that after ELM was diagnosed with jaundice he was moved to the nursery. The results from the laboratory revealed that ELM’s TSB levels were very high, and according to the ‘chart’ in the nursery, the recommended treatment for an infant matching ELM’s profile was an exchange blood transfusion. The blood bank was contacted as that was the first line of treatment according to the published medical guidelines. Dr Harper then instructed a hospital staff member in the nursery during the morning of 20 October 2010 to order the blood in order to do an exchange blood transfusion for ELM. They were informed that ‘whole fresh blood’ was not available at the East London blood bank, and that blood had to be ordered from Gqeberha. ELM, in the interim, was treated with phototherapy. Further tests were conducted, but during the course of the day, when it became clear that the appellant and ELM’s blood group were incompatible, and that there was no blood available, treatment commenced by way of intravenous haemoglobin. Phototherapy continued while they waited the arrival of the blood from Gqeberha, which was scheduled to arrive at 17h00 on 21 October 2010. There was no indication that ELM’s condition was deteriorating, and there was no sign of acute bilirubin encephalopathy present. [18] However, during midday on 20 October 2010, ELM’s parents requested that ELM be transferred to a private facility, the Life Beacon Bay Hospital. Dr Harper instructed Dr Evans, another doctor in the nursery to prepare a referral letter, recording at the end of the referral letter that the blood had been ordered from Gqeberha. This was, according to Dr Harper to prevent the private hospital from initiating the same process to order the blood. At 14h50 ELM was transferred to the private facility. Up until the time of the transfusion at the private hospital there were no indications that ELM had been neurologically compromised. The volume of blood required for an exchange transfusion was 576 millilitres. Ultimately, only 390 millilitres was transfused to ELM. [19] Dr Lombard’s testimony was that the blood was ordered on the 21st and not on the 20th. However, it must be borne in mind that this evidence of Dr Lombard did not stem from his personal knowledge, but from his interpretation of the clinical notes which were kept by the hospital staff in the nursery at Frere hospital. The entries on the 21st record that ‘blood exchange transfusion ordered from PE, and the estimated time of arrival at blood bank was 17h00 of the blood ordered’. The high court held that it was on the basis of this assumed fact that both Drs Lombard and Mzizana expressed the view in their joint minutes, that there was an undue delay, and that had the blood been ordered on the morning of the 20th the transfusion could have been done that same evening. This inference that the experts sought to draw, however, was clearly wrong and has no evidential value. [20] The high court thus erred in concluding that the blood was only ordered on 21 October 2010. The high court appears to have disregarded Dr Harper’s evidence that the order for the blood was made on 20 October 2010. Dr Harper was the paediatrician in charge of the nursery who treated ELM. He had a clear recollection of the case and his testimony with regard to the referral letter to the private facility is critical in the assessment of the burden of proof. He testified that he informed Dr Evans that it was important to state in the letter to the private facility that the blood had been ordered ‘Because the private facility [uses] the same blood bank that we do and we did not want them to go through the same process of trying to order fresh whole blood when we had ordered it. So, [he] instructed the junior doctor to write very clearly at the bottom of the letter that the blood had been ordered from Port Elizabeth. This letter is not a day-by-day notes account of doctors writing notes on each day. It is a summary of the case. The fact that the note “blood for exchange transfusion” is at the end is because I instructed them to make it very clear that the blood had been ordered.’ [21] This testimony clearly indicates that Dr Harper, as the treating doctor, took ELM’s case seriously and was alive to what was expected of him as a medical practitioner. He was aware that ELM required emergency treatment and took steps to bring it to the attention of the hospital staff at Frere hospital, including those at the private facility. He took steps to secure an alternative blood supply when the blood was not available in East London. He was aware that a blood exchange transfusion was required for ELM. [22] This evidence established, on the probabilities, that an order for blood was indeed placed on 20 October 2010. There appears to have been no cogent reason to reject Dr Harper’s evidence that he instructed the hospital staff to order the blood. Furthermore, Dr Harper took reasonable and supportive measures to treat ELM, whilst the blood was awaited to prevent harm to ELM. On the facts, until the commencement of the blood transfusion, there were no indications. that ELM was neurologically compromised. The consequence is that whilst he was under the care of the hospital staff ELM received proper and reasonable care and was neurologically sound. Therefore, in our view the full court was correct in holding that on the available evidence, the staff at Frere hospital were not negligent. [23] Additionally, Dr Lombard’s evidence was that if the blood was ordered on the morning of 20 October 2010, the transfusion could have been done that same evening. In the absence of any factual evidence, as to the time it would have taken between placing an order for the blood in Gqeberha and its delivery at the blood bank in East London, this evidence has no factual basis, and must remain in the realms of speculation. Consequently, there exists no factual basis for Dr Lombard’s assumption that an exchange blood transfusion could have been done on 20 October 2010. The full court was correct in finding that the high court erred in its rejection of the respondent’s evidence that the blood was ordered on 20 October 2010. There exists no reason to reject this finding. [24] In the absence of established negligent conduct the issue of causation does not arise. However, for the reasons that follow, the appeal must fail also on this aspect. In Lee v Minister of Correctional Service4 the Constitutional Court said causation as an element of liability gives rise to two distinct enquiries. The first is the factual enquiry into whether the negligent act or omission caused the harm giving rise to the claim. If it did, then the second enquiry, referred to as the legal causation, arises namely when the negligent act is sufficiently closely or directly linked to the loss for liability to ensure, or whether the loss is too remote. In this matter the conduct in question is the failure to timeously order the blood in order for an exchange blood transfusion to be performed on 20 October 2010 to prevent harm to ELM. This supposes that the blood would have arrived on the 20th. In this regard there was no evidence raising this as a 4 Lee v Minister of Correctional Services [2012] ZACC 30; 2013 (2) BCLR 129 (CC); 2013 (2) SA 144 (CC); 2013 (1) SACR 213 (CC). probability. Whole fresh blood was simply not available. The blood had to be ordered and dispatched from another city. No evidence was led as to whether it was readily and immediately available at the blood bank in Gqeberha, and at what time it would arrive in East London for ELM to receive the exchange blood transfusion, so as to prevent ELM from developing bilirubin encephalopathy. There are no facts to confirm that the blood would have been received on the 20th. [25] Regrettably, no evidence was produced as to when the order for blood was in fact placed with the blood bank. It was open to the appellant to have obtained evidence to that effect from the blood bank, which was an entity distinct from the respondent. The question of onus is important in the assessment of the evidence and the onus was on the appellant to establish the elements of delictual liability. The appellant could have, and should have, subpoenaed an official from the blood bank to establish when the blood was actually ordered, but she chose not to do so. This was a factual issue. Simply put, evidence on this point would have put paid to speculation on this important point in the assessment of delictual liability. [26] There was some debate in the high court, the full court and before this Court, with regard to the manner in which the appellant had formulated the foregoing particulars of claim and the respondent’s plea which was filed in response to the appellant’s particulars of claim, that it had no knowledge of the allegations constituting negligence on the part of the hospital staff. At the heart of the aforementioned para 7 is the allegation of the respondent’s negligent causation of ELM’s condition, and that the respondent, through the hospital staff, failed to exercise reasonable care and skill. [27] The high court found that it was incumbent upon the respondent to have pleaded that the blood was ordered on 20 October 2010, this in circumstances, where the appellant did not plead that the blood was ordered late by the respondent as a ground of negligence. In this regard, the trial court erred. [28] The effect of this finding by the high court was that the trial court expected the respondent to adduce evidence to eliminate a factual inference drawn by the expert witness, Dr Lombard. Furthermore, the appellant did not adduce any evidence in support of the allegation that the blood was only ordered by the respondent on 21 October 2010, when it was possible for the appellant to have led evidence in this regard. Had the appellant called an official from the blood bank, all the speculation as to the question when or whether blood was ordered would have been settled. Moreover, if the appellant wished to narrow the issues to the failure to order the blood timeously, the particulars of claim should have been amended, thus affording the respondent an opportunity to properly understand the case that had to be met. It is clear that the purpose of pleadings is as stated by Innes CJ in Robinson v Randfontein Estates GM Co Ltd:5 ‘The object of pleadings to define the issues; and parties will be kept strictly to their pleas where the 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. And 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 of the opponent has not been as explicit as it might have been.’6 It is pertinent to note that this position has remained unchanged for decades. [29] This court cannot rule out the possibility that other factors may have contributed to the factual cause of ELM’s injury. It cannot only be said that the blood in East London did not arrive timeously. The decision of the parents of ELM to transfer him to a private hospital, and the conduct of the staff at the private facility in performing the blood transfusion are other factors. It may also have been the fact that the staff at the private hospital had failed to transfuse sufficient blood, and they should have done a further transfusion. It is not known whether this may have had a detrimental effect on ELM. But again this is also a matter of speculation, which regrettably has never been explored. [30] There is no factual or casual connection between the conduct of the staff at Frere Hospital and the harm suffered by ELM. Had Frere hospital become aware of ELM’s serious TSB levels on 20 October 2010, and done nothing, such a delay would clearly and obviously have been negligent. However, as soon as the laboratory result indicated ELM’s TSB level were above the threshold, Dr Harper ordered a range of 5 Robinson v Randfontein Estates GM Co Ltd 1925 AD 173. 6 Ibid at 198. treatments on the same day, 20 October 2010, to lessen the severity of the TSB level. From the record the following clearly emanates: ‘[the treatment was provided] whilst you were still waiting for the order of fresh blood?’ to which the answer was ‘This [was] while we were waiting for fresh blood to arrive from Port Elizabeth . . . if we needed to do that.’ Dr Harper understood the gravity of the situation, commenced treatment using methods readily available, as soon as jaundice was diagnosed and additionally ordered the blood, in the event that the treatments readily available were unsuccessful. This conduct is indicative of a doctor that acted with skill and care and who did not wait for confirmation that the conventional treatments had failed, before ordering the blood; it is clear that the blood had been ordered even when the treatments were being performed. The record indicates that the instruction to order blood was given the moment the severe TSB levels were confirmed, albeit per instruction to another junior doctor. [31] In addition, there is also nothing in the papers that indicates that Dr Harper was anything other than a reasonable medical practitioner and that the care provided to ELM was anything other than the standard of care that could be expected. The reason why Dr Mzizana’s retraction is important is because it casts credence on the assumption that Dr Harper was, in fact performing his duties as could be expected of a reasonable medical practitioner. [32] A medical professional is expected to act with the reasonable care and skill required, and that it can be expected of a medical practitioner to act knowledgeably in light of the information a medical professional ought to know. A reasonable medical professional would know that the levels of TSB presented in ELM were so severe that blood was immediately required, and from the record, Dr Harper was well-aware of this fact as ELM was treated in order to mitigate the consequences of the high TSB levels during the time that the blood was awaited. [33] The level of care exhibited by the hospital staff complies with the requirements of a diligens paterfamilias expressed in Kruger v Coetzee:7 ‘For the purposes of liability culpa arises if- (a) 7 Kruger v Coetzee 1966 (2) SA 428 (A). a diligens paterfamilias in the position of the defendant- (i) would foresee the reasonable possibility of his conduct injuring another in his person or property and causing him patrimonial loss; and (ii) would take reasonable steps to guard against such occurrence; and (b) the defendant failed to take such steps.’8 [34] It does not appear that the staff of the hospital did anything other than what was reasonably expected of them at the time. In view of the foregoing, the appellant was unable to establish negligence or causation on the part of the respondent pertaining to the treatment that ELM received at Frere hospital. The appeal must fail. As regards costs, counsel for the respondent accepted that given the circumstances of this matter, no order as to the costs in respect of the appeal be made. [35] In the result, the following order is made: The appeal is dismissed with no order as to costs. _______________________ H K SALDULKER JUDGE OF APPEAL 8 Ibid at 430E-F. Appearances For the appellant: G W Austin Instructed by: Gary Austin Inc, Benoni Honey Attorneys, Bloemfontein For the respondent: B Dyke SC Instructed by: State Attorney, East London 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: 12 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 M M v MEC for Health; Eastern Cape (580/2022) [2023] ZASCA 130 Today, the Supreme Court of Appeal (SCA) dismissed an appeal with no order as to costs, from the Eastern Cape Division of the High Court, Bhisho, (high court). The appeal revolved around a claim for damages by the appellant arising out of a brain injury sustained by her minor child (ELM) after his birth at Frere Hospital in East London, causing the child to be diagnosed with dystonic cerebral palsy and profound developmental delays complicated by epilepsy, intellectual disability and a hearing defect, caused by hyperbilirubinemia on account of severe levels of total serum bilirubin (TSB). After ELM’s delivery, he was transferred to the nursery ward, whereafter he exhibited symptoms associated with jaundice and significantly high TSB levels. Hospital staff commenced intensive phototherapy and administered intravenous haemoglobin. The following day, a hospital note indicated that there was no significant relief evident regarding the TSB levels and that blood for an exchange transfusion had been ordered from Gqeberha, as there was no suitable blood available in East London. The estimated time of arrival of the blood was around 17h00 that same afternoon, however, the appellant instructed her child to be transferred to Beacon Bay Hospital, a private medical facility, around 15h00. During the time at Frere Hospital and up until the eventual blood transfer, the appellant’s child did not indicate any symptoms of neurological complications. Regardless, the high court held that the staff at Frere Hospital were negligent and that the respondent was liable to pay such damages as can be proven. On appeal, the full bench dismissed the order of the high court that the staff at Frere Hospital were negligent. The appellant approached this Court on appeal to determine whether the negligence of the hospital staff caused or contributed to the injury suffered by the appellant’s child. The allegation was levelled that the attending physicians did not timeously order the blood required, but only did so on the following day, the 21st of October 2010. The appellant contended that the staff at Frere Hospital allowed the child to develop kernicterus in that they failed to prevent bilirubin encephalopathy from developing when they had ample opportunity to do so. The high court held that, based on a joint minute by experts, that the unreasonable delay on part of the hospital staff to order the requisite blood caused the resultant harm. However, the SCA held that the high court was mistaken in this regard as the inference drawn by the experts was clearly wrong and of no evidential value. The SCA found that the attending physician dealt with the matter in all seriousness and was alive to what was expected of him as a medical practitioner. He was pertinently aware of the child’s condition and took steps to not only bring it to the attention of the staff at Frere Hospital, but also the staff at Beacon Bay Hospital. In fact, the SCA found that substantial and supportive treatment was provided to the child during the time that blood was ordered and awaited. The matter revolved around the timeous ordering of blood, but no evidence was provided indicating that the blood was readily available there. The appellant ought to have obtained evidence from the blood bank confirming the exact time the order for blood was placed, as this would have been critical for the establishment of delictual liability. Consequently, this Court determined that there was no factual or causal connection between the conduct of the staff at Frere Hospital and the harm suffered by the appellant’s child. Had the staff become aware of the child’s precarious condition and done nothing, negligence would clearly and obviously have been evident which would have opened the discussion regarding causation. However, the SCA found nothing to suggest that the staff performed their duties in any manner other than could reasonably have been expected and that the attending physician was anything other than a reasonable medical practitioner professionally performing his duties. In the result, the appeal was dismissed, with no order as to costs. ~~~~ends~~~~

4129

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1304/2021 In the matter between: PINDILE JOSEPH JUNIOR NTSHONGWANA APPELLANT and THE STATE RESPONDENT Neutral Citation: Ntshongwana v The State (1304/2021) [2023] ZASCA 156 (21 November 2023) Coram: MOLEMELA P and PONNAN, MOCUMIE and MBATHA JJA and WINDELL AJA Heard: 23 August 2023 Delivered: 21 November 2023 Summary: Criminal law – defence of pathological incapacity – ss 78(1A) and 78(1B) of the Criminal Procedure Act 51 of 1977 – onus on accused to prove lack of criminal responsibility on a balance of probabilities – onus not discharged. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Nkosi AJ with Steyn and Vahed JJ concurring, sitting as a court of appeal): The appeal is dismissed. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Windell AJA (Molemela P and Mocumie and Mbatha JJA concurring): Introduction [1] During March 2011, an axe-wielding man brutally killed four people in the greater Durban area. He hacked them to death, decapitating three of them in the process. He also attempted to kill two more people. The victims were all men, walking alone at night. Both the injuries inflicted and cause of death were similar, namely chop wounds to the head and neck. On further investigation, the perpetrator of these crimes was linked to two more incidents, four months earlier: an assault with intent to do grievous bodily harm of a man on 26 November 2010; and the kidnapping and rape of a woman on multiple occasions over a period of three days during 28 November to 1 December 2010. [2] On 28 March 2011, Mr Pindile Joseph Junior Ntshongwana, the appellant, was arrested at his home, which he shares with his mother, in Yellowwood Park, Durban. The appellant was arraigned before the KwaZulu-Natal Division of the High Court, Durban on nine counts: four in respect of murder (counts 4, 7, 8 and 9); two in respect of attempted murder (counts 5 and 6); and one each in respect of assault with intent to do grievous bodily harm, kidnapping, and rape (counts 1, 2 and 3, respectively). In respect of each count of murder and the rape, the provisions of s 51(1) and Part 1 of Schedule 2 of the Criminal Law Amendment Act 105 of 1997 applied, in terms of which, in the absence of substantial and compelling circumstances, each count attracted a sentence of life imprisonment. [3] The appellant pleaded not guilty. His defence was not entirely clear. As best as one could discern, it was that he suffered from a mental illness, and that by reason of such mental illness, he lacked criminal capacity (also referred to as criminal responsibility), which is a prerequisite for criminal liability. [4] The type of defence sought to be raised is commonly referred to as a defence of pathological incapacity. Section 78(1) of the Criminal Procedure Act 51 of 1977 (the CPA) in that regard provides: ‘A person who commits an act or makes an omission which constitutes an offence and who at the time of such commission or omission suffers from a mental illness or mental defect which makes him or her incapable – (a) of appreciating the wrongfulness of his or her act or omission; or (b) of acting in accordance with an appreciation of the wrongfulness of his or her act or omission, shall not be criminally responsible for such act or omission.’1 [5] Section 78(1A) states that: ‘Every person is presumed not to suffer from a mental illness or mental defect so as not to be criminally responsible in terms of s 78(1), until the contrary is proved on a balance of probabilities’. Section 78(1B) provides that the burden of proof with reference to the criminal responsibility of the accused shall be on the party that raises it. The onus in the present matter thus rested on the appellant. To discharge the onus, he had to prove that he suffered from a mental illness or mental defect during the commission of the offences and that the mental illness or mental defect resulted in a lack of criminal capacity. [6] The appellant elected not to testify in his defence, but called three witnesses: Professor A E Gangat, a specialist psychiatrist; his sister; and his mother. Their testimony related to his odd behaviour and mood swings, which they believed to be indicative of his 1 Sections 77, 78 and 79 of the Criminal Procedure Act 51 of 1977 were amended by the Criminal Procedure Amendment Act 4 of 2017. The words ‘mental defect’ were replaced with ‘intellectual disability’. mental illness. He was convicted by Khalil AJ (sitting with an assessor) in the KwaZulu- Natal Division of the High Court, Durban (the trial court) on all nine counts. The trial court found that on a conspectus of all the evidence, the appellant failed to discharge the onus resting on him in terms of s 78(1B) and that, notwithstanding the fact that he suffered from a mental illness at the time of the commission of the offences, he was criminally responsible for his actions. On 19 December 2014, the appellant was sentenced to, inter alia, five life terms – for the four murders and rape. [7] The convictions and sentences imposed by the trial court were subsequently confirmed on appeal by the KwaZulu-Natal Division of the High Court, Pietermaritzburg per Nkosi AJ with Vahed and Steyn JJ concurring (the full court) on 4 June 2021. During November 2021, the appellant was granted special leave to appeal against both the convictions and sentences to this Court. [8] In this Court, the appellant argued that the trial court committed a material misdirection, which was perpetuated by the full court, by focusing solely on s 78(1)(a) in relying on evidence that the appellant committed the offences in a ‘well planned, calculated and purposed driven manner’ and that he ‘took steps to avoid detection after the commission of the offences,’ all of which indicated that he was aware of what he was doing at the relevant times. Counsel for the appellant submitted that none of that was in issue. It was not disputed that the appellant was able to appreciate the wrongfulness of his conduct. The real issue was whether the appellant had the capacity to act in accordance with such appreciation when he committed the offences (s 78(1)(b)), an issue which was not addressed by the trial court or the full court. [9] In this regard, counsel for the appellant contended that although the appellant elected not to testify and claimed that he had no recollection of any of the events, it mattered not. This is because the objective evidence of the survivors in the attempted murder charges and the complainant in the rape charge, coupled with the evidence of the appellant’s expert witness, Professor Gangat, was sufficient to discharge the onus upon him in terms of s 78(1B). [10] In the alternative, it is contended that both courts erred in their finding that the appellant’s capacity to act in accordance with his appreciation of the wrongfulness of his actions was not diminished by reason of his mental illness as contemplated in s 78(7) of the CPA, thereby constituting substantial and compelling circumstances which justified a departure from the prescribed minimum sentences.2 [11] As the trial progressed the appellant came to accept that he had committed the offences in question. Therefore, in respect of conviction, the sole issue for determination before this Court is whether the appellant had discharged the onus in proving that he did not have the capacity to act in accordance with an appreciation of the wrongfulness of his conduct. In relation to sentence, the issue is whether his capacity to act in accordance with his appreciation of the wrongfulness of his actions, was diminished by reason of his mental illness. Background facts [12] The appellant committed the first offence on 26 November 2010. He attacked Mr Mhleli Tholo, who was walking alongside the road in Yellowwood Park in Durban with a baton (count 1). Mr Tholo shouted for help and one of the residents nearby switched on a light, whereafter the appellant released him and fled the scene. Prior to the attack, the appellant had tried to get the attention of the victim by enquiring from him if he knew a girl by the name of Zama. Mr Tholo reported the incident to the South African Police Service (SAPS) and was able to give them a description of the appellant as well as the registration number of the silver-grey car that the appellant was travelling in. [13] A few days later, on 28 November 2010, the appellant kidnapped Ms M, who was walking in Park Street in Durban Central. What followed was a three-day ordeal during which she was kept against her will at the appellant’s home and raped on three consecutive days (counts 2 and 3). She testified that during the period of her kidnapping the appellant’s mood changed several times and that he at times, acted and made utterances that made no sense. He sometimes behaved as if she was his girlfriend and 2 Director of Public Prosecutions, Transvaal v Venter [2008] ZASCA 76; [2008] 4 All SA 132 (SCA); 2009 (1) SACR 165 (SCA). accused her, amongst other things, of having other boyfriends, aborting his baby, killing his child by infecting the child with AIDS, and causing problems between their respective families. At other times, however, he was apparently aware that she was not his girlfriend. When the complainant, for instance, first got into his car, he placed her hand on his crotch and asked her if she ever had sex with a Xhosa boy. When she said no, he said she would experience it that night. Later, he threatened the complainant to keep quiet when someone knocked on his locked bedroom door. He also dictated a message that she sent to her sister from her cell phone to the effect that ‘she was with a wonderful man and was fine’. At one time when he raped her, she asked him to use a condom. He reassured her that ‘he had nothing’. On a separate occasion, he forced her to travel with him to fetch a firearm, chased after her when she tried to escape and then assaulted her. On the fourth day, she managed to escape after she convinced the appellant that she wanted to move in with him, whereafter he took her to her flat to collect her belongings. After the escape, the complainant reported the kidnapping and rape to the SAPS. She provided them with a copy of the appellant’s Identity Document (which she took from the appellant’s room) and was able to give the SAPS the registration number of the car used by the appellant during the kidnapping. [14] Approximately four months later, on 20 March 2011, the appellant killed and beheaded Mr Thembinkosi Cebekhulu in Montclair, Durban (count 4). Two days later, on 22 March 2011, he killed and beheaded Mr Paulos Hlongwa (count 7) in Lamontville, Durban. The murder in count 7 was witnessed by two people who saw the appellant picking up something reddish and placing it into a plastic packet after the attack. The head of the deceased was found later that same night, about a kilometre away in a bin. The following day, on 23 March 2011, the appellant killed Mr Simon Ngidi (count 8) in Umbilo, Durban. Mr Ngidi was not beheaded, but the injuries were clearly indicative of an attempt to do so. An eyewitness to this murder testified that the appellant continued chopping the deceased for some time, and it was only after he opened the front door and shouted at the appellant to stop, that he looked up and thereafter ran away. The appellant also killed and beheaded an unidentified man sometime between 20 March and 28 March 2011 (count 9). His body was found in Yellowwood Park, Durban, approximately 500 metres from the appellant’s home. A toe cap from a Nike shoe (later identified as belonging to the appellant) was found next to the decapitated body. [15] In between the murders, the appellant attacked and attempted to kill two other men, Mr Siyanda Khumalo on 21 March 2011 in Umlazi and Mr Khangelani Mdluli in Lamontville on 22 March 2011 (on the same night the murder was committed in count 7). Both survivors testified. The complainant in count 5, Mr Khumalo, only had a fleeting encounter with the appellant from which he managed to escape. During this encounter there were no utterances from the appellant save from saying ‘come here’, after which he attacked him. Mr Mdluli (the complainant in count 6), however, had a brief interaction with the appellant before he was attacked. The appellant asked him why he had infected his child with AIDS. When the complainant denied the accusation, the appellant grabbed the complainant and attacked him with an axe. The complainant was able to break free and bolted to safety. The appellant chased after him but failed to catch him. [16] Eyewitnesses to counts 4, 7 and 8 gave the SAPS a unique physique description of the appellant and of the car he was driving. This in turn led the SAPS to the assault charge committed against Mr Tholo in November 2010, which ultimately led them to the appellant’s mother, as it turned out that the silver-grey car used in the assault on Mr Tholo was registered in her name. [17] When the SAPS arrived at the appellant’s home on 28 March 2011, a foul scent directed them to a dog kennel in the backyard. Bloodied clothes and shoes (including a Nike shoe with a toe cap missing) as well as a sharpened axe were found hidden inside the dog kennel. The appellant was arrested on suspicion of murder. Later, on further forensic examination, the SAPS found signs of latent blood in various places in the appellant’s en suite bathroom. [18] At the time of the appellant’s arrest, his mother’s car, a silver-grey Chevrolet Aveo (the Aveo), was not at the premises. The SAPS were told that the Aveo had been taken in for repairs and a courtesy car that was used by the appellant, a silver-grey Opel Corsa, from Avis Rent a Car (the Avis car), had been returned to Avis four days earlier, on 24 March 2011. [19] It then transpired that the Avis car had not been returned timeously to Avis car rental and Warrant Officer Mathe (Mathe) had been dispatched to collect the Avis car on behalf of the rental company. He was interviewed by the SAPS. He later testified that he spoke to the appellant on 24 March 2011 (less than a day after the killing of Mr Ngidi in count 8) and on inspection of the Avis car, confronted him about blood stains inside the car and damage at the boot area. He also noticed an attempt to remove a portion of the blood stains. The appellant explained to him that the Avis car had been involved in an accident with a bus, and that the blood stains were from injuries sustained by some of the bus passengers. The appellant voluntarily consented to surrender the car and followed Mathe in the Avis car to the Avis premises in Prospecton, Durban. Mathe then drove the appellant back to his residence. [20] Two days after his arrest, on 30 March 2011, the SAPS interviewed the appellant in the presence of his attorney. He was asked a series of questions by Lieutenant-Colonel McGray. An analysis of the questions put at the interview reveals a total of 77 questions asked, of which the accused declined to comment on, or elected to remain silent in respect of 34 questions. [21] Sometime later the SAPS linked the appellant to the rape and kidnapping case that was committed during 28 November 2010. DNA samples taken from the Avis car, and the toe cap of the Nike shoe found next to the unidentified body, also connected the appellant to the murder charges in counts 7, 8 and 9. The appellant’s medical history [22] When the appellant first appeared in court on the charges, he was referred by the magistrate, in terms of s 77(1) and 78(2) of the CPA, to undergo psychiatric observation. The purpose was to enquire into and report on whether, by reason of mental illness or mental defect, the appellant was capable of understanding the court proceedings so as to make a proper defence, and whether the mental illness or mental defect, if any, rendered him incapable of appreciating the wrongfulness of his acts or of acting in accordance with an appreciation of the wrongfulness of his acts (ie not criminally responsible). [23] Three psychiatrists presented reports in terms of s 79(1)(b) of the CPA: Dr Dunn, Dr Moodley and Dr Brayshaw (the panel psychiatrists). A formal enquiry was held to determine whether the appellant was fit to stand trial as provided for in s 77(3) of the CPA. The KwaZulu-Natal Division of the High Court, Durban, per Pillay J, found the appellant capable of understanding the proceedings to make a proper defence. The proceedings then continued in the ‘ordinary way’ as prescribed in s 77(5) of the CPA. [24] In his s 115 plea explanation, the appellant stated that he suffered from a delusional disorder, which resulted in ‘loss of control’. A report from the appellant’s expert witness, Professor Gangat, who later testified on behalf of the appellant, was annexed to his plea explanation. Two further details of the appellant’s defence, which were not included in his plea explanation, later emerged through Professor Gangat’s evidence and the cross-examination of the state witnesses: first, the appellant had amnesia during the period that the offences were committed and was unable to remember anything concerning it; and second, although the appellant was able to appreciate the wrongfulness of his actions during the commission of the offences, he lacked the criminal capacity to act in accordance with such appreciation. [25] It is common cause that the appellant’s early life and adolescence did not reveal any ‘conduct disorder features’. At a young age he was introduced to sports and excelled at rugby. He was a prefect at school and by all accounts led by example, especially during those formative years. As a young adult he undertook a professional rugby career. [26] The appellant’s mother and sister testified that they first noticed peculiarities in his behaviour during August to December 2009, when the appellant was in his early thirties. This was about a year before the commission of the offences in counts 1, 2 and 3. According to his mother, he became a ‘totally different person’. He refused to eat the food his sister had prepared for fear of being poisoned and accused her of stealing his personal belongings. There were times when the appellant would not sleep in his room because of ‘strange smells’. Both the appellant’s mother and sister noticed the appellant increasingly isolating himself in his room. He had mood swings and would become excessively angry. He however never engaged in physical threats or violence. [27] The appellant was first admitted for treatment on 15 December 2009 at RK Khan Hospital. According to the psychiatric report prepared by Dr Singh dated 19 January 2012 (the Singh report), which was handed in by consent, the appellant presented psychotic and manic symptoms evidenced by paranoid, religiose and grandiose delusions, tangentiality, pressured speech, irritable mood, decreased need for sleep and aggressive behaviour. The appellant was diagnosed with schizoaffective disorder, bipolar type. This included persecutory delusions, including, inter alia, that he was being followed, that his food was being poisoned, that people wanted to kill him and that his personal belongings were being stolen. He was put on medication and was discharged on 28 December 2009. [28] Six months later, on 14 July 2010, the appellant was readmitted to RK Khan Hospital with a relapse of manic and psychotic symptoms following non-compliance with his treatment. The Singh report noted that the appellant refused hospital treatment, and a transfer to King George V Hospital was arranged. En-route to King George V Hospital, the appellant escaped from the ambulance. On 13 August 2010, he was admitted to the Valkenberg Hospital, Cape Town and stayed there for nearly four weeks. Dr Temmingh, the treating psychiatrist, filed a report, which was also handed in by consent. It was noted that on this occasion he presented symptoms of being preoccupied with religious and spiritual matters. He was talkative and his thoughts were described as circumstantial and over-inclusive. He appeared suspicious of the food in the ward and expressed over- valued ideas about his abilities to continue his rugby career. He also came across as intrusive and sexually flirtatious in interviews with female staff. The diagnosis of schizoaffective disorder, bipolar type was confirmed, and he was put on medication and discharged on 17 September 2010. [29] On 23 December 2010, the appellant was admitted to the psychiatric ward in King George V Hospital. As it later turned out, at the time of his admission, he had already committed the assault with intent to do grievous bodily harm (count 1), and the kidnapping and rape in counts 2 and 3. A report from Dr Moola was admitted with consent. It was reported that the appellant presented with persecutory delusions, auditory hallucinations and poor sleep on admission. The ‘working diagnosis’ was ‘schizoaffective disorder, bipolar type most recent episode mania with psychotic features’. Dr Moola noted that he responded well to medication and his psychosis had improved, although his insight remained partial and he continued to have treatment-resistant negative symptoms of schizophrenia. His medication was increased to therapeutic doses and he was discharged on 3 January 2011. [30] On 17 January 2011, at King George V Hospital, the appellant had a follow-up visit with Dr Moola and was found to be stable. There were no reports of aggressive or other inappropriate behaviour, although his mother still expressed concerns about the appellant isolating himself. His medication was increased. On 14 February 2011, during an interview with Dr Moola, the rape allegation was discussed, which the appellant denied. He, however, conceded locking his girlfriend in his room for a few minutes whilst he went to the kitchen as he feared someone may steal his belongings. (His mother confirmed this conversation when she testified for the defence.) According to Dr Moola, there were no reports of aggression and the appellant reported that he had been compliant with his medication, which was overseen by his mother. He recorded the appellant’s ‘persisting persecutory overvalued ideations’, and the presence of ‘residual positive psychotic features’ as well as ‘negative symptoms of schizophrenia’. The evidence of the psychiatrists [31] During the trial the defence relied on the evidence of Professor Gangat, whilst the State relied on the evidence of the panel psychiatrists. Professor Gangat has more than 33 years’ experience in psychiatry. He is also a lecturer and examiner at the University of KwaZulu-Natal, Nelson Mandela School of Medicine in psychiatry. He previously served as a professor and head of department of psychiatry at the Medical University of South Africa (MEDUNSA). [32] He first saw the appellant in July 2012, more than a year after his arrest. He testified that during his first visit, which was at the request of the appellant’s mother, the appellant refused to be interviewed or examined by him and he appeared to be suspicious of him. Professor Gangat was however given a brief history by the appellant’s mother of what she observed when she visited the appellant on 9 July 2012. On that occasion, she found the appellant behaving in a ‘bizarre manner in that he was carrying a broom and preaching’. The appellant refused, in addition, to accept the food that she had brought. Professor Gangat also studied the hospital ward notes which revealed that on one occasion the appellant was found kneeling and reading the Bible and spoke to himself in an unintelligible and incoherent language. Professor Gangat also interviewed a nursing sister, Ms Luthuli at Westville Correctional Centre, who informed him that the appellant's behaviour was fine, and he was not verbally aggressive. With this limited information and ignoring sister Luthuli’s observations, Professor Gangat concluded that the appellant ‘is clearly suffering from a severe mental illness with delusions and hallucinations accompanied by bizarre behaviour. He lacks insight and has impaired judgment. He has lost touch with reality and is unable to give a coherent account of himself’. [33] Three months later, on 18 October 2012, Professor Gangat consulted with the appellant. He prepared a second report dated 14 November 2012. He concluded that it was clear that the appellant has a delusional disorder, and was beset by delusions of being harmed, poisoned and killed. He stated that: ‘When the delusions come thick and fast, the person loses control and can become hostile, aggressive, homicidal and extremely violent in this highly charged emotional state where the world of his delusions and hallucinations become one with the real world. He then loses touch with reality. His actions during this psychotic breakdown may not be able to be recalled.’ [34] He stated that delusional disordered persons have impaired impulse control and may not remember their actions during a psychotic breakdown. He added that the delusions may vary in degree, and are fixed, firm, false beliefs not amenable to reason or logic. He further explained that delusions involve situations that occur in real life, such as being followed, poisoned, infected, loved, deceived or cheated. He testified that, in his opinion, the appellant acted in accordance with such delusions when he committed the offences because he feared being harmed, poisoned or killed. [35] Notably, he could not, however, explain how the appellant, who did not know or meet the victims before the incidents, would have felt threatened by the said victims. Professor Gangat suggested, in general terms, that the only logical conclusion was that the appellant was acting in a psychotic state when he committed the offences and that although he was capable of distinguishing between right and wrong, he would have acted involuntarily, irrationally and not in a goal-directed or purposeful way. [36] Professor Gangat did not fare well under cross-examination. When he interviewed the appellant in 2012, and when he testified in court a year later, he was not aware of the allegations against the appellant. He merely knew that the appellant was incarcerated for murder. He also did not know anything about the details of the offences and the appellant’s conduct during the commission of the offences. He contradicted himself on the appellant’s diagnosis of delusional disorder and the symptoms thereof and when referred to an academic article dealing with delusional disorder, he agreed with the views expressed therein that, in delusional disorders, mood symptoms tend to be brief or absent and, unlike schizophrenia, delusions are non-bizarre, and hallucinations are minimal or absent. When confronted with the undisputed evidence of the witnesses at the time of the commission of the offences, namely that the appellant drove a car on various occasions; had the axe in a plastic packet which he removed and used to attack the victims; committed the offences over a four month period; asked the rape victim if she ever had sex with ‘a Xhosa boy’; and threatened the complainant to keep quiet when somebody knocked on his bedroom door, he was evasive and merely stated: ‘Anything is possible’. [37] Confronted with the fact that the appellant tendered an explanation, namely that the complainant was his girlfriend when asked about the rape allegation during his follow- up visit with Dr Moola on 14 February 2011, his response was: ‘They sometimes remember facets of what occurred, not everything, and sometimes they have no recollection of it’. He could not explain how, if the appellant was in a psychotic state and acted irrationally, he would have been able to drive to various places and seek out his victims to attack; wipe the blood in the bathroom and Avis car; and conceal the axe and clothing in the dog kennel. Pressed for an answer, Professor Gangat stated that the appellant would have acted involuntarily and ‘could have done a better job in concealing the axe’. He later proposed that the appellant acted ‘in a state of automatism’ when committing the offences and described the act of driving a car as automatic. He later changed his testimony by conceding that the appellant's conduct in driving to various places to commit the offences was not automatic because, when driving, a person had to be aware of one's action and be possessed of one’s faculties. [38] Before the panel psychiatrists testified in court, they confirmed that, unlike Professor Gangat, they had read the transcript of the evidence and that they were au fait with the appellant's conduct at the time of the commission of the various offences. Following their observation of the appellant at Fort Napier Hospital, the panel psychiatrists described the appellant as coherent and cooperative, with his cognitive functions fully intact. Drs Moodley and Brayshaw both testified that they had changed their initial opinion expressed during the s 77 of the CPA enquiry and were of the view that the appellant’s behaviour at the relevant times, was consistent with making conscious decisions, and his mental illness had no impact on his mental abilities of appreciating the wrongfulness of his actions and acting accordingly at the time of the commission of the offences. Dr Dunn confirmed his initial opinion and testified that he was more convinced that the appellant had criminal capacity at the time of the commission of the offences. [39] The panel psychiatrists referred to examples in the undisputed evidence of the witnesses in the various counts indicative of the appellant having criminal capacity. In count 7, for example, they described the appellant's behaviour in leaving the scene and returning to continue the attack on the deceased, picking things up, placing them into a plastic packet, as being goal-directed and purposeful. According to them, a person in a confused state of mind, would be incapable of acting as such. Furthermore, the actions of the appellant in sharpening the axe, concealing it in the dog kennel, wiping off blood in the bathroom and in the Avis car, in their opinion, showed that the appellant was not only fully appreciative of what he did, but was aware of the consequences if caught. They opined that the steps taken by the appellant to evade detection, are signs of clear thinking and can hardly be described as involuntary or automatic. [40] The panel psychiatrists also disagreed with Professor Gangat’s diagnosis of delusional disorder. They believed that Professor Gangat ignored all other symptoms which led, not only them, but also the psychiatrists at Valkenberg, RK Khan and King George V Hospitals to the diagnosis of schizoaffective disorder. There was also, according to them, no nexus between the offences committed, and the fears of the appellant of being poisoned, harmed, or killed. They testified that if the appellant feared that his sister was poisoning his food and harming him, it would have been more likely that he would have attacked her instead of the strangers walking along the road, posing absolutely no threat to him. [41] The trial court remarked that the panel psychiatrists stood up well to cross- examination and impressed the court as being, not only reliable witnesses, but also unbiased in their opinions. The trial court noted that ‘[t]hey provided motivated reasons in coming to the conclusions they did’ and where necessary, in support of their opinions, referred to the undisputed facts relating to the conduct of the appellant at the time of the commission of the various offences. The criminal capacity defence [42] There is a presumption in terms of s 78(1A) of the CPA that the appellant was not suffering from a mental illness at the time of the commission of the offence ‘so as not to be criminally responsible in terms of s 78(1)’. The appellant bears the onus to prove the contrary on a balance of probabilities.3 According to Burchell et al,4 with reference to S v Kavin,5 and S v McBride,6 the determining factor under s 78(1)(b) is the question of capacity for self-control, namely, whether, ‘in all the circumstances of the case, the effect of the insanity was that the accused “could not resist or refrain from” committing the act 3 Section 78(1B) of the CPA. 4 E M Burchell, P M A Hunt, J Milton, J M Burchell South African Criminal Law and Procedure: General Principles of Criminal Law (2011) Vol 1, 4 ed at 299. 5 S v Kavin 1978 (2) SA 731 (W) at 741A. 6 S v McBride 1979 (4) SA 313 (W) at 319B-C. or was “unable to control himself to the extent of refraining from” committing the act’. Burchell states that ‘it does not have to be shown that the accused’s conduct was involuntary in the sense that it was automatic or purely reflexive, for then the accused would be exempt from criminal liability on the ground that his or her act was not one of which the criminal law takes cognisance, and the question of criminal capacity does not arise’. [43] The trial court arrived at its conclusion on mainly three grounds. First, the appellant’s decision not to testify. The trial court held that although the appellant was under no constitutional obligation to testify, it did not mean that there were no consequences attached to his election to remain silent. The onus remained on the appellant to prove that he had no mental capacity. Second, the appellant’s conduct during the period of the commission of the crimes. The trial court relied on evidence that the appellant not only committed the offences in a goal-directed manner, but he also took steps to avoid detection after the commission of the offences. This evidence supported the conclusion that he had the mental capacity to act in accordance with his appreciation of wrongfulness. Third, the trial court rejected the evidence of Professor Gangat and accepted that of the panel psychiatrists. The trial court found that Professor Gangat was biased, contradicted himself, disregarded certain information and that his evidence was ‘unreliable and of very little, if any, cogent value’. [44] The conclusion by the trial court cannot be faulted. It was correct in rejecting the evidence of Professor Gangat and accepting that of the panel psychiatrists. There was therefore no misdirection on the facts. The evidence of the panel psychiatrists supported the trial court’s conclusion that the conduct of the appellant during and after the commission of the crimes was indicative of a person that had criminal capacity. In evaluating the evidence in counts, 4 to 9, the trial court found that his actions were those of someone who had a purpose in mind. The appellant drove around late at night looking for victims who were generally alone on the streets. He would then exit his car and follow the victims on foot. To attract their attention, he would pretend to enquire from them about someone before he attacked. He left his home on each occasion carrying the axe, concealed in a plastic packet, and exercised conscious decision-making in deciding when to attack. In my view, the trial court justifiably concluded that the only reasonable inference to be drawn, consistent with the proven facts, was that the murders were pre- meditated and that the appellant was criminally responsible. [45] As far as the kidnapping and rape of the complainant in counts 2 and 3 were concerned, the trial court meticulously dealt with the events from the time of the complainant's abduction on 28 November, until her escape on 1 December 2010. It considered that the appellant had frequent mood swings throughout this episode but was able to control his anger. It found that his actions were clearly indicative of conscious and goal-directed behaviour. The appellant prepared breakfast, ordered pizza, threatened the complainant not to make a sound when someone knocked at the door calling out his name and even dictated a cell phone message to the complainant's sister to inform her that all was fine. These were all signs of clear and rational thinking. The trial court was therefore correct in its finding that the actions of the appellant were clearly not of a person who acted involuntary or in a state of automatism. As the trial court found: ‘If anything, the conduct of the appellant may be described as manipulative and purposeful in inspiring fear into the heart of a defenceless young woman whom he intended all along to kidnap and rape’. [46] The question that then arises in the present matter is the following. If Professor Gangat’s evidence did not withstand the scrutiny of cross-examination, and there was no reason to reject the panel psychiatrists’ evidence, and the appellant opted not to testify, where does it leave the appellant who bears the onus to prove on a balance of probabilities that he lacked criminal capacity at the crucial moments when he committed the offences? This brings me to the high-water mark of the appellant’s argument. Counsel for the appellant argued that the undisputed psychiatric history of the appellant and the ‘bizarre conduct’ of the appellant during the commission of the crimes were sufficient to discharge the onus on the appellant, as it clearly showed that he acted ‘in a severely deluded state when committing the offences and that this compromised his ability to regulate his conduct in accordance with his appreciation of [the] wrongfulness [of his conduct]’. The full court, so it is argued, therefore misdirected itself when it remarked that the appellant was the only person who could attest to his state of mind. In support of his argument, counsel for the appellant relied on two cases: Kavin and McBride. [47] Firstly, these two cases are of little assistance to the appellant. Although they both emphasize the importance of expert testimony in a defence of pathological incapacity in evaluating the particular facts of a case, the crucial issue of the appellant's criminal responsibility for his actions at the relevant time is ultimately a matter for the Court to decide, not the psychiatrist.7 In both matters the court and the panel psychiatrists had an explanation from the accused as to what happened on the day of the commission of the offences, and the psychiatrists also considered the accused’s conduct during and before the commission of the offences before they unanimously found that the accused had no criminal capacity. The respective trial courts could therefore find no compelling grounds to reject the findings of the experts. [48] Secondly, as far as the appellant’s decision to not testify is concerned, it is important to emphasize two aspects. First, the appellant cannot shy away from the fact that he is the only person that can testify about his state of mind during the commission of his offences and explain his behaviour. There are significant gaps in the events as they unfolded that could only have been filled by the appellant. His election not to testify was voluntarily made.8 There are consequences for the appellant, particularly in relation to the issue on which he bore the onus. Dr Brayshaw mentioned in his report and early in his testimony that the appellant, in his view, is ‘highly intelligent, understands the nature and seriousness of the charges against him, is able to follow procedure’ and would be able to communicate with his legal representative if he so chooses. He added that, if he refused to communicate or to be cooperative, it would not be because of mental illness but would be deliberate. This evidence was unrefuted. [49] Closely linked to the appellant’s decision not to testify is his allegation that he had amnesia for the whole period during which he committed the offences (26 November 2010 until at least 28 March 2011). Amnesia is not a defence and such a claim should be 7 S v Harris 1965 (2) SA 340 (A) at 365B-C; S v Cunningham 1996 (1) SACR 631 (A). 8 R v Von Zell 1953 (3) SA 303 (A). carefully scrutinised.9 During the formal enquiry in terms of s 77(3) of the CPA, it was found that the appellant was able to understand the proceedings and give instructions to his counsel to make out a defence. The panel psychiatrists’ testimony (that was accepted by the trial court) was that the appellant’s conduct after the commission of the offences cast serious doubts on the appellant's claim of amnesia. According to the panel psychiatrists, that the amnesia claimed by the appellant extending over four months, covering the period when the offences were committed, is unknown in psychiatry. According to Dr Brayshaw, delusional disordered patients usually have sharp memories and in all his years of practice, it was the first time he had heard of a person diagnosed with delusional disorder having memory problems. [50] I agree with the trial court’s finding that the appellant's claim of amnesia appears to be an afterthought. It must be treated with scepticism for three reasons: he was able to give an explanation to Dr Moola on 14 February 2011 when he was confronted about the kidnapping and rape of the complainant in counts 2 and 3; he was able to give an account to Mathe who met with the appellant and engaged with him less than a day after the murder of the deceased in count 8; and he gave clear answers to Lieutenant-Colonel McGray who conducted the interview with the appellant on 28 March 2011. The undisputed evidence of these witnesses was that the appellant appeared to be cognitively intact and answered questions appropriately. Absent the appellant’s evidence, there was no evidence on record as to his state of mind at the time of the offence and nothing to gainsay the evidence of the panel psychiatrists that his claims of memory loss were likely contrived. [51] Thirdly, contrary to what counsel for the appellant submitted, the trial court did not ignore the appellant’s medical history. In fact, it dealt with the appellant’s medical history at length and was alive to the fact that the appellant had been in and out of psychiatric hospitals before the commission of the offences. Although the earlier psychological reports objectively showed that the appellant was suffering from a mental illness at the time of the commission of the offences, they were of little assistance in establishing 9 S v Majola 2001 (1) SACR 337 (N); S v Kensley 1995 (1) SACR 646 (A). whether the appellant had criminal capacity at the time of the commission of the offences. No evidence was led to give context to the medical reports,10 and they were simply insufficient to gainsay the conclusions reached by the panel psychiatrists. Snyman11 correctly points out that ‘a person may at a certain time have capacity and at another time lack capacity. A mentally disturbed person may for a reasonably short period be mentally perfectly normal and therefore have capacity (this is the so-called lucidum intervallum [lucid interval]) and thereafter again lapse into a state of mental abnormality. For the purposes of determining liability, a court needs to know only ‘whether X had capacity at the moment he committed the unlawful Act’.12 [52] Lastly, it is so that the appellant made certain unusual utterances to the complainant in counts 2 and 3. As much as some of his behaviour seemed odd, there were other facts which pointed to clear, rational and goal-directed behaviour. As stated by the trial court, these charges provided the trial court with the greatest insight over the period of some three days to examine the conduct of the appellant in light of the defence raised, the expert psychiatric evidence, medical reports and surrounding facts relating to the commission of these offences. The trial court noted that ‘[h]is behaviour showed a train of conduct that required a conscious awareness of what was going on and an ability to respond to the differen[t] circumstances he found himself in’. [53] On a conspectus of all the evidence, the appellant failed to show any misdirection by the full court on the facts or the law. In addition, no circumstances have been shown which would entitle this Court to interfere with the finding of either the trial court or the full court that the appellant was able to appreciate the wrongfulness of his actions and that he was able to act in accordance with his appreciation of the wrongfulness of his actions during the commission of the offences. It follows that the appeal on conviction must be dismissed. 10 MM v S [2012] ZASCA 5; 2012 (2) SACR 18 (SCA); [2012] 2 All SA 401 (SCA). 11 K Snyman & S Vaughn Hoctor Snyman’s Criminal Law 7 ed (2020). 12 Ibid at 138. Diminished responsibility [54] Section 78(7) of the CPA states: ‘If the court finds that the accused at the time of the commission of the act in question was criminally responsible for the act but that his capacity to appreciate the wrongfulness of the act or to act in accordance with an appreciation of the wrongfulness of the act was diminished by reason of mental illness or mental defect, the court may take the fact of such diminished responsibility into account when sentencing the accused.’ [55] The trial court found that that there were no facts in support of the appellant’s contention that his actions were influenced or diminished by his mental illness. Counsel for the appellant contended that this was a misdirection, as the appellant’s ‘severe mental illness at the relevant times, coupled with his consistently abnormal conduct proved “overwhelmingly” that his criminal responsibility was diminished by reason of mental illness’. In S v Mnisi,13 in dealing with diminished responsibility, this Court observed: ‘Whether an accused acted with diminished responsibility must be determined in the light of all the evidence, expert or otherwise. There is no obligation upon an accused to adduce expert evidence. His ipse dixit may suffice provided that a proper factual foundation is laid which gives rise to the reasonable possibility that he so acted. Such evidence must be carefully scrutinised and considered in the light of all the circumstances and the alleged criminal conduct viewed objectively.’ [56] For the same reasons set out above, the finding of the trial court cannot be faulted. In respect of the murder counts (counts 4, 7, 8 and 9) an inference was drawn, which was consistent with the proven facts, that the murders were planned and not impulsive acts committed on the spur-of-the-moment. As far as the rape conviction is concerned, the appellant’s behaviour showed a conscious awareness of what he was doing and an ability to control his actions and to act accordingly. As remarked in Mnisi, had the appellant testified, his testimony could have provided the factual foundation to give rise to the reasonable possibility that he acted with diminished responsibility. Yet, he chose not to give evidence. 13 S v Mnisi [2009] ZASCA 17; 2009 (2) SACR 227 (SCA); [2009] 3 All SA 159 (SCA); 2009 (2) SACR 227 (SCA) para 5. Sentence [57] The appellant was sentenced to life imprisonment on each of the four counts of murder and on the count of rape. On count 1, assault with intent to do grievous bodily harm, he was sentenced to 2 years’ imprisonment. On counts 2, 5 and 6 (the attempted murder and kidnapping charges), he was sentenced to six years’ imprisonment on each of the counts. [58] The appellant is a dangerous criminal who acted with flagrant disregard for the sanctity of human life and individual physical integrity. Counsel for the appellant accepted that in the absence of a finding of diminished responsibility there are no substantial and compelling circumstances justifying a departure from the prescribed minimum sentences imposed by the trial court. This concession was rightly made. [59] In the result, the following order is made: The appeal is dismissed. ________________________ L WINDELL ACTING JUDGE OF APPEAL PONNAN JA (concurring) [60] In S v Hadebe, Marais JA observed: ‘The breaking down of a body of evidence into its component parts is obviously a useful aid to a proper understanding and evaluation of it. But, in doing so, one must guard against a tendency to focus too intently upon the separate and individual part of what is, after all, a mosaic of proof. Doubts about one aspect of the evidence led in a trial may arise when that aspect is viewed in isolation. Those doubts may be set at rest when it is evaluated again together with all the other available evidence. That is not to say that a broad and indulgent approach is appropriate when evaluating evidence. Far from it. There is no substitute for a detailed and critical examination of each and every component in a body of evidence. But, once that has been done, it is necessary to step back a pace and consider the mosaic as a whole. If that is not done, one may fail to see the wood for the trees.'14 [61] In dismissing the appeal, my colleague, Windell AJA, has subjected the various components of the body of evidence to a detailed and critical examination. In stepping back a pace, to consider the mosaic as a whole in this matter, I will seek to demonstrate that the broad hypothesis sought to be advanced on behalf of the appellant is equally unsustainable. [62] A useful starting point is the finding, after an enquiry by the high court (per Pillay J), that the appellant was capable of understanding the proceedings and of mounting a proper defence to the charges. The appellant has never sought to assail that finding. Early in the appellant’s criminal trial, which had commenced thereafter in the ordinary course, there was an attempt to cross examine some of the prosecution witnesses as to credit, but that was quickly abandoned. Consequently, the prosecution evidence establishing the commission of each of the offences, as also the appellant’s involvement in them, went unchallenged. The appellant was thus driven to the only defence that arguably could avail him in the circumstances, namely, his lack of criminal capacity. This had been 14 S v Hadebe and Others 1998 (1) SACR 422 (SCA) at 426 E-H, Marais JA citing with approval from his own earlier judgment in Moshephi and Others v R (1980-1984) LAC 57 at 59F-H. foreshadowed in his s 115 plea explanation and evidently had its genesis in a report that had been prepared by Professor Gangat. [63] To succeed in his defence, the appellant had to prove on a balance of probabilities that the view of Professor Gangat was correct. However, when viewed in isolation, there were several disquieting aspects about the conclusion reached by Professor Gangat, the most notable of which were: He appears to have rushed to an opinion. Approximately one year after the commission of the offences, after no more than fleeting contact with the appellant, and when the appellant was far from co-operative, he was evidently willing to express a view. Professor Gangat saw the appellant on the first occasion for no more than five minutes (when the appellant refused to talk to him), on the second for half an hour and on the third for less than that. His view was expressed in a vacuum so to speak, without him having familiarised himself with the details of the offences, the manner in which they were committed or the version of the prosecution witnesses. [64] Further, when juxtaposed against the evidence of the other expert witnesses, the acceptance of Professor Gangat’s opinion had to be predicated on the rejection of some seven other opinions. This, because the opinion of Professor Gangat was irreconcilable with those opinions. The difference between Professor Gangat, on the one hand, and the other experts, on the other, also illustrates a substantial difference in objectivity, when the respective views are compared. Little wonder then, when the various instances of the appellant’s purposeful, goal-directed behaviour was pointed out to Professor Gangat, he was willing to revise his opinion under cross examination. He then came to accept that the appellant was capable of appreciating the wrongfulness of his actions, but suggested he may well have been incapable of acting in accordance such appreciation. [65] This alternative hypothesis formed a key plank of the appeal to this Court. The difficulty for the appellant is that this hypothesis rests as well on the acceptance of Professor Gangat’s evidence. It must follow from the rejection of his evidence that it lacks a proper factual foundation. And, absent a proper factual foundation, it is open to rejection as no more than a rather speculative hypothesis. But, goes the argument, even on a rejection of Professor Gangat’s evidence, by stitching together from various disparate pieces of objective evidence, a proper factual substratum can be discerned for the contention that although the appellant had the ability to distinguish between right and wrong, he lacked the capacity of acting in accordance with his appreciation of the wrongfulness of his conduct. However, to cherry pick from the evidence, by disregarding those aspects that are less favourable demonstrates a misconception as to how evidence is to be evaluated. As it was put in S v Trainor: ‘A conspectus of all the evidence is required. Evidence that is reliable should be weighed alongside such evidence as may be found to be false. Independently verifiable evidence, if any, should be weighed to see if it supports any of the evidence tendered. In considering whether evidence is reliable the quality of that evidence must of necessity be evaluated, as must corroborative evidence, if any. Evidence must of course be evaluated against the onus on any particular issue or in respect of the case in its entirety. [A] compartmentalised and fragmented approach . . . is illogical and wrong.’15 [66] That aside, the alternative hypothesis sought to be advanced hardly seems compatible with an acceptance that the appellant was capable of appreciating the wrongfulness of his actions. The key enquiry must focus on the time when the appellant committed each of the offences. It would have been far easier to accept that the appellant had suffered a complete loss of self-control had we been concerned with an isolated incident. But, here we are dealing with someone who has committed a series of offences on diverse occasions over a protracted period. That he could appreciate right from wrong, but was incapable of acting in accordance with such appreciation when he committed each offence, merely has to be stated to be rejected. The appellant had the wherewithal to go about his daily life, drive to unfamiliar places to seek out his victims, perpetrate the offences and avoid detection. On at least two of those occasions, he stopped when disturbed, demonstrated an awareness of his surroundings, before fleeing the scene. It thus seems inconceivable that over a period of many months the appellant suffered a complete loss of control only at the crucial time when committing each offence. I thus cannot subscribe to the view that the appellant did not have the capacity of self-control necessary to restrain himself from committing the acts that he knew to be unlawful. 15 S v Trainor [2002] ZASCA 125; 2003 (1) SACR 35 (SCA); [2003] 1 All SA 435 (SCA) para 9. [67] In the result, like Windell AJA, I would also dismiss the appeal, albeit on this narrower footing. ________________________ V M PONNAN JUDGE OF APPEAL Appearances For the appellant: J E Howse SC Instructed by: Mdledle Incorporated, Durban Webbers Attorneys, Bloemfontein For the respondent: N Moosa Instructed by: National Prosecuting Authority, Durban 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: 21 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 Ntshongwana v The State (1304/2021) [2023] ZASCA 156 (21 November 2023) Today, the Supreme Court of Appeal (SCA) dismissed an appeal against the judgment of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the full court), which dismissed an appeal against the conviction and sentence imposed by the KwaZulu-Natal Division of the High Court, Durban (the trial court) of the appellant, Mr Pindile Joseph Junior Ntshongwana. The appellant was convicted by the trial court on all nine counts charged: four in respect of murder (counts 4, 7, 8 and 9); two in respect of attempted murder (counts 5 and 6); and one each in respect of assault with intent to do grievous bodily harm, kidnapping, and rape (counts 1, 2 and 3, respectively). The appellant was sentenced to life imprisonment on each of the four counts of murder and on the count of rape. On count 1, assault with intent to do grievous bodily harm, he was sentenced to 2 years’ imprisonment. On counts 2, 5 and 6 (the attempted murder and kidnapping charges), he was sentenced to six years’ imprisonment on each of the counts. The charges were related to the following facts. During March 2011, an axe-wielding man brutally killed four people in the greater Durban area. He hacked them to death, decapitating three of them in the process. He also attempted to kill two more people. On further investigation, the perpetrator of these crimes was linked to two more incidents, four months earlier: an assault with intent to do grievous bodily harm of a man on 26 November 2010; and the kidnapping and rape of a woman on multiple occasions over a period of three days during 28 November to 1 December 2010. The appellant’s defence was that he suffered from a mental illness, and that by reason of such mental illness, he lacked criminal capacity. In respect of conviction, the sole issue for determination before the SCA was whether the appellant had discharged the onus in terms of s 78(1B) of the Criminal Procedure Act 51 of 1977 (the CPA) in proving that he did not have the capacity to act in accordance with an appreciation of the wrongfulness of his conduct. In relation to sentence, the issue was whether his capacity to act in accordance with his appreciation of the wrongfulness of his actions, was diminished by reason of his mental illness. Ad conviction, the SCA found that, in regard to criminal responsibility, on a conspectus of all the evidence, the appellant failed to show any misdirection by the full court on the facts or the law. In addition, no circumstances had been shown which would entitle the SCA to interfere with the finding of either the trial court or the full court that the appellant was able to appreciate the wrongfulness of his actions and that he was able to act in accordance with his appreciation of the wrongfulness of his actions during the commission of the offences. In this regard, the SCA found that the trial court was correct in rejecting the evidence of Professor A E Gangat, a specialist psychiatrist (who testified on behalf of the appellant), and accepting that of the panel psychiatrists in terms of s 79 of the CPA (who testified on behalf of the State). There was therefore no misdirection on the facts. The evidence of the panel psychiatrists supported the trial court’s conclusion that the conduct of the appellant during and after the commission of the crimes was indicative of a person that had criminal capacity, in that the appellant’s actions were clearly indicative of conscious and goal-directed behaviour and were clearly not of a person who acted involuntary or in a state of automatism. In regard to diminished responsibility, the SCA found that the finding of the trial court could not be faulted. In respect of the murder counts (counts 4, 7, 8 and 9) an inference was drawn, which was consistent with the proven facts, that the murders were planned and not impulsive acts committed in the spur-of-the-moment. As far as the rape conviction was concerned, the appellant’s behaviour showed a conscious awareness of what he was doing and an ability to control his actions and to act accordingly. Ad sentence, the SCA found that the appellant was a dangerous criminal who acted with flagrant disregard for the sanctity of human life and individual physical integrity. The SCA found that the concession by counsel for the appellant was rightly made, that in the absence of a finding of diminished responsibility there were no substantial and compelling circumstances justifying a departure from the prescribed minimum sentences imposed by the trial court. Ponnan JA penned a separate concurring judgment, in which, by stepping back a pace to consider the mosaic of evidence as a whole, he sought to demonstrate that the broad hypothesis sought to be advanced on behalf of the appellant, that he was incapable of acting in accordance with the appreciation of the wrongfulness of his actions when he committed each offence, was equally unsustainable. This, because Ponnan JA found that this case dealt with someone who had committed a series of offences on diverse occasions over a protracted period. The appellant had the wherewithal to go about his daily life, drive to unfamiliar places to seek out his victims, perpetrate the offences and avoid detection. On at least two of those occasions, he stopped when disturbed, demonstrated an awareness of his surroundings, before fleeing the scene. It thus seemed inconceivable that over a period of many months the appellant suffered a complete loss of control only at the crucial time when committing each offence. Ponnan JA thus held that he could not subscribe to the view that the appellant did not have the capacity of self-control necessary to restrain himself from committing the acts that he knew to be unlawful. ~~~~ends~~~~

1294

non-electoral

2010

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 25/2010 In the matter between: MUSTAFA AMAN ARSE Appellant And MINISTER OF HOME AFFAIRS First Respondent DIRECTOR-GENERAL DEPARTMENT OF HOME AFFAIRS Second Respondent BOSOSA (PTY) LTD t/a PROSPECTS TRADING Third Respondent Neutral citation: Arse v Minister of Home Affairs (25/10) [2010] ZASCA 9 (12 March 2010) Coram: MPATI P, CLOETE, CACHALIA, MALAN JJA and THERON AJA Heard: 24 February 2010 Delivered: 12 March 2010 Summary: Refugees Act 130 of 1998 and Immigration Act 13 of 2002 – enactments to be read together – appellant an asylum seeker issued with asylum transit permit in terms of s 23 of Immigration Act – asylum seeker permit issued in terms of s 22 of Refugees Act – whether detention of appellant lawful. ______________________________________________________________________ ORDER On appeal from: South Gauteng High Court (Johannesburg) (Willis J sitting as court of first instance): An order is made in the following terms – (1) The appeal is upheld with costs including the costs of two counsel; (2) The order of the court a quo is set aside and replaced with the following order: ‗(a) the detention of the applicant is declared to be unlawful; (b) the first and second respondents are directed to re-issue the applicant with an asylum seeker permit in accordance with s 22 of the Refugees Act 130 of 1998 which permit shall remain valid until a decision has been made on the applicant‘s application for asylum and, where applicable, the applicant has had an opportunity to exhaust his rights of review or appeal in terms of Chapter 4 of the Refugees Act and the Promotion of Administrative Justice Act 3 of 2000; (c) the respondents are directed immediately to release the applicant in possession of the asylum seeker permit as set out above; and (d) the first and second respondents are directed to pay the applicant‘s costs including the costs of two counsel.‘ ______________________________________________________________________ JUDGMENT MALAN JA (MPATI P, CLOETE AND CACHALIA JJA AND THERON AJA concurring): [1] This is an appeal with the leave of Willis J against his judgment in the South Gauteng High Court dismissing the appellant‘s urgent application to secure his release from the Lindela Holding Facility. The appellant is an asylum-seeker from Ethiopia whose application for asylum was refused. He has appealed against this refusal to the Refugee Appeal Board. The following order was given in court immediately after argument was concluded. ‗An order is made in the following terms – (1) The appeal is upheld with costs including the costs of two counsel; (2) The order of the court a quo is set aside and replaced with the following order: ―(a) the detention of the applicant is declared to be unlawful; (b) the first and second respondents are directed to re-issue the applicant with an asylum seeker permit in accordance with s 22 of the Refugees Act 130 of 1998 which permit shall remain valid until a decision has been made on the applicant‘s application for asylum and, where applicable, the applicant has had an opportunity to exhaust his rights of review or appeal in terms of Chapter 4 of the Refugees Act and the Promotion of Administrative Justice Act 3 of 2000; (c) the respondents are directed immediately to release the applicant in possession of the asylum seeker permit as set out above; and (d) the first and second respondents are directed to pay the applicant‘s costs including the costs of two counsel.‖‘ The court indicated that reasons for the order given would be given. These are the reasons. [2] The appellant is an Ethiopian citizen who, according to the founding papers, fled from Ethiopia owing to persecution by reason of his tribal affiliation and political opinion. He arrived in South Africa on 8 December 2008 for the purpose of applying for political asylum in terms of the Refugees Act 130 of 1998. He was provided with an asylum transit permit in accordance with s 23 of the Immigration Act 13 of 2002 so that he could proceed to a Refugee Reception Office to apply for asylum. An asylum transit permit is valid for a period of 14 days. The appellant stated that he attempted to gain access to the Port Elizabeth Refugee Reception Office during that period and in the months thereafter but that he did not succeed due to the lengthy queues. On 26 May 2009 he was arrested in Queenstown where he spent a week at the police station before being transferred to Lindela on 2 June 2009. He has been detained at Lindela since 2 June 2009 under the name Abdul Ahid Amon. [3] With the assistance of officials of the second respondent the appellant applied for asylum status on 3 September 2009 and had an asylum seeker permit issued to him in terms of s 22 of the Refugees Act. His application was, however, rejected by the Refugee Status Determination Officer on the same day. He appealed to the Refugee Appeal Board (see s 26 of the Refugees Act) and a hearing took place on 4 December 2009, but allegedly in the absence of his legal representatives. The Refugee Appeal Board has not yet made its decision on the matter. On 18 December 2009 the appellant launched an urgent application in the High Court in Johannesburg for an order interdicting the respondents from deporting him; declaring his detention from 2 June 2009 to be unlawful; directing the first and second respondents to immediately re-issue an asylum seeker permit to him; and directing his immediate release from detention. The application was dismissed. Hence this appeal. [4] During the hearing of the urgent application Willis J urged the parties to come to an agreement on conditions on which the appellant could be released. The respondents suggested that there should be an undertaking by a lawful resident of South Africa to provide the appellant with shelter, that he should pay R 2000 as security to the nearest inspection or Refugee Reception Office and that he should report to the nearest Refugee Reception Office every Tuesday and Friday pending the outcome of his appeal to the Refugee Appeal Board. The appellant rejected the conditions. Willis J was concerned that ‗[w]hile the court obviously has to have regard to the importance of a person having freedom, the court must also have regard to the practicalities that would arise in ordering the release of a person such as this [applicant], who cannot even comply with eminently reasonable conditions put forward by the respondents.‘ He considered whether there was any ‗absolute‘ statutory unlawfulness in the continuing detention of the appellant. Referring to s 22 of the Refugees Act he found that the right to ‗sojourn‘ ‗does not necessarily entail a right to go about freely in South Africa with[out] any restrictions. The applicant is sojourning in South Africa, he is not going to be deported or sent out of South Africa pending the outcome of his appeal relating to asylum status. He is indeed sojourning in South Africa, albeit under restriction.‘ [5] Once it is established that a person has been detained, the burden justifying the detention rests on the detaining authority. In Principal Immigration Officer and Minister of Interior v Narayansamy1 Sir John Wessels stated: ‗Apart from any legislative enactment, there is an inherent right in every subject, and in every stranger in the Union, to sue out a writ of habeas corpus. This right is given not only by English law, but also by the Roman Dutch law. Prima facie therefore every person arrested by warrant of the Minister, or by any other person, is entitled to ask the Court for his release, and this Court is bound to grant it unless there is some lawful cause for his detention.‘ In English law the remedy is known as habeas corpus but in Roman Dutch law it is referred to as the interdictum de homine libero exhibendo. Both terms are used in our law.2 [6] In the answering papers the respondents submitted that the Refugee Appeal Board is entitled to investigate certain factual averments made by the appellant so as to make an informed decision about his status in the country. The deponent expressed the apprehension that if the appellant was released before this was done the process might be frustrated and the proper functioning of the administration of justice be undermined. 1 1916 TPD 274 at 276. See Jeebhai & others v Minister of Home Affairs & another 2009 (5) SA 54 (SCA) para 22; Zealand v Minister of Justice and Constitutional Development & another 2008 (4) SA 458 (CC) para 25; Minister van Wet en Orde v Matshoba 1990 (1) SA 280 at 284E-F; Minister of Law and Order & others v Hurley & another 1986 (3) SA 568 (A) at 589E-F. 2 See S Kentridge ‗Habeas corpus procedure in South Africa‘ (1962) 79 SALJ 283; DL Carey Miller ‗A judicial extension of the interdict de libero homine exhibendo‘ (1975) 92 SALJ 242; Lawrence Baxter Administrative Law (1984) 692 ff. The respondents seek to justify the appellant‘s detention under s 23 and hence also s 34(1) and (2) of the Immigration Act. They provide as follows: ‗23 Asylum transit permit — (1) The Director-General may issue an asylum transit permit to a person who at a port of entry claims to be an asylum seeker, which permit shall be valid for a period of 14 days only. (2) Despite anything contained in any other law, when the permit contemplated in subsection (1) expires before the holder reports in person to a Refugee Reception Officer at a Refugee Reception Office in order to apply for asylum in terms of section 21 of the Refugees Act, 1998 (Act 130 of 1998), the holder of that permit shall become an illegal foreigner and be dealt with in accordance with this Act. 34 Deportation and detention of illegal foreigners — (1) 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 he or she understands; (d) may not be held in detention for longer than 30 calendar days without a warrant of a Court which on good and reasonable grounds may extend such detention for an adequate period not exceeding 90 calendar days, and (e) shall be held in detention in compliance with minimum prescribed standards protecting his or her dignity and relevant human rights. (2) 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 pm of the first following court day.‘ [7] It was submitted on behalf of the respondents that s 23 meant that the appellant became an ‗illegal foreigner‘ after the expiry of the asylum transit permit granted to him. An ‗illegal foreigner‘ is a foreigner who is in the Republic in contravention of the Immigration Act.3 Being an ‗illegal foreigner‘ the appellant may be dealt with in terms of the Immigration Act, and hence detained and deported.4 It was suggested that legislation of this nature was in accordance with international law and fell within the inherent powers of a sovereign state to regulate and forbid entrance to foreigners into its borders or admit them on such conditions as it may see fit to prescribe.5 The right to freedom of movement, it was submitted, is not absolute and may be limited in appropriate circumstances.6 Both the Immigration Act and the Refugees Act limit the rights of the appellant. Both ss 9 and 32 of the Immigration Act contain such limitations on the freedom of movement of foreigners. On expiry of the asylum transit permit issued in terms of s 23 (1) of the Immigration Act the appellant became an ‗illegal foreigner‘ and also guilty of an offence.7 As an ‗illegal foreigner‘ he ‗shall be deported‘.8 Relying on the decision of this court in Jeebhai,9 the submission was made that pending a review or appeal an ‗illegal foreigner‘ may be detained until he or she is deported in terms of s 34 of the Immigration Act. [8] Even if the appellant is an ‗illegal foreigner‘ as envisaged by s 23 of the Immigration Act his detention in terms of s 34 cannot be justified. Section 34(2) permits the detention of an ‗illegal foreigner‘ only for a period not exceeding 48 hours subject to the proviso that if the said period expires on a non-court day it ‗shall be extended to four 3 Section 1 of the Immigration Act. 4 Section 32 of the Immigration Act. 5 See Nishimura Ekiu v The United States (1892) 142 US 651 at 659 cited with approval in Minister of Home Affairs & others v Watchenuka & another 2004 (4) SA 326 (SCA) para 29. 6 Minister of Home Affairs & others v Watchenuka & another 2004 (4) SA 326 (SCA) para 28. 7 Section 49(1) of the Immigration Act. 8 Section 32(2) of the Immigration Act. See Jeebhai & others v Minister of Home Affairs & another 2009 (5) SA 54 (SCA) paras 21 ff. 9 Jeebhai & others v Minister of Home Affairs & another 2009 (5) SA 54 (SCA) para 32. pm of the first following court day.‘ The appellant was arrested on 26 May 2009 and detained at Lindela since 2 June 2009. Section 34(2) is therefore of no assistance to the respondents. [9] To justify the appellant‘s detention the respondents sought to bring it within the ambit of s 34(1). The respondents indeed produced the original warrant of detention dated 26 May 2009 but no evidence that a court (ie a magistrate‘s court)10 has extended the period of detention in terms of s 34(1)(d). An ‗illegal foreigner‘ may in terms of this paragraph not be detained for a period longer than 30 calendar days ‗without a warrant of a Court which on good and reasonable grounds may extend such detention for an adequate period not exceeding 90 calendar days‘. The respondents were not able to produce such a warrant justifying the appellant‘s continued detention.11 It seems to me that the maximum period of detention permitted under s 34(1)(d) is 120 days, ie an initial period of 30 days, followed by an extended period or periods not exceeding 90 days.12 [10] A ‗detained person has an absolute right not to be deprived of his freedom for one second longer than necessary by an official who cannot justify his detention.‘13 The 10 Section 1(1) of the Immigration Act. 11 The procedure to obtain such a warrant for the further detention of an ‗illegal foreigner‘ is regulated by Regulation 39(5) of the Immigration Regulations GN R616, GG 27725, 27 June 2005. 12 In Kanyo Aruforse v Minister of Home Affairs; Director-General, Department of Home Affairs and Bosasa (Pty) Ltd (GSJ) (case 2010/1189) an unreported judgment of Meyer J delivered on 25 January 2010 in which he said in para 17: ‗The intention of the statute undoubtedly includes an intention to deport illegal foreigners from this country. But the maximum period for which any person may be so detained in terms of s 34(1) is a period of 120 days. I also respectfully fail to appreciate how this interpretation will defeat the said purpose of the Immigration Act. In terms of its preamble the Act aims at putting in place a new system of immigration control which inter alia ensures that: ―immigration laws are efficiently and effectively enforced, deploying to this end the significant administrative capacity of the Department of Home Affairs, thereby reducing the pull factors of illegal immigration‖; ―immigration control is performed within the highest applicable standards of human rights protection‖; ―a human rights based culture of enforcement is promoted‖; and ―civil society is educated on the rights of foreigners and refugees‖.‘ The citations are from paragraphs (g), (l), (n) and (p) of the preamble. Whether the extension must be a single one need not be decided here. It appears as if the word ‗adequate‘ in s 34(1)(d) should read ‗aggregate‘ so that more than one extension is possible although the aggregate period may not exceed 90 days. See, generally, LC Steyn Die Uitleg van Wette 5th ed (1981) by SIE van Tonder in co-operation with NP Badenhorst, CH Volschenk and JN Wepener 58 ff. 13 Silva v Minister of Safety and Security 1997 (4) SA 657 (W) at 661H-I. importance of this right ‗can never be overstated‘.14 Section 12(1)(b) of the Constitution guarantees the right to freedom, including the right not to be detained without trial. This right belongs to both citizens and foreigners.15 The safeguards and limitations contained in s 34(1) of the Immigration Act justify its limitation of the right to freedom and the right not to be detained without trial.16 Enactments interfering with elementary rights should be construed restrictively. In R v Sachs17 it was said: ‗[T]he appellant in an able and admirably objective argument discussed the manner in which courts of law should approach the interpretation of statutes which give the Executive the power to invade the liberty of the individual. He submitted that such statutes should be subjected to the closest scrutiny of courts of law whose function it is to protect the rights and liberty of the individual. Courts of law do scrutinise such statutes with the greatest care but where the statute under consideration in clear terms confers on the Executive autocratic powers over individuals, courts of law have no option but to give effect to the will of the Legislature as expressed in the statute. Where, however, the statute is reasonably capable of more than one meaning a court of law will give it the meaning which least interferes with the liberty of the individual.‘ In addition, s 39(2) of the Constitution requires courts when interpreting a statute that is reasonably capable of two interpretations to avoid an interpretation that would render the statute unconstitutional and to adopt the interpretation that would better promote the spirit, purport and objects of the Bill of Rights, even if neither interpretation would render the statute unconstitutional.18 The detention of the appellant is clearly in breach of the express provisions of s 34(1)(d) of the Immigration Act and is unlawful. Indeed Mr Semenya who appeared on behalf of the respondents quite properly conceded this during argument. 14 Lawyers for Human Rights & another v Minister of Home Affairs & another 2004 (4) SA 125 (CC) para 36. 15 Lawyers for Human Rights & another v Minister of Home Affairs & another 2004 (4) SA 125 (CC) para 27; Jeebhai & others v Minister of Home Affairs & another 2009 (5) 54 (SCA) para 26. 16 Lawyers for Human Rights & another v Minister of Home Affairs & another 2004 (4) SA 125 (CC) para 43. 17 1953 (1) SA 392 (A) at 399F-H. See further Dadoo Ltd & others v Krugersdorp Municipal Council 1920 AD 530 at 552; Johnson v Minister of Home Affairs & another 1997 (2) SA 432 (C) at 434J – 435A. 18 Investigating Directorate: Serious Economic Offences and 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) paras 22-6; Wary Holdings (Pty) Ltd v Stalwo (Pty) Ltd 2009 (1) SA 337 (CC) paras 46, 84 and 107; Fraser v Absa Bank Ltd (National Director of Public Prosecutions as Amicus Curiae) 2007 (3) SA 484 (CC) para 47. [11] The court a quo referred to the ‗eminently reasonable conditions‘ which the respondents proposed for the appellant‘s release. Since the appellant could not meet these conditions, Willis J held that his application had to fail. He reasoned that because no right was absolute a balancing act had to be undertaken: the appellant had a right to freedom but, he said, the State ‗had a legitimate interest in trying to curb illegal immigration, in trying to keep track of persons who have entered the country illegally and ensuring that persons who do not have places of shelter and who do not have any visible means of support, are not free to roam the streets.‘ I do not agree. A court, generally, cannot impose conditions for the release of a person unlawfully detained. Section 35(2)(d) of the Constitution entitles any person who is detained to challenge his or her detention before a court and, if the detention is unlawful, ‗to be released.‘ This can be contrasted with s 35(1)(f) which allows a person arrested for allegedly committing an offence to be released from detention if justice permits ‗subject to reasonable conditions‘. It follows, it seems to me, that the Constitution does not permit the imposition of conditions on a person such as the appellant for his release. As long ago as 1879, De Villiers CJ stated that where a detention is unlawful the only course open was to order the release of the person immediately. In In Re Willem Kok and Nathaniel Balie19 De Villiers CJ said: ‗It is unnecessary to consider the rights which under the Roman-Dutch law free persons had to a release or to the writ de homine libero exhibendo, for, in my opinion, the rights of the personal liberty, which persons within this colony enjoy, are substantially the same, since the abolition of slavery, as those which are possessed in Great Britain. Where those rights are violated this Court would at least have the same power of restraining such violation as the Supreme Court of Holland had to interdict the infringement without sufficient cause of the rights to personal liberty as understood by the Roman-Dutch law. But in addition to the powers vested in this Court under the Roman-Dutch law, there are certain statutory provisions, which not only add to the powers of the Court, but make it the bounden duty of the Court to protect personal liberty whenever it is illegally infringed upon ... Supposing that the applicants had been detained in one of the ordinary gaols of the colony, and it had been brought to the notice of the Court that they were so kept without a lawful warrant, it surely would have been competent for the Court to call upon the gaoler to produce the prisoners and justify the detention. Can it then make any difference that they are detained in a military fortress instead of an ordinary gaol? I think not. In either case the person in 19 (1879) 9 Buch 45 at 65-66 and 71. whose custody they are is bound to produce his warrant or other authority for detaining them, and in case the return to the order of Court be found to be clearly bad it would be the duty of the Court, under ordinary circumstances, to order their discharge. But then it is said the country is in such an unsettled state, and the applicants are reputed to be of such a dangerous character, that the Court ought not to exercise a power which under ordinary circumstances might be usefully and properly exercised. The disturbed state of the country ought not in my opinion to influence the Court, for its first and most sacred duty is to administer justice to those who seek it, and not to preserve the peace of the country … The Civil Courts have but one duty to perform, and that is to administer the laws of the country without fear, favour or prejudice, independently of the consequences which ensue.‘ [12] For these reasons the continued detention of the appellant cannot be justified in terms of the Immigration Act and he is entitled to his immediate release. The respondents‘ reliance on that Act is also misconstrued: it ignores the provisions of the Refugees Act, as I shall demonstrate. It is necessary to examine the provisions of the latter Act. [13] The court a quo held that the appellant‘s detention was compatible with the provisions of s 22 of the Refugees Act. This enactment gives effect in South Africa to international instruments and law relating to refugees and provides for the reception of asylum seekers. It was enacted to regulate applications for and recognition of refugee status and to provide for the rights flowing from that status. It must be interpreted and applied with due regard to the 1951 Convention Relating to Status of Refugees, the 1967 Protocol Relating to the Status of Refugees and the Convention Governing the Specific Aspects of Refugee Problems in Africa (OAU 1969), the Universal Declaration of Human Rights (UN 1948) and other human rights instruments to which South Africa is or becomes a party.20 [14] Section 2(a) of the Refugees Act provides that: ‗Notwithstanding any provision of this Act or any other law to the contrary, no person may be refused entry into the Republic, expelled, extradited or returned to any other country or be subject to any similar 20 Section 6 of the Refugees Act. See John Dugard SC with contributions by Daniel Bethlehem QC, Max du Plessis and Anton Katz International Law. A South African Perspective 3ed (2005) 348 ff; FJ Jenkins ‗Coming to South Africa: An overview of the application for asylum and an introduction to the Refugees Act‘ (1999) 24 SAYIL 182; M Beukes ‗―Economic refugees‖: South African reality in international refugee law‘ (2002) 27 SAYIL 206. measure, if as a result of such refusal, expulsion, extradition, return or other measure, such person is compelled to return to or remain in a country where – (a) he or she may be subjected to persecution on account of his or her race, religion, nationality, political opinion or membership of a particular group; or (b) his or her life, physical safety or freedom would be threatened on account of external aggression, occupation, foreign domination or other events seriously disturbing or disrupting public order in either part or the whole of that country.‘ In terms of the Refugees Act a person qualifies for refugee status if he or she has a well-founded fear of being persecuted by reason of his or her race, tribe, religion, nationality, political opinion or membership of a particular social group, and is outside the country of his or her nationality and is unable or unwilling to avail him or herself of the protection of that country or, not having a nationality and being outside the country of his or her former habitual residence is unable or, owing to such fear, unwilling to return to it.21 A person also qualifies for refugee status if owing to external aggression, occupation, foreign domination or events seriously disturbing or disrupting public order in either a part or the whole of his or her country of origin or nationality he or she is compelled to leave his or her place of habitual residence in order to seek refuge elsewhere.22 Any dependant of either of the two categories of persons referred to also qualifies for refugee status.23 Certain groups of people do not qualify for refugee status. These include persons in respect of whom there is reason to believe that they have committed a crime against peace, a war crime or a crime against humanity, or a crime, albeit not of a political nature, which would if committed in South Africa be punishable by imprisonment.24 Persons who are guilty of acts contrary to the objects and principles of the United Nations Organisation or the Organisation for African Unity,25and persons 21 Section 3(a) of the Refugees Act. See Union of Refugee Women & others v Director: Private Security Industry Regulatory Authority & others 2007 (4) SA 595 para 29. 22 Section 3(b) of the Refugees Act. 23 Section 3(c) of the Refugees Act. 24 Section 4(1)(a) and (b) of the Refugees Act. 25 Section 4(c) of the Refugees Act. who enjoy the protection of any other country are also excluded.26 Provision is made for the cessation of refugee status.27 [15] The Refugees Act and the regulations28 made under it prescribe the procedure to be followed when applying for asylum. An application for asylum must be made to a Refugee Reception Officer at any Refugee Reception Office.29 The Refugee Reception Officer must ensure that the application is properly completed and must, if necessary, assist the applicant in completing the form. He or she may also conduct an enquiry in order to verify the information furnished in the application. The application must then be submitted to a Refugee Status Determination Officer.30 No proceedings may in terms of s 21(4) be instituted or continued against any person in respect of his or her unlawful entry into or presence within the Republic if: ‗(a) such person has applied for asylum in terms of subsection (1), until a decision has been made on the application and, where applicable, such person has had an opportunity to exhaust his or her rights of review or appeal in terms of Chapter 4; or (b) such person has been granted asylum.‘ [16] Section 22 deals with an asylum seeker permit to be issued to an asylum seeker. It provides: ‗(1) The Refugee Reception Officer must, pending the outcome of an application in terms of section 21(1), issue to the applicant an asylum seeker permit in the prescribed form allowing the applicant to sojourn in the Republic temporarily, subject to any conditions, determined by the Standing Committee, which are not in conflict with the Constitution or international law and are endorsed by the Refugee Reception Officer on the permit. (2) Upon the issue of a permit in terms of subsection (1), any permit issued to the applicant in terms of the Aliens Control Act, 1991, becomes null and void, and must forthwith be returned to the Director- General for cancellation. 26 Section 4(d) of the Refugees Act. 27 Section 5 of the Refugees Act. 28 GN R 366, GG 21075, 6 April 2000 as amended by GN R938, GG 21573, 15 September 2000. 29 Section 21(1) of the Refugees Act. 30 Section 21(2) of the Refugees Act. (3) A Refugee Reception Officer may from time to time extend the period for which a permit has been issued in terms of subsection (1), or amend the conditions subject to which a permit has been so issued. (4) The permit referred to in subsection (1) must contain a recent photograph and the fingerprints or other prints of the holder thereof as prescribed. (5) A permit issued to any person in terms of subsection (1) lapses if the holder departs from the Republic without the consent of the Department. (6) The Department may at any time withdraw an asylum seeker permit if— (a) the applicant contravenes any conditions endorsed on that permit; or (b) the application for asylum has been found to be manifestly unfounded, abusive or fraudulent; or (c) the application for asylum has been rejected; or (d) the applicant is or becomes ineligible for asylum in terms of section 4 or 5. (7) Any person who fails to return a permit in accordance with subsection (2), or to comply with any condition set out in a permit issued in terms of this section, is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years, or to both a fine and such imprisonment.‘ [17] The Refugee Status Determination Officer must make the decision regarding the application for asylum. He or she may request any information or clarification from the applicant or the Refugee Reception Officer, may consult with or invite a United Nations High Commissioner for Refugees representative to furnish information and may, with the permission of the asylum seeker, provide the latter representative with any information that may be requested.31 When the application is considered the Refugee Status Determination Officer must have due regard to s 33 of the Constitution and must, in particular, ensure that the applicant fully understands his or her rights and responsibilities and the evidence presented.32 He or she must at the conclusion of the hearing grant asylum; or reject the application as manifestly unfounded, abusive or fraudulent; or reject it as unfounded; or refer any question to the Standing Committee.33 31 Section 24(1) of the Refugees Act. 32 Section 24(2) of the Refugees Act. 33 Section 24(3) of the Refugees Act. See also s 24(4). Provision is made in the Refugees Act for the review by the Standing Committee of certain decisions made by the Refugee Status Determination Officer.34 An asylum seeker may also appeal against the decision of the Refugee Status Determination Officer to reject his application as being unfounded.35 The Appeal Board may confirm, set aside or substitute any decision taken by a Refugee Status Determination Officer in terms of s 24(3).36 [18] A person whose asylum seeker permit has been withdrawn by the Department of Home Affairs in terms of s 22(6) may be arrested and detained pending finalisation of the application for asylum, in the manner and at a place determined ‗with regard to human dignity‘.37 However, s 29(1) provides: ‗No person may be detained in terms of this Act for a longer period than is reasonable and justifiable and any detention exceeding 30 days must be reviewed immediately by a judge of the High Court of the provincial division in whose area of jurisdiction the person is detained, designated by the Judge President of that division for that purpose and such detention must be reviewed in this manner immediately after the expiry of every subsequent period of 30 days.‘ [19] The respondents‘ reliance on s 23(2) of the Immigration Act to justify the appellant‘s detention is, as I have said, misconceived. Section 23(2) provides that ‗[d]espite anything contained in any other law‘ the holder of an asylum transit permit becomes, on expiry of the permit, an ‗illegal foreigner‘ liable to be dealt with under the Immigration Act. This contention, however, does not account for s 21(4) of the Refugees Act which provides that ‗[n]otwithstanding any law to the contrary‘ no proceedings may be instituted or continued against any person in respect of his or her unlawful entry into or presence in the country if that person has applied for asylum in terms of s 21(1) until a decision has been made on his or her application and that person has had an opportunity to exhaust his or her rights or review or appeal in terms of the Refugees Act. Section 23(2) of the Immigration Act is a general enactment passed after the Refugees Act which deals with the specific situation of refugees. In so far as there may be a 34 Section 25(1) and (2) of the Refugees Act. 35 Section 26(1) of the Refugees Act. 36 Section 26(2) of the Refugees Act. 37 Section 23 of the Refugees Act. conflict between the two provisions they should be reconciled. Where two enactments are not repugnant to each other, they should be construed as forming one system and as re-enforcing one another. In Petz Products v Commercial Electrical Contractors38 it was said: ‗Where different Acts of Parliament deal with the same or kindred subject-matter, they should, in a case of uncertainty or ambiguity, be construed in a manner so as to be consonant and inter-dependant, and the content of the one statutory provision may shed light upon the uncertainties of the other.‘ The two provisions can be reconciled with each other without doing violence to their wording and in accordance with the spirit of the international instruments the Refugees Act seeks to give effect to.39 It follows that s 23(2) of the Immigration Act ceases to be of application when an asylum seeker permit is granted to an ‗illegal foreigner‘. He or she can thereafter no longer be regarded as an ‗illegal foreigner‘ and no proceedings may be instituted or continued against such a person in respect of his or her unlawful entry into or presence in the country until a decision has been made on his or her application or he or she has exhausted his or her rights of review or appeal. The judgment in Jeebhai40 on which the respondents rely did not consider s 21(4) of the Refugees Act. It is of no assistance to them in this matter. [20] There are other reasons why the detention of the appellant is unlawful under the Refugees Act. First, he has been detained for a period far in excess of 30 days. Section 29(1) of the Refugees Act prohibits the detention of a person for a longer period than is ‗reasonable and justifiable‘ and, in any event, ‗any detention exceeding 30 days‘ must be reviewed by a judge of the High Court. It is common cause that the appellant‘s detention has never been reviewed by the High Court. [21] Second, s 23 regulates the detention of an asylum seeker. This may only be done ‗if the Department has withdrawn an asylum seeker permit in terms of section 22(6)‘. The withdrawal of the asylum seeker permit is thus a jurisdictional fact for the 38 1990 (4) SA 196 (C) at 204H-I. See R v Maseti & others 1958 (4) SA 52 (E) 53H-I; Nkabinde v Nkabinde and Nkabinde 1944 WLD 112 at 122; Johannesburg City Council v Makaya 1945 AD 252 at 257 and 259; Chotabhai v Union Government & another 1911 AD 49. Steyn above p 153 and 188 ff. 39 See Dugard above p 351 and s 6 of the Refugees Act. 40 Jeebhai & others v Minister of Home Affairs & another 2009 (5) SA 54 (SCA). lawful detention of the asylum seeker. It is common cause that appellant‘s asylum seeker permit has not been withdrawn. [22] Third, s 22 of the Refugees Act obliges the Refugee Reception Officer to issue to an applicant for asylum ‗an asylum seeker permit … allowing the applicant to sojourn in the Republic temporarily.…‘ As I have said, in the court a quo Willis J held that the right to sojourn did not necessarily entail a right to move about freely in South Africa without any restrictions. The applicant was sojourning in South Africa, he opined, albeit under restriction. I do not agree. ‗Sojourn‘ means ‗to make a temporary stay in a place; to remain or reside for a time‘,41 which implies a decision to stay or remain in a certain place. This is not the same as the detention of a person in a place against his will. After an asylum seeker permit has been issued to him or her the asylum seeker cannot be regarded as an ‗illegal foreigner‘ as contemplated by the Immigration Act.42 The provisions of ss 38(1), 39(1)(a), 42(1) and 49(6) prohibiting the employment, teaching or harbouring of an ‗illegal foreigner‘ and rendering these acts offences cannot be applied to an asylum seeker to whom a permit in terms of s 22 has been issued. His or her detention would also be in contravention of s 2 of the Refugees Act entrenching the State‘s international obligation of non-refoulement. Since the appellant‘s asylum seeker permit has expired and has not been extended in terms of s 22(3) of the Refugees Act it is necessary to order that an asylum seeker permit be re-issued to him. [23] I am aware of the concerns of the respondents as expressed in the judgment of the court a quo that the state has a legitimate interest in trying to curb illegal 41 Oxford Universal Dictionary sv ‗sojourn‘. A ‗sojourner‘ is ‗a temporary resident‘. 42 Kiliko & others v Minister of Home Affairs & others 2006 (4) SA 114 (C) para 27; Tafira & Others v Ngozwane & others (GNP) (case 12960/06 delivered on 12 December 2006) para 23. With reference to Minister of Home Affairs & others v Watchenuka & another 2004 (4) SA 326 (SCA) Dugard above p 351 remarks that ‗[a]sylum seekers are thus authorized in general to work or study in South Africa pending the finalization of their applications for asylum.‘ immigration.43 However, these concerns could have been addressed by the imposition of conditions in terms of s 22 of the Refugees Act and their effective monitoring.44 ___________________________ F R Malan Judge of Appeal 43 See para 11 above. 44 See Annexure 3 to the Refugee Regulations (Forms and Procedure) published under GN R 366, GG 21075, 6 April 2000 as amended by GN R938, GG 21573, 15 September 2000. APPEARANCES: APPELLANT: Steven Budlender (with him Irene de Vos) Instructed by Lawyers for Human Rights, Johannesburg Webbers, Bloemfontein RESPONDENT: IAM Semenya SC (with him N Manaka) Instructed by State Attorney, Johannesburg State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 12 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. M A ARSE v MINISTER OF HOME AFFAIRS & OTHERS On 24 February 2010 and after the conclusion of argument the Supreme Court of Appeal ordered the immediate release of Mr Mustafa Aman Arse, an Ethiopian citizen, who was detained as an ‘illegal foreigner’ under the Immigration Act 13 of 2002, from the Lindela Holding Facility. The Court indicated that it would furnish reasons for its order. The Supreme Court of Appeal today gave those reasons. Mr Arse, who claims to have left his country of birth due to political and tribal persecution, was issued with an asylum transit permit on his entering South Africa 8 December 2008 so that he could proceed to a Refugee Reception Office to apply for asylum. He was arrested after expiry of his asylum transit permit. While in detention, an asylum seeker permit was issued to him. His application for asylum was refused but an appeal to the Refugee Appeal Board is pending. He brought an urgent application to the Johannesburg High Court for his release and the re-issue to him of a valid asylum seeker permit. His application was dismissed the Johannesburg court holding that the detention of an asylum seeker was compatible with the right given by the Refugees Act 130 of 1998 to ‘sojourn’ in the country temporarily. The Supreme Court of Appeal disagreed and emphasised that a person illegally detained had a right to be released unconditionally. An asylum seeker in possession of an asylum seeker permit is not an ‘illegal foreigner’ as contemplated by the Immigration Act. Pending finalisation of the application for asylum and an appeal or review he or she may not be detained.

2350

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No 668/2008 In the matter between: MINISTER OF SAFETY AND SECURITY Appellant and PIETER SAMUEL THEO SLABBERT Respondent Neutral citation: Minister of Safety & Security v Slabbert (668/2008) [2009] ZASCA 163 (30 November 2009]) Coram: Harms DP, Mthiyane, Lewis, Mhlantla JJA, et Hurt AJA Heard: 12 November 2009 Delivered: 30 November 2009 Summary: Delict – arrest and detention – Trial court having regard to issues not pleaded or fully canvassed – Further detention of the plaintiff justified. ____________________________________________________________ ORDER ____________________________________________________________ On appeal from: High Court, Grahamstown (Kroon J sitting as a court of first instance). (1) The appeal is upheld with costs including the costs of two counsel. (2) The order by the court below is set aside and replaced with an order in the following terms: 'The plaintiff's claims are dismissed with costs'. JUDGMENT ___________________________________________________________ MHLANTLA JA (Harms DP, Mthiyane, Lewis JJA and Hurt AJA concurring): [1] This is an appeal with the leave of the court below against a judgment of Kroon J in the High Court, Grahamstown, in terms of which the appellant was ordered to pay damages allegedly suffered by the respondent by reason of unlawful detention. The appellant is the employer of the police officers who arrested and detained the respondent for being drunk and disorderly in public. The respondent instituted action against the appellant claiming damages for wrongful arrest and detention, assault and malicious prosecution on the basis that the appellant was vicariously liable for his employees' wrongful acts. In this judgment I shall refer to the respondent as the plaintiff and the appellant as the defendant. [2] During the night of 5 February 2005 Constable Magoxo and a colleague were on patrol duty in Klipplaat when they encountered a bakkie parked in the middle of Main Street. This motor vehicle constituted an obstruction to traffic. Shortly after their arrival at the vehicle, the plaintiff approached them and they observed that he was drunk. The vehicle belonged to the plaintiff who attempted to drive it despite Magoxo's request that the plaintiff get a sober driver to drive it for him. [3] Realising that the plaintiff would constitute a danger to other road users, Magoxo arrested him for being drunk and disorderly in a public street. The plaintiff resisted arrest. He was only subdued after Magoxo had used pepper spray on him and some force was applied. He was then taken to the local police station where he was detained overnight. While Magoxo was processing his detention, the plaintiff's wife arrived and requested that he be released into her care. As the plaintiff was still in a drunken state, Magoxo declined to release him. He explained that the plaintiff would be released after four hours if he were found to be sober, otherwise he would be detained further until he sobered up sufficiently. Apparently the police in Klipplaat have a practice in terms of which they keep suspects held on drunk and disorderly charges in detention for four hours to enable them to dry out or sober up. Constable Magoxo's refusal was in terms of that practice. The plaintiff was eventually released at 07h15 the next morning and was issued with a notice directing him to appear in court on a specified date. The charge was however subsequently withdrawn. As mentioned above he sued the defendant for various wrongful acts. [4] At the conclusion of the trial, the claims for assault, malicious prosecution and wrongful arrest were dismissed. The court found that the plaintiff had been lawfully arrested for being drunk and disorderly in public. The court, however, divided his detention into two periods, namely, the period before the plaintiff's wife requested that he be released into her care and the period following the request until his release the next morning. The court found that his initial detention was justified. Regarding the other period, it found that his further detention was unlawful and held the defendant liable to compensate the plaintiff. It awarded him damages in the sum of R20 000. [5] The court below found that, as Magoxo had applied the practice that a person arrested for drunkenness be detained for a minimum period of four hours, the plaintiff's detention following his wife's request for his release was not justified. Following the judgment in that court in Van Niekerk v Minister of Safety and Security1 the court below held that the refusal to release the plaintiff rendered his further detention wrongful. The reasons underlying the court's finding were as follows: 'In the present case, too, the evidence was that when Magoxo, after locking the plaintiff in the cells, went to talk to the plaintiff's wife she requested the release of the plaintiff. The request was refused on the basis of the implementation of the practice referred to above. The inference is that the request of the plaintiff's wife that he be released into her care, carried with it the implicit undertaking that she would see to his welfare. By that stage the plaintiff had long since adopted a calm and submissive attitude. The plaintiff was known to Magoxo, his particulars had been secured, and 1 Case No 1212/05 ECD (15 June 2006). there was no reason to apprehend that he would not stand trial to face any charge preferred against him. I am satisfied that the invasion of the plaintiff's constitutional rights to freedom constituted by his continued detention subsequent to his wife's request for his release was unjustifiable, and the exigencies of the matter could have been met at that stage by the issue to him of the J534 notice and releasing him into the care of his wife.' [6] It is against this conclusion that the defendant launched the appeal. [7] The issue on appeal is whether the high court's finding that part of the plaintiff's detention was unjustified addresses an issue covered by the case pleaded and established by the plaintiff. [8] A determination of this issue requires a consideration of the pleadings and to a lesser extent the evidence led at the trial. In the particulars of claim, the plaintiff alleged that the arrest and detention were wrongful because there were no reasonable grounds for his arrest and detention and that the arresting officers were aware of this fact. The relevant part of the particulars of claim reads: '(a) Op Februarie 2005 en te Hoofstraat, Klipplaat, binne die jurisdiksie gebied van die bogemelde Agbare Hof, is die Eiser wederregtelik en onregmatiglik deur lede van die Suid-Afrikaanse Polisiediens (hierin verder na verwys as "die SAPD lede") sonder 'n lasbrief gearresteer en van sy vryheid ontneem, en was die SAPD lede te alle relevante tye wederregtelik en opsetlik die oorsaak dat die Eiser te die Suid- Afrikaanse Polisiediens se aanhoudingselle te Klipplaat aangehou is terwyl daar, tot die wete van die SAPD lede geen wettige gronde vir die arrestasie, aanvanklike aanhouding en verdere aanhouding van die Eiser was nie. (b) Eiser was vanaf ongeveer 22h30 op 6 Februarie 2005 tot ongeveer 08h00 op 7 Februarie 2005 in aanhouding. (c) Te alle relevante tye en meer in besonder ten tye van die Eiser se arrestasie en aanhouding soos hierbo vermeld was die SAPD lede aan diens, en het hulle opgetree binne die diensbestek van hulle diensverhouding met die Verweerder. (d) Bovermelde arrestasie, aanhouding en verdere aanhouding is animo iniuriandi deur die SAPD lede versoorsaak en uitgevoer.' [9] In his plea the defendant denied all the above allegations and in amplification contended that the arrest and detention were justified by law. He averred that the plaintiff was arrested for committing an offence in the presence of police officers. It is no longer disputed that the plaintiff was drunk and disorderly in public. Nor is it in doubt that the officer who arrested him complied with the provisions of s 40 of the Criminal Procedure Act 51 of 1977 which authorises an arrest without a warrant. [10] The question that arises for consideration is whether the case pleaded by the plaintiff covers the assertion that the refusal to release him into his wife's care rendered the further detention unlawful. A perusal of the particulars of claim shows clearly that such a case was not pleaded. As stated, the arrest and detention were challenged on the basis that the police had no legal justification for effecting them. As expected, the defendant's plea addressed only that issue. [11] The purpose of the pleadings is to define the issues for the other party and the court. A party has a duty to allege in the pleadings the material facts upon which it relies. It is impermissible for a plaintiff to plead a particular case and seek to establish a different case at the trial.2 It is equally not permissible for the trial court to have recourse to issues falling outside the pleadings when deciding a case. [12] There are, however, circumstances in which a party may be allowed to rely on an issue which was not covered by the pleadings. This occurs where the issue in question has been canvassed fully by both sides at the trial. In South British Insurance Co Ltd v Unicorn Shipping Lines (Pty) Ltd,3 this court said: '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'. [13] The issue on which the court below relied as a basis for liability was not fully canvassed at the trial presumably because it was not pleaded and the parties' attention was not drawn to it. It was fleetingly touched upon during Magoxo's cross-examination. The response elicited was that the plaintiff was still drunk at the time his wife made the request. The issue was not pursued and furthermore the plaintiff's wife did not testify to support the contention. [14] Counsel for the plaintiff submitted that the plaintiff ought to have been released into his wife's custody even if he were drunk. There is no merit in this submission. It has to be borne in mind that the plaintiff's wife never testified. No attempt was made to assess whether or not the 2 See particularly Moaki v Reckitt & Colman (Africa) Ltd and another 1968 (3) SA 98 (A) at 102A; Imprefed (Pty) Ltd v National Transport Commission 1993 (3) SA 94 (A) at 107; Buchner and another v Johannesburg Consolidated Investment Co Ltd 1995 (1) SA 215 (T) at 216H-J; Jowell v Bramwell- Jones and others 1998 (1) SA 836 (W) at 902H. 3 1976 (1) SA 708 (A) at 714G. inebriated plaintiff would have submitted to his wife's control once released; whether he would have refrained from behaving in a drunk and disorderly manner and whether he would have remained with his wife once released. There is furthermore no evidence that he was no longer a danger to himself and/or members of the public. The evidence therefore does not support the conclusion that the plaintiff was calm and submissive at the time of the request for his release. The police had subdued him and he remained in their control. [15] In the matter of Nelson v Minister of Safety and Security,4 the appellant's 18 year old son Romano had been arrested and detained after a police operation on a charge of riotous behaviour. He was kept in the police cells until 10h00 the next morning. It appeared that Romano had been arrested after he had been seen by a police officer, Holland, staggering drunk in the middle of the road brandishing a bottle of beer, behaving in a riotous and disorderly fashion and obstructing traffic. The full bench in dismissing the appeal held: 'That he co-operated to the extent of giving his name and address to the police and that he had seemingly calmed down after being taken to the police is not a sufficiently good reason. It is to be expected that people who are drunk and disorderly will revert to their previous pattern of behaviour as soon as the police have turned their back. Indeed, I believe that it would have been irresponsible for the police to have released Romano unless they could be sure that he was no longer dangerous.' [16] In this case too we have no evidence to suggest that it would have been safe or sensible to release the plaintiff into his wife's care. No one knew how he would have behaved if released. The judge a quo also did 4 [2007] ZAECHC 40 (14 June 2007) at para 8. not know, yet made a finding without any factual basis. It is not necessary, in my view, to comment in any detail on the high court's inferential reasoning. Suffice it to say that the inferences it drew were not supported by the established facts. [17] It follows that the court below erred in finding that the plaintiff's further detention was not justified. As a result its order must be set aside. I have read the judgment of Harms DP and agree with it. [18] In the result the following order is made: (1) The appeal is upheld with costs including the costs of two counsel. (2) The order by the court below is set aside and replaced with an order in the following terms: 'The plaintiff's claims are dismissed with costs.' _____ __________ N Z MHLANTLA JUDGE OF APPEAL HARMS DP: [19] The facts of the case appear from the judgment of Mhlantla JA. I concur in her judgment but wish to elaborate on the consequences of the high court’s finding that continued detention was wrongful. [20] The right to dignity and freedom and security of the person are core values of the Constitution and any arrest and detention of a person amounts to a prima facie infringement of these rights. Our common law adopted the same approach and it is for this reason that the police, if challenged, have to justify an arrest and detention. This means that the police bear the onus of proving that the arrest and detention are not wrongful. [21] The onus can arise only after the issue itself has arisen. The aggrieved person must claim that a particular arrest or detention was wrongful before the police are saddled with this onus. As pointed out in the judgment of Mhlantla JA, the plaintiff’s case was that his arrest and detention were unlawful because he had not been drunk and disorderly. His case on the pleadings was not, in the alternative, that his detention had become unlawful when his wife and friend arrived. [22] A court is not bound by pleadings if a particular issue was fully canvassed during the trial. But there is not the slightest suggestion that the matter was so canvassed. As a matter of fact, neither the plaintiff’s friend nor his wife testified on his behalf in respect of his state of intoxication at the police office. One can only assume, in the absence of any other explanation, that they would not have supported him. In other words, the police had at the end of the plaintiff’s case not the slightest inkling that they had to defend the continued detention after the arrival of the plaintiff’s wife at the police station. The defendant was entitled at that stage, at the very least, to know that it had to establish that the legality of the continued detention was an issue. Cases by ambush are not countenanced. [23] One gains the impression from his questioning that the trial judge assumed that the police had a duty to check every few minutes whether the plaintiff was still drunk and disorderly and unless they are able to show from minute to minute that his detention was no longer required they would have failed to discharge their onus. The police in this case visited the cells regularly and found after the first visit that the plaintiff was asleep. The implication that they should have woken him to check his state of inebriation and to release him in the middle of the night appears to me to be farfetched. [24] I would like to recount the learned judge’s reasoning and relate it to the evidence. He held that the plaintiff was not only drunk and disorderly but that he was also intent on committing the offence of drunken driving and that the police were accordingly ‘obliged’ to arrest and detain him. He further held that ‘the plaintiff’s drunken condition and disorderly attitude was also sufficient, at least initially, to lock him up in the cells.’ He then posed the question which was not an issue, as I have sought to point out, namely whether his continued detention was justified. [25] In answering this question the learned judge referred to the fact that after locking up the plaintiff Magoxo went to talk to the plaintiff’s wife. She had requested his release. The judge held that (a) the request was refused on the basis of the implementation of a police practice to release such a person only after four hours; (b) the wife’s request carried with it the ‘implicit undertaking that she would see to his welfare’; and (c) by that stage the plaintiff had long since adopted a calm and submissive attitude. [26] I fear that the trial judge misconstrued the evidence. Plaintiff’s counsel was unable to support these factual findings on the record. Magoxo made it quite clear that the plaintiff was at that stage still drunk and that his wife was fully aware of the fact. He also said that ‘if anyone could have come to the police station and requested his release, then he would have been released if he was sober.’ As to the second point, it was never suggested to Magoxo that the wife was able or willing to look after the plaintiff’s welfare in his inebriated state. And as to the last point, if the conclusion was based on the fact that the plaintiff, after having been sprayed with pepper, handcuffed and locked up, was submissive I can understand it: but that does not justify the conclusion that he was entitled to be released. ___________ LTC HARMS DEPUTY PRESIDENT Appearances: For Appellant E A S Ford SC N J Sandi N N Dullabh & Co , GRAHAMSTOWN The State Attorney, BLOEMFONTEIN For Respondent H J van der Linde SC A Frost G P Van Rhyn, Minnaar & Co Inc, UITENHAGE Honey Attorneys Inc, BLOEMFONTEIN

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL 30 November 2009 STATUS: Immediate MINISTER OF SAFETY AND SECURITY v PIETER SAMUEL THEO SLABBERT CASE NO 668/2008 Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal The Supreme Court of Appeal today upheld an appeal against a judgment of the High Court, Grahamstown: that court had ordered the Minister of Safety and Security (the appellant) to pay damages allegedly suffered by Mr Slabbert (the respondent) in respect of unlawful detention. On 5 February 2005 the respondent was arrested by police officers for being drunk and disorderly in public. He was locked up in the police cells. His wife arrived whilst the police were completing the documents relating to his arrest and requested that he be released into her care. The police declined to do that. The respondent was released at 07h15 the next morning. He subsequently instituted action against the appellant and claimed damages for wrongful arrest, detention, assault and malicious prosecution. No allegation was made in the plaintiff's particulars of claim about the refusal of the police to release him upon his wife's request. All that was alleged was that the police had no legal justification for effecting the arrest and detention. The court below found that the respondent had been lawfully arrested and that his initial detention that necessarily followed was lawful. It found, however, that his continued detention after his wife had sought his release was unlawful and accordingly awarded the respondent damages in the sum of R20 000. The SCA held that the trial court had regard to issues which were not pleaded or canvassed in the trial. It further held that there was no factual basis for the finding and that the inferences drawn by the court were not supported by the established facts. This court thus set aside the order of the court below and replaced it with an order dismissing the plaintiff's claims with costs. --- ends ---

3689

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1021/2019 In the matter between: HAL obo MML APPELLANT and MEC FOR HEALTH, FREE STATE RESPONDENT Neutral citation: HAL obo MML v MEC for Health, Free State (Case no 1021/2019) [2021] ZASCA 149 (22 October 2021) Coram: WALLIS, MOLEMELA and MAKGOKA JJA and ROGERS and UNTERHALTER AJJA Heard: 9 March 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, and by publication on the Supreme Court of Appeal website and release to SAFLII. The time and date for hand down is deemed to be 10h00 on 22 October 2021. Summary: Medical negligence – cerebral palsy – circumstances of brain injury – adequacy of evidence of negligence. Trial – conduct – obligation of parties to define the issues – sequence of witnesses – joint minutes of experts – agreement on facts contrasted with agreement on opinion – approach to agreements on matters of opinion ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Free State Division of the High Court, Bloemfontein (Daffue J, sitting as court of first instance): The appeal is dismissed with costs of two counsel. ________________________________________________________________ JUDGMENT ________________________________________________________________ Makgoka JA (Wallis JA and Unterhalter AJA concurring) (Majority judgment): [1] On 1 May 2005 a pregnant Ms HAL (the appellant), then 21 years old, was admitted to the Thebe Hospital (the hospital) in Harrismith, Free State, at approximately 13h00. The following morning, 2 May 2005 at approximately 05h00, she gave birth to a baby boy (MML) by way of a normal vaginal delivery. At the time neither she nor the hospital raised an alarm about his condition, but some considerable time later he showed signs of neurological regression and eventually he was diagnosed with cerebral palsy. A magnetic resonance imaging (MRI) scan of the child’s brain taken in August 2014, a little over nine years later and immediately before the commencement of this action, revealed that he had suffered a hypoxic ischemic encephalopathy (HIE), a brain injury caused by lack of oxygen and lack of blood flow in the brain. It was further confirmed that this was a partial prolonged type brain injury, which develops slowly over 30 to 45 minutes (or longer), and occurs with partial asphyxia.1 The brain’s response 1 This must be distinguished from an acute profound injury, which is severe and of short duration, with almost total asphyxia, that is, interruption of the supply of oxygen, to the brain resulting in injury to the central deep grey matter in the brain. Its onset is sudden. It is normally caused by a catastrophic sentinel event like a mother falling, etc. is to direct the flow of blood entirely to its central area, thereby depriving the outside portion of blood and oxygen and causing damage there. [2] On 2 September 2014, the appellant instituted action against the respondent, the Free State Member of the Executive Council (MEC) for Health, in the Free State Division of the High Court, Bloemfontein (the high court). She claimed that MML had suffered the brain injury during the latter stages of the labour and birth process (ie the intrapartum period). She attributed MML’s injury to the negligence of the hospital staff, alleging they did not adequately monitor her and her unborn child, as a result of which they failed to detect foetal distress. This, she alleged, led to MML’s brain injury. The respondent denied liability. After a lengthy trial, the high court dismissed the appellant’s action with the costs of two counsel, but subsequently granted the appellant leave to appeal to this Court. [3] From its inception, the matter was hampered by the absence of neonatal and obstetric records. The experts who compiled their reports did so on the basis of the limited available records and the appellant’s factual statements. The factual matrix that was before the high court comprised the following: the reports of the experts and in some instances, their oral evidence; the evidence of the appellant and some of the midwives who were on duty at the hospital on 1 and 2 May 2005 or at the clinic she attended after MML’s birth; the limited hospital records in the form of the Maternity Register, the Delivery Register, the Ward and Discharge Summary forms and the Road to Health Chart; the extra-judicial statements made by the appellant to some of the experts during their consultations with her as recorded in their reports; and the appellant’s statements in the form of affidavits in an application for condonation of the late delivery of the statutory notice in terms of s 3(4)(a) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 (the condonation application). [4] In the absence of the full hospital records, I deem it necessary to set out in some detail the contents of the available records. But before I do so, I have to address the suggestion that somehow these records were either hearsay evidence or that their contents were disputed. This is simply incorrect. These documents were discovered and placed before the court by the appellant’s counsel during his opening address as the appellant’s merits documents. Whether formally under Rule 36(9) or informally, they appear to have been accepted as having been completed by the persons shown to have compiled them and to be what they purport to be. The Discharge Summary and the Road to Health document had been in the appellant’s possession all along. They were referred to by all the expert witnesses on the basis that they were accurate. [5] During the course of the trial no reservation was expressed in regard to the accuracy of these documents, although in certain respects the appellant's evidence was inconsistent with them. They featured in the joint minutes agreed between Mrs Bekker and Prof Nolte and between Dr Hofmeyr and Dr Schoon, without any question being raised about the accuracy of their contents. No-one suggested that they had been formulated with a view to putting a favourable gloss on the treatment the appellant received. There is no merit in the contention that their contents were disputed or were inadmissible hearsay, as opposed to being an accurate reflection of what the lost hospital records contained. [6] Much store was placed on the fact that the principal maternity and obstetric records were missing. This does not assist the case of either party. The records were not available, and we do not know what has happened to them. Whether this was due to incompetence in the administration of the records or something nefarious we cannot say. Nor can any inference, favourable or unfavourable, be drawn from their absence. As I explain more fully in paras 77 and 78 below, the absence of hospital records in the context of this case is a neutral point. There is mutual suspicion by the parties that the other had a hand in the disappearance of the records. [7] I therefore respectfully differ from the view expressed by my sister Molemela JA in paras 116 to 123 of her judgment, where she suggests that this warrants a ‘charitable approach, which gives cognizance to the plight of the litigant’. The MEC was as handicapped by the absence of the records as the appellant. If there was nothing untoward about MML's birth or his appearance when taken to the clinic thereafter, the MEC's key witnesses, the three midwives, would not be expected to remember the appellant and MML after 13 years. In their evidence they said this was the case. If they had purported to remember and claimed that MML's birth was uneventful and that he appeared normal when observed at the clinic, they would have been accused of fabricating evidence, because after that lapse of time no-one can be expected to remember unremarkable events. They needed to consult records in order to refresh their memory of events. [8] All that is available are the documents to which reference is about to be made, one of which – the Discharge Summary form – can only have been derived from the entries in the missing record and the remainder of which were original records. The entries in regard to the appellant were consistent with those of other patients who gave birth at the same time and were listed on the same page of the registers. There is no reason to regard them with suspicion. Given that there is no suggestion in these records that anything was amiss in regard to the appellant’s delivery and MML, that is at most an indication that the missing records did not record a problem. However, one cannot go further than that to infer anything about the treatment received by the appellant and MML. [9] In regard to these missing records the appellant’s counsel submitted that an adverse inference should be drawn against the MEC for not calling Mr Rakatsinyane, the keeper of the key to the strong room where the records were stored at Thebe Hospital. Leaving aside the fact that he did not indicate what inference the court should draw from this, it is as well to reiterate that the basis for a court to draw an adverse inference from the failure to call a witness, in accordance with the decision of this Court in Elgin Fireclays v Webb,2 is that: ‘… it is true that if a party fails to place the evidence of a witness, who is available and able to elucidate the facts, before the trial Court, this failure leads naturally to the inference that he fears that such evidence will expose facts unfavourable to him. See Wigmore (secs. 285 and 286).) But the inference is only a proper one if the evidence is available and if it would elucidate the facts. … [T]the position … was not investigated; he may not have been available as a witness, or he may have seen no more of the occurrence than was testified to by the other witnesses. Consequently, no inference unfavourable to the respondent could properly be drawn.’ Mr Rakatsinyane may have been available, but there was no indication of what he could say about the records other than that they were missing. No inference could be drawn from that. There was nothing in the evidence to suggest that he obviously had something relevant to say and was being shielded from hostile cross-examination. [10] The same was true of the other witnesses whom it was suggested should have been called and whose absence was said to justify an undefined adverse inference. They were Ms Hlophe who made entries in the registers reflecting that both the appellant and MML were stable on discharge; Dr Matla, who is reflected in the registers as being both the admitting and discharging doctor;3 Sister Skosana, a general nursing assistant, who was present at the birth; and 2 Elgin Fireclays Ltd v Webb 1947 (4) SA 744 (A) at 749-750; Munster Estates (Pty) Ltd v Killarney Hills (Pty) Ltd 1979 (1) SA 621 (A) at 624B-H. 3 There is an indication that she may no longer be on the register of doctors held by the Health Professions Council of South Africa and that her whereabouts may be unknown. Sisters Moloi and Xaba, who dealt with MML at the clinic on occasions. They too, would not be expected to have independent recollection of the events of 1 and 2 May 2015. Other than the respective entries made by them, in regard to which there was no dispute, they would have had very little to testify about. It would therefore have served no purpose to call them as witnesses. Accordingly, nothing turns on the fact that they were not called as witnesses. [11] Turning to the records it is convenient to start with the Discharge Summary form and Ward Register. The person who completed these records was not identified, but Sister Mokoena said that they would have been completed from the maternity records.4 The Ward Admission and Discharge Register showed that the appellant and MML were discharged on 3 May 2005 at 14h35. It was recorded with regard to the child that he weighed 2,9 kg, and measured 51 cm, with a head circumference of 34 cm. BCG and Polio immunisations were administered and the child had been given Konakion and Chloromax shortly after birth. Method of feeding was recorded as ‘breast’. [12] There is also a section on postnatal advice in the Discharge Summary form, where among other things, the appellant was advised to wait two years before a further pregnancy. She was to visit a clinic on 12 May 2005 for a follow-up examination. According to the Delivery Register, the child’s Apgar scores were 7/10 and 8/10 at one and five minutes after birth, respectively.5 Counsel submitted that this was hearsay, but all of the medical witnesses relied on these scores and there is no basis for thinking that they were incorrectly inserted in the Delivery 4 The discharge summary appears to have been signed by one Mokoena, but sister Mokoena said it was not in her handwriting and she was not on shift at that time. It may have been another nurse with the same surname, who is shown on the duty roster. 5 APGAR stands for Appearance, Pulse, Grimace, Activity and Respiration. In the test, five factors are used to check a baby’s health. Each is scored on a scale of 0 to 2, with 2 being the best score. For Appearance the skin colour is checked; for Pulse, heart rate; for Grimace, reflexes; for Activity, muscle tone; and for Respiration, breathing rate and effort. The individual scores for the five factors are added up to obtain a score out of ten. The highest score to be achieved is 10 and scores of 7, 8 or 9 out of 10 are normal or good scores. Source: kidshealth.org Register, much less falsified, by the nurse aid who made the entries. Prof Nolte said in her evidence in chief that if one has a Discharge Summary then there must have been preceding records from which the information in the summary was obtained. [13] There is a section of the Discharge Summary about the mother, in which the following was recorded in respect of the appellant: there were no surgical or obstetric problems, and she looked well. Her pulse, temperature, and breasts were all normal. She had moderate vaginal bleeding and a tear of the perineum. The urinary output was good. She was given vitamin A. It was also recorded that family planning was discussed with the appellant, and the contraceptive method accepted by her was an injection. Also, the importance of breast-feeding was discussed with her and it was recorded as ‘initiated successfully’. [14] The Road to Health Chart is a document a mother has to present to a designated clinic or hospital for postnatal check-ups. According to the appellant’s chart, for the period June to December 2005, she visited the clinic every month, except for December. In 2006, no visits were recorded for August, October and December. The child seemed to develop normally, up to the age of approximately 18 months. His putting on weight slowed in the following six months, but there may have been other reasons for this. In May 2006 Wormstop, a proprietary remedy for the treatment of worms, was administered and in June the chart records that he had suffered from diarrhoea. In November he was again dewormed.6 It is not clear whether this was a routine precaution or directed at a specific condition. After 18 months he weighed 8.8 kg. 6 In the course of Prof Nolte’s evidence counsel for the appellant suggested that the relevant entry in the Road to Health document read ‘Dr worried’, but it was, in fact, the more prosaic ‘Dewormed’. [15] No visits were recorded thereafter for the period between December 2006 and April 2007. On the next scheduled visit in May 2007 the child weighed 9,1 kg and it was noted that he was vomiting. He again seems to have been dewormed. There were no recorded visits between June 2007 and October 2007. There was a visit in September 2008, but the note is unintelligible. In November 2007 it was recorded that the child weighed 10 kg. The next entry was in July 2008, in which it was recorded that the child had been coughing and vomiting for about four days. No visits were recorded for August and October 2008. The next scheduled appointment was on 10 November 2008 when the child was three and half years old. It was recorded that the child could not walk or stand and did not crawl. He could get from prone and supine positions to a sitting position. It was further recorded that he had low muscle tone in his legs and high muscle tone in his arms, and that he ate and drank by himself. This was the first record of his having any physical problems. [16] At various times from about the age of two MML’s condition was investigated, but it is not clear when the diagnosis of cerebral palsy was made, or when this was communicated to the appellant. The appellant told Dr Mogashoa that the problems manifested themselves after about eight months when he started to regress. There is evidence that she was referred to Manapo Clinic but her description of events suggests that as a result of administrative issues nothing came of this. In October 2011 there is a reference in the Road to Health Chart of a physiotherapist saying that the child could not walk and crawled abnormally. The appellant was given exercises for him. When she had a second child in 2012 the hospital records did not contain any reference to MML’s condition or any issues in regard to her previous pregnancy. MML has for some time been attending the Dimakatso Disabled Centre in Ntabazwe. [17] A number of joint minutes were handed in at the outset of the trial. Two of the appellant’s witnesses, Prof Andronikou, a specialist radiologist, and Prof Solomons, a paediatric neurologist, were parties to such minutes but were not called as witnesses. Three expert witnesses gave evidence on behalf of the appellant. They were Prof Nolte, a nursing specialist; Dr Hofmeyr, an obstetrician and gynaecologist, and Dr Gericke, a specialist paediatrician and geneticist. In addition, after they had given their evidence, the appellant testified. The MEC called Mrs Bekker, a midwife; three nurses, Sisters Msibi and Mokoena, who were on duty at the hospital and attended to the appellant and MML, and Sister Mosia, who was the manager of the clinic that the appellant attended with MML; Dr Kamolane, a specialist radiologist and party to the joint minute with Prof Andronikou; Dr Kganane, a paediatric intensivist; Dr Mogashoa, a paediatric neurologist and Dr Schoon, a specialist obstetrician and gynaecologist. Dr Griessel, who had subsequently become unavailable, was a party to one of the joint minutes with Prof Solomons. [18] Having considered the available hospital records, the joint minutes and the oral evidence adduced at the trial, and the opinions of the various experts, the high court found the appellant to have been a poor witness. It made credibility findings against her on key issues relating to the nature of care, monitoring and birth while in hospital. The high court found ‘internal and external contradictions as well as improbabilities’ in her version, which it held, rendered the opinions of the experts on her behalf, unreliable. The court said: ‘[The appellant’s] version to experts and evidence in court were aimed at taking advantage of missing records. Insofar as the experts relied on her version, and also the missing records, such evidence does not pass the reasonable and logical requirement test for acceptance of their opinions…’ [19] As was the case before the high court, the key issue in the appeal is the likely cause and timing of MML’s brain injury. The argument for the appellant was directed at overturning the judge's factual findings in regard to the reliability of her evidence and the acceptability of the opinions of some of her expert witnesses. Counsel for the appellant assailed the high court’s findings and conclusions on various bases. It was submitted that the uncontested evidence of the appellant, and the agreements concluded between the opposing experts, established that, in all probability, MML’s brain injury occurred in the intrapartum period. It was further submitted that he showed signs of brain injury immediately after birth, which signalled an intrapartum insult. The contention that MML showed signs of a brain injury after birth was based on three propositions: he had breathing problems, did not cry and had to be stimulated by the administration of oxygen using nasal prongs and being injected on his thigh; he could not latch, suck or swallow; and he was taken away from the appellant for five hours. If there were signs of brain injury immediately after MML’s birth that might be decisive of the appeal so I consider them first below. [20] The appellant testified that: ‘After the child was born, that child never cried. They put two pipes in the child’s nostrils. They also injected the child on the thighs.’ [21] It was common cause during the trial that the child was given an injection shortly after birth. The appellant sought to make much of this injection, testifying that ‘[t]hey just take something like a nail or something, they just put it on there or just stab the child on [the] thighs.’ In the cross-examination of Mrs Bekker, the midwife expert for the respondent, counsel for the appellant asked a hypothetical question as to what medication would be administered to a baby with breathing problems at birth. Her answer was that a medicine called Narcan would be injected into a child’s thighs. In their heads of argument, counsel for the appellant submitted that on the probabilities, ‘the pricking of both thighs could only have been the administration of Narcan …[which] only proves that [the child] must have been in distress at birth.’ [22] Context is important. Earlier in her evidence-in-chief, Mrs Bekker had been referred to the Discharge Summary form, where it was noted, among other things, that MML was given Konakion and Chloromax after birth. Mrs Bekker explained that Konakion is a vitamin K injection, which is routinely administered to babies immediately after birth to prevent any possible intracranial haemorrhage. Mrs Bekker further explained that as an intramuscular injection, Konakion is administered mostly in the upper thigh. There was nothing sinister about the injection administered to MML. In the face of the entry in the Discharge Summary form that Konakion was the injection administered to the child, it is difficult to understand how counsel can tenably insist that the child was injected with Narcan. Chloromax, Mrs Bekker explained, is an antibiotic drop to cleanse the baby’s eyes with sterile water to prevent eye infections. This too, is routine, in case the baby might have contracted an infection during birth. [23] With regard to the alleged use of nasal prongs (the technical name of the pipes the appellant said were inserted in the baby’s nostrils), there was some uncertainty on the part of sisters Mokoena and Msibi as to whether the hospital had nasal prongs as at May 2005, but it is unnecessary to determine this. Sister Msibi, one of the midwives on duty on 1-2 May 2005, explained that it is sometimes necessary to insert a suction tube into a child’s nostril to suck mucus. If this was done, and Sister Mokoena who attended at the birth was unable in the absence of clinical records to say whether it was, the appellant could possibly have confused the suction with the nasal prongs. However, Sister Msibi gave unchallenged evidence that nasal prongs, if available at all, were only available in the room for sick babies and not the delivery room. The appellant remained in the delivery room throughout, so she could not have seen the use of nasal prongs. [24] Furthermore, both Sisters Msibi and Mokoena and Dr Hofmeyr, an obstetrician called on behalf of the appellant, explained that if the child had respiratory problems which necessitated resuscitation, a face mask would be used. According to Dr Hofmeyr, while applying oxygen through the nostrils is an alternative, this would have entailed a more prolonged administration of oxygen, and not just a quick intervention to help a baby recover from the trauma of the delivery. The appellant testified that the administration of what she called 'nasal prongs' to the child was for a short duration. On the most favourable view of the appellant's evidence, there was therefore a plausible explanation for both the injection and for the alleged use of nasal prongs. The former was a routine vitamin K injection, while in regard to the latter the appellant possibly mistakenly thought that the mucus suction was an instrument for administering oxygen. The high court cannot be faulted for not accepting the appellant's evidence on these two issues. [25] These explanations aside, there was an objective basis to test the appellant’s assertion that the child had breathing problems at birth. All the relevant experts – Dr Hofmeyr, Mrs Bekker, Dr Kganane, and Dr Schoon – confirmed that the colour of a healthy baby is pink, which signals that oxygenation is good. A baby deprived of oxygen, according to Dr Kganane, would either be bluish or purplish, and if they remained that way after stimulation, ‘[t]hat would be an unwell child.’ A pale or blue baby is an indication of either infection or problems in breathing, according to Mrs Bekker. Dr Hofmeyr testified that if there is no sign of breathing, no crying or any attempt to make respiration, then it is highly unlikely that the baby would be pink. The significance of a pinkish baby as a sign of good oxygenation was confirmed by the midwives who testified on behalf of the respondent. [26] The appellant was clear that MML was pink at birth. Based on this, it must therefore be accepted that the child showed a strong indication of good oxygenation and the ability to breathe independently at birth. This, considered in the light of all the factors mentioned earlier, dismantles the appellant’s assertion that the child had breathing problems. It also takes care of a related contention that the child did not cry after birth. Even were it to be accepted that the child did not cry, it does not mean the child could not breathe, given the healthy colour at birth, and all other indications of a normal child, recorded in the available hospital records. [27] I am also wary of accepting the appellant’s mere say-so on these matters. This was her first child and it was not suggested that she was familiar with either the normal steps a midwife would take after birth, or the type of equipment they might have had readily to hand. Her reference to the nasal prongs is particularly troubling once it is accepted that they were not in the delivery room and were not used. How then did she come to be aware of them, much less give evidence that they were used? The appellant testified 13 years after MML’s birth. She was a young first-time mother. One has to question whether, so long after the event, she would have recalled accurately all the details to which she testified. It is true that her evidence on several points is uncontradicted, but it does not have to be accepted for only that reason. As I demonstrate later, the appellant’s evidence on certain important aspects was found wanting, and this influences how the uncontradicted aspects of her evidence have to be approached. [28] The appellant also testified that she could not breast-feed the child after birth as he was unable to suck properly. This was presented as being unusual and something other than the ordinary process of a new mother and baby establishing breastfeeding, although Dr Hofmeyr said only that it is ‘in keeping with Neonatal Encephalopathy’, but not specific to it. The appellant’s evidence was contradicted by the contents of the Discharge Summary form, which recorded that the importance of breast-feeding was discussed with the appellant, and had been initiated successfully. If there were problems as testified by the appellant, it is likely that this would have been noted in the form. There is no suggestion that the form was tampered with or that its contents were not a reflection of the true position. It must therefore be accepted as the true and official record that there were no feeding problems worth noting at birth. [29] Furthermore, there are improbabilities in the appellant’s version. The appellant claimed to have been discharged in the afternoon of 2 May 2005, that is, the day MML was born, but that was inconsistent with the Ward Admission and Discharge Register, which reflected that the appellant and MML were discharged on 3 May 2005 at 14h35. There is no reason to believe that these records were inaccurate, and the further particulars for trial on behalf of the appellant recorded that she was discharged in accordance with the Discharge Register. On that basis more than a day and a half passed before she was discharged. The suggestion in para 107 of the second judgment that there was something odd about this was not supported by the expert witnesses, none of whom said that the appellant remaining in hospital until 3 May was unusual. From a practical point of view, it is highly improbable that the child would have gone for that long without being fed. According to the appellant, this was a complaint she registered with the nurses and the doctor who discharged her, but it was ignored. [30] The appellant said that the problem of poor feeding persisted after birth but improved over time, although the Road to Health chart showed that MML appeared to gain weight normally. If there had been a serious problem, she would presumably have reported it to the clinic where she attended postnatal examinations. There is no record that she did. In fact, there is no record that the appellant ever reported any breast-feeding problem to anyone after birth, until the report of Prof Solomons was produced some eleven and a half years later. What is more, the appellant apparently told Dr Griessel a different version on this aspect. In his report, Dr Griessel noted that the appellant had told him that the child did not have any problems drinking milk, was breastfed for 18 months, and grew well for the first year. This accords with what was reflected on the Road to Health Chart. [31] The last matter about which the appellant testified allegedly occurred immediately after birth. According to her the baby was taken away from her to another room, and only returned to her after five hours, ie at 10h00. There is a difficulty with this time period. In the condonation application, the appellant stated in her founding affidavit that the child was brought back to her within a few minutes. This was not corrected in her replying affidavit in that application, unlike her evidence in respect of the method of delivery. In the founding affidavit, she had stated that the child was delivered by caesarean section. In the replying affidavit she corrected this and stated that she gave birth by normal vaginal delivery. The fact that she did not correct the length of time she was separated from the child after birth means that there are two contrary statements by the appellant, both under oath, on the same issue. [32] In any event, there is nothing sinister in a mother and child being separated after birth. Mrs Bekker explained that this may happen for various reasons. She explained that often the child is taken to another room to be cleaned or to be physically examined. The mother might also need attention, for example to suture an episiotomy. In the present case, it is common cause that the appellant had an episiotomy which had to be sutured. Mrs Bekker also testified that although ideally one does not wish to separate the mother and child, practice at hospitals, including private hospitals, varies. Sometimes the infant will be kept apart from the mother for a day to allow the latter to sleep, only being brought to the mother for feeding. A further difficulty is that even if MML was taken from the appellant for a lengthy period, we do not know the reason for that and there is no reason to assume that it was because of a problem. [33] Before dealing with the experts’ reports and the agreed minutes, there is one aspect of the evidence that deserves mention. The experts all agreed that MML had suffered a severe injury resulting in a severe impairment of his motor abilities. In the course of her cross-examination, Dr Hofmeyr was asked whether being born with cerebral palsy affects the baby's muscle tone. Her answer was: ‘I can refer to a baby that has probably suffered hypoxic damage because cerebral palsy is a diagnosis that is made much later, as is neonatal encephalopathy, but a baby that is believed to have suffered a hypoxic incident, during birth or prior to delivery, will typically be a floppy baby, as we would, the term we use is floppy, so it would be a limp baby with very little muscle tone. That is the typical description.’ (Emphasis added.) [34] Neither the appellant, nor the hospital records that are available, suggest that MML presented as a ‘floppy baby’. Mrs Bekker referred to a child with severe encephalopathy as being flaccid. Again, no-one attached that description to MML when he was born, but it is what would be expected if his profoundly damaged condition were occasioned by hypoxic damage during the intrapartum period. Mrs Bekker’s report said that not even mild clinical signs were recorded and that he did not display the signs of hypoxic ischaemic encephalopathy. [35] Turning now to the opinions of the experts, the parties’ respective radiologists, Prof Andronikou and Dr Kamolane, agreed that the brain injury would probably have occurred in the perinatal period, that is, any time over 37 weeks of pregnancy and up to 30 days after birth. But as to its more accurate timing, and causes thereof, the radiologists deferred to the paediatric and obstetric experts. Prof Solomons and Dr Hofmeyr were, respectively, the experts on behalf of the appellant. Their counterparts on behalf of the respondent were Dr Griessel, a neurodevelopmental paediatrician (later replaced by Dr Mogashoa, a paediatric neurologist) and Dr Schoon, an obstetrician. [36] According to Prof Solomons’ report, he consulted with the appellant and examined the child on 17 December 2016. It is perhaps opportune to clarify something about his report. In cross-examination the appellant was confronted with certain discrepancies between her evidence and Prof Solomons’ report concerning the factual background she conveyed to him during consultation. The appellant disputed the contents of the report, and denied that she ever consulted with Prof Solomons. The appellant was adamant that the only doctors she had consulted with were the respondent’s experts, Dr Mogashoa and Dr Kganane. [37] However, in re-examination the appellant confirmed that the first time she consulted a doctor in relation to the matter was on 17 December 2016, although she did not remember the doctor’s name. This date ties in with what appears in Prof Solomons’ report as the date on which he consulted with the appellant and examined the child. One must accept that given the lapse of time, the appellant was mistaken in her denial of consulting with Prof Solomons. It can therefore be safely accepted that Prof Solomons indeed consulted with the appellant and examined the child on 17 December 2016. [38] Prof Solomons stated in his report that among other things, the appellant had informed him that MML had difficulty in sucking and swallowing after birth. He referred to the American College of Obstetrics and Gynaecology (ACOG) definition of neonatal encephalopathy as a clinically-defined syndrome of disturbed neurological function in the earliest days of life of an infant born after 35 weeks of gestation manifested by a subnormal level of consciousness or seizures and often accompanied by difficulty with initiating and maintaining respiration and depression of tone and reflexes. However, other than the appellant’s report of MML experiencing breathing difficulties requiring nasal prongs to be used, and having sucking and swallowing difficulties when feeding, both of which have been dealt with and rejected above, none of the other identified markers were present. (Emphasis added.) [39] Dr Kganane used the first edition of the guidelines of the American Academy of Pediatrics (AAP) and the American College of Obstetrics and Gynecology (ACOG). The guidelines set out the following factors, which all have to be present, before a diagnosis of perinatal asphyxia, severe enough to result in an acute neurological insult, could be made: (a) profound metabolic or mixed acidemia (pH <7.00) in umbilical artery blood sample, if obtained; (b) persistence of an Apgar score of 0–3 for longer than 5 minutes; (c) neonatal neurologic sequelae (e.g., seizures, coma, hypotonia); and (d) multiple organ involvement (e.g., kidney, lungs, liver, heart, intestines). [40] None of those factors were shown to be present in MML. Prof Solomons referred to the more recent 2014 edition of the ACOG guidelines, which identified four ‘essential criteria for an acute intrapartum hypoxic event sufficient to cause cerebral palsy’. It is unnecessary to set these out because of his conclusion that none were present in MML, a conclusion shared by Dr Mogashoa. He also referred to Volpe’s7 criteria for the diagnosis of an intrapartum insult as being the likely cause of neonatal brain injury, namely: (a) Evidence of foetal distress; (b) Depression at birth necessitating resuscitation; (c) An overt neonatal neurological syndrome during the first hours and days of life. Prof Solomons considered that, given the appellant’s statement that MML received nasal oxygen after birth, he fulfilled the second criterion, ie depression at birth necessitating resuscitation. However, his report showed that once the evidential basis for that fell away, none of Volpe's criteria would be satisfied. Because the medical records were missing, there was no evidence as to the presence or absence of foetal distress. [41] Prof Solomons’ opinion as it appeared in his report can be summarised as follows. The MRI features are those of chronic evolution of a global insult to the brain due to hypoxic ischemic injury of the partial prolonged variety, most likely occurring at term. The history he received from the appellant was of problematic respiration and of MML receiving oxygen shortly after birth. HIE is one of the possible causes of MML's neonatal encephalopathy. The appellant said to him that MML had a sucking and swallowing abnormality. Apart from this report of breathing difficulties and receiving nasal oxygen, MML did not fit any of Volpe's criteria for an antepartum asphyxia insult or the ACOG Guidelines. Radiologically the evidence supported an injury occurring in the intrapartum period. Prof Solomons expressed the opinion that in the setting of the absence of medical reports and the maternal history indicating neonatal encephalopathy, the partial prolonged hypoxic ischemic injury was timed to the intrapartum period. 7 J J Volpe Neurology of the Newborn, 4 ed, 2001 WB Saunders Company. Expert obstetric and nursing opinion needed to be obtained concerning the monitoring and management of the intrapartum period. [42] Central to Prof Solomons’ opinion that MML’s brain injury occurred in the intrapartum period, was the appellant’s statement that the child received nasal oxygen and had difficulty in sucking and swallowing. I have already pointed to the difficulty in accepting the appellant’s evidence in regard to those matters. It was not supported by the Discharge Summary form. It also suffered from the inherent improbabilities that I have pointed out. It is also important to note that Prof Solomons did not testify. As a result, his opinion and views were not subjected to the scrutiny of cross-examination. The status of his report is unclear. The pre-trial conference minute did not reflect an agreement that it could be used without Prof Solomons giving evidence. It was part of a bundle of expert witness reports handed in at the commencement of the trial without any indication of their status. [43] It appears that the appellant's legal representatives were prepared to stand or fall by the contents of the joint minute between Prof Solomons and Dr Griessel, whose report was also placed before the court. The minute departed in certain respects from Prof Solomons’ report. For example, he said that MML’s brain changes were indicative of injury ‘at term’, which was a more definite opinion on timing than that in his report. Dr Griessel said he would defer to the radiologist’s opinion in regard to the timing of the injury. The minute recorded Prof Solomons’ view that in the light of the maternal history of sucking and swallowing abnormality the timing of the partial prolonged HIE to the intrapartum period cannot be excluded. Dr Griessel’s opinion was that the normal growth of MML during the first year of his life made severe feeding difficulties unlikely. [44] Lastly, Prof Solomons recorded in the joint minute that there was no evidence for the injury in the antepartum or postpartum periods. Dr Griessel’s response was that there was no evidence for peripartum injury and that he would defer to the radiologists. On all three points therefore the joint minute reflected disagreement, not agreement. The views and reasoning of these two experts were not canvassed in evidence, because neither of them gave evidence. [45] Prof Solomons’ other counterpart on behalf of the respondent was Dr Mogashoa, a paediatric neurologist, who also had consulted with the appellant, examined MML, and testified. Before I set out her opinion, I must mention this. Counsel for the appellant sought to exclude her opinion because of the following. Initially, Dr Griessel, a neuro developmental paediatrician, was the respondent’s expert. He became unavailable for the trial and Dr Mogashoa replaced him. At that stage, Prof Solomons and Dr Griessel had already signed a joint minute in which they set out their points of agreement and disagreement. [46] The two had agreed on the following: that MML suffered a partial prolonged hypoxic ischemic injury; that he had suffered spastic cerebral palsy right more than left with microcephaly and profound intellectual disability; that his motor disability was severe, and that there existed a good correlation between the child’s brain abnormalities and the type of cerebral palsy. However, Prof Solomons and Dr Griessel could not agree on whether MML had a history of sucking and swallowing abnormality, or on the timing of the brain injury to the intrapartum period. While Prof Solomons was of the view that that there was no evidence of hypoxic ischemic injury in the antepartum or postpartum periods, Dr Griessel qualified his assent to this proposition by saying that in the absence of records there was also no evidence for peripartum injury. [47] Subsequently, Prof Solomons and Dr Mogashoa signed a joint minute in which Dr Mogashoa disagreed with some of the issues which Prof Solomons and Dr Griessel had earlier agreed on. Counsel for the appellant argued that Dr Mogashoa was not entitled to do so, and that the respondent was bound by the joint minute between Prof Solomons and Dr Griessel. The issues on which Dr Mogashoa differed from Prof Solomons were: the timing of the injury to the intrapartum period; whether the normal circumference of the child’s head at birth made the antenatal timing of the brain injury unlikely; whether there was a history of poor sucking, and if so, whether it was indicative of an intrapartum injury. [48] Having done this simple comparison, it seems there is little difference between Prof Solomons' and Dr Griessel’s joint minute, on the one hand, and Prof Solomons' and Dr Mogashoa’s, on the other. Significantly, in both minutes, the key issue in the matter, that is, the timing of the brain injury, was disputed. The issue about the history of poor sucking was a factual one, which I have considered already. The real dispute about Dr Mogashoa's evidence related to her view that the nature of MML’s disability was more consistent with injury in the perinatal period rather than the intrapartum period. She was also of the view that, as his lower limbs were predominantly affected, this was not typical of injury caused by hypoxia. The appellant did not assert any prejudice as a result of Dr Mogashoa’s evidence. She and her legal representatives was aware of Dr Mogashoa’s views long before the trial, and were accordingly not taken by surprise, yet Prof Solomons was not called to refute her views. In addition, Dr Mogashoa was cross-examined at length by the appellant’s counsel. [49] It is trite that where experts agree on a matter of fact in a joint minute, the parties are bound by the agreement and may not, without more, deviate from the agreement, without proper explanation and the consideration of prejudice. The situation is different here. Dr Mogashoa was not party to the joint minute between Prof Solomons and Dr Griessel. The question is whether the respondent is bound by that agreement to the extent that Dr Mogashoa is prohibited from expressing a different view. In the light of the practical approach I have adopted above, I refrain from expressing any view on this issue. [50] In her clinical observations of MML, Dr Mogashoa found that his motor signs were normal, with power and a slightly increased tone in the upper limbs. The child could pull himself up using predominantly his upper limbs. There was reduced power and some rigidity in the lower limbs, which also showed brisk reflexes with upgoing plantars. With regard to the contention that the child exhibited sucking problems at birth, Dr Mogashoa stated that, even if this were to be accepted, it could not necessarily be attributed to an intrapartum hypoxia. A history of poor sucking and an MRI performed at nine years, she said, were not sufficient for that conclusion, as there are other causes for poor sucking in neonates. [51] Based on these views, Dr Mogashoa was of the opinion that the child’s brain injury was not typical of one that occurred in the perinatal period, but was more commonly seen with injury that occurred to the pre-term brain. Thus, she concluded, the injury was unlikely to have been caused by an intrapartum hypoxia. Like Prof Solomons, Dr Mogashoa referred to the AAP and ACOG guidelines, and likewise, found that the child satisfied none of the criteria for an intrapartum insult as being the likely cause of the brain injury. She also considered the following objective facts as pointing further away from an intrapartum hypoxia: MML was well enough to be discharged a day after birth; he had normal Apgar scores; he did not lose more weight than is to be expected in the first week of life; and the pattern of his regression (being able to sit at four months and leopard-crawling soon thereafter, but then experiencing a regression after more than a year) was not typical of an intrapartum hypoxia. Dr Mogashoa also disagreed with Prof Solomons’ conclusion that because the child’s birth head circumference was within normal limits, any brain injury in the perinatal period prior to admission was unlikely. [52] Although Dr Mogashoa sought to argue that the injury probably happened earlier than the perinatal period, she acknowledged that the radiologists were best qualified to interpret the MRI scans, and ultimately, she unconditionally agreed with the radiologists, save for her point that a ‘term brain’ for radiology purposes was at 35 weeks rather than 37 weeks. It is not known exactly how long the appellant’s gestation was at the time of birth. But assuming it to have been 40 weeks, there would have been at least five weeks prior to her admission to hospital when a partial prolonged asphyxia may have occurred. Viewed in this light, there is some force in Dr Mogashoa’s evidence that the insult could have occurred in the perinatal period prior to the appellant's admission to hospital, given the relatively good Apgar scores, the generally good presentation at birth, the pattern of late regression, and the atypical feature of spastic diplegia (affecting the lower limbs rather than the upper limbs) rather than spastic quadriplegia or dyskinesia which one normally associates with intrapartum brain injury. [53] When dealing with the evidence of experts in a field where medical certainty is virtually impossible, a court must determine whether and to what extent their opinions advanced are founded on logical reasoning. The court must be satisfied that such opinion has a logical basis, in other words that the expert has considered comparative risks and benefits and has reached ‘a defensible conclusion.’8 An opinion expressed without logical foundation can be rejected.9 Having carefully considered the totality of the evidence of the two experts, I am of the view that Dr Mogashoa’s evidence provided the most reasoned and cogent explanation of why an intrapartum brain injury was not likely in this case. Prof Solomons’ opinion was thinly reasoned, relying as it did, on the questionable statement of the appellant. In addition, Dr Mogashoa’s opinions were subjected to an arduous, if hostile, cross-examination, during which she stood her ground. She made a favourable impression on the high court. Overall, Dr Mogashoa’s opinions offered the most rational explanation for MML’s condition and closely matched the objective facts. [54] I turn now to the timing of the brain injury. In their joint minute, Prof Solomons and Dr Mogashoa deferred to obstetricians on this issue. Dr q Hofmeyr was that expert on behalf of the appellant. Her counterpart on behalf of the respondent was Dr Schoon. Dr Hofmeyr had not consulted with the appellant. In compiling her report, she relied on the available hospital records, Prof Andronikou’s radiologist’s report, Prof Solomons’ report; and a ‘factual statement’ by the appellant dated 31 August 2017’. The latter statement was not made available to the court, its origin was never explained and the appellant denied in cross-examination ever making such a statement. [55] In order to place the brain injury in the intrapartum period, Dr Hofmeyr sought to establish that there was foetal distress and prolonged labour. Foetal distress is a sign that an unborn baby is not well. It happens when the baby does 8 Michael & Another v Linksfield Park Clinic (Pty) Ltd and Another 2001(3) SA 1188 (SCA); [2002] All SA 384 (A); paras 36-37 where this Court adopted the decision of the House of Lords in the medical negligence case of Bolitho v City and Hackney Health Authority [1997] UKHL 46; [1998] AC 232 (HL(E). 9 Medi-Clinic Limited v Vermeulen [2014] ZASCA 150; 2015 (1) SA 241 (SCA) para 5. not receive enough oxygen through the placenta. How it should be monitored, and the frequency of such monitoring, are among the many guidelines set out in the 2002 National Guidelines for Maternity Care (the maternity guidelines), which define levels of care, obstetrical record keeping; and antenatal care, among others. Frequently, foetal distress is monitored by a CTG. The partogram is a document in which the foetal and maternal information and the progress of labour are all recorded. According to the maternity guidelines, failure to use and complete a partogram during labour constitutes ‘substandard care’. [56] With reference to this case, and in particular whether there was evidence of foetal distress, Dr Hofmeyr mentioned that in the absence of antenatal and obstetric records, she was unable to accurately evaluate or comment on foetal heart rate patterns or the adequacy of foetal monitoring. Nevertheless, she concluded: ‘[T]he [appellant’s] statement …reflects inadequate [foetal] heart rate monitoring in direct contrast to prescribed minimum standards of care. The [foetal] heart rate should have been monitored every 30 minutes during the active phase of labour but was only performed once during the (more than) 14-hour admission, through the initial admission CTG. Without regular [foetal] heart rate monitoring attending staff would not be able to detect foetal distress depicting a possible intra-partum event.’ (Emphasis added.) [57] With regard to the child’s brain injury and its timing, Dr Hofmeyr relied on Prof Andronikou’s initial (August 2014) opinion, that the brain injury had most likely occurred at term. Dr Hofmeyr accepted that this did not necessarily limit it to the intrapartum period. She conceded that it could have occurred in the broader peri-partum period before the onset of labour, or even after birth. This is indeed more in line with the agreement between the radiologists referred to above. In this regard, Dr Hofmeyr considered that the appellant was a low-risk patient with an uncomplicated antenatal course; the appellant had a spontaneous onset of labour and that the admission CTG was reassuring. She concluded that the most likely timing of the brain injury was ‘during the labour and/or delivery…’ She based her conclusion on the following: the alleged absence of further foetal and maternal monitoring throughout the labour; and ‘probable prolonged labour’. [58] Dr Hofmeyr was supported in these conclusions by Prof Nolte. She, like Dr Hofmeyr, had not consulted with the appellant. In compiling her report, she relied on Prof Solomons’ report and the ‘consultation records’ of the appellant. She said that ‘[i]t seemed as if no observations, except the cervical dilatation, was done between 12:00 and [2 May 2005] at 04:00’. She concluded in her report that the midwives who cared for the appellant during her labour delivered sub- standard care because, according to her, they failed to: monitor foetal and maternal condition or to record observations thereof; refer the appellant to a doctor ‘when there was prolonged labour’; and keep accurate records of the case. [59] Thus, Dr Hofmeyr and Prof Nolte both relied on inadequate foetal and maternal monitoring, as well as prolonged labour, for their respective opinions. Their opinions on these are based entirely on the appellant’s statements availed to them for their respective reports – the appellant’s undisclosed ‘factual statement’ dated 31 August 2017 used by Dr Hofmeyr, and the appellant’s undisclosed ‘consultation notes’ used by Prof Nolte. The contents of both documents, insofar as inadequate monitoring is concerned, are consistent with the appellant’s evidence on the issue. In her evidence, the appellant testified that CTG monitoring was done only once on admission, and never again. The appellant further testified that apart from cervical examinations, no other examinations were made on her. In the absence of hospital records, the reliability of the experts’ opinions, rest on the reliability and acceptability of the appellant’s uncontradicted evidence. [60] Despite the fact that the appellant’s evidence was uncontradicted, it is not without difficulties. I have already discussed the problems with it in regard to the use of nasal prongs and the ‘pricking’ of the baby's thighs. There are other instances where the appellant’s evidence was inconsistent with what she had conveyed to the experts who consulted with her. For example, in respect of CTG monitoring, the appellant testified that this was done 20 minutes after admission, which must have been at approximately 13h20. This was consistent with Dr Hofmeyr’s report. But according to Dr Mogashoa’s report, the appellant conveyed to her that CTG monitoring commenced at 15h00. To Dr Kganane, the appellant mentioned that at 18h00 ‘belts were put on her to monitor the baby.’ [61] Similar problems in relation to the events of that day arise in relation to what she was told by the nurses about the progress of her labour. She testified that she was told after being examined on admission that she was 3 cm dilated and the baby was ‘high’. In his report, Dr Kganane mentioned that the appellant had informed her that this was conveyed to her at 20h00. Dr Kganane testified that there were no language barriers between her and the appellant as they communicated in the appellant’s home language. The disparity between these is a further indication that with the elapse of time the appellant's memory of events and their timing was not necessarily reliable. [62] The same problem crops up with the appellant's evidence in regard to when she was examined by the nurses during the course of her labour. She testified that she was examined at the following intervals on 1 May 2005: 13h00, 13h20, 18h00, 20h00 and midnight. In his report, Prof Solomons recorded that the appellant was examined at 18h00, 20h00 on 1 May 2005, and again at 01h00, 02h00 and 04h00 the following morning. Dr Kganane mentioned in her report ‘at midnight the pain worsened but no examination was done.’ This is a further indication that the appellant's memory was not reliable, which as the trial judge pointed out was hardly surprising given the passage of time between the events in question and her having to recall them. It is not a reflection on her honesty as a witness, but on the reliability of the information on which the experts based their reports in relation to her treatment. [63] The appellant’s evidence of inadequate monitoring, on which the opinions of Dr Hofmeyr and Prof Nolte rest, is doubtful, given the contents of the available hospital records, which seem to have been completed fairly carefully and comprehensively. As the court a quo correctly pointed out, the appellant testified that contemporaneous notes were made by the nursing staff that examined her. It is not clear on what basis Prof Nolte limits these observations to only cervical dilation. All of the available records could only have been completed with reference to other records, not only those recording cervical dilations. With reference specifically to the Discharge Summary form, Mrs Bekker emphasised that its existence suggested that the relevant records were completed, as it formed part of the Maternity Case Record. These could not have been completed without proper monitoring and proper recording of the observations. Prof Nolte described the records of the case as inadequate, but that was plainly incorrect as the records were not available. A judgment on their adequacy could only be made if they had been produced, but that was not possible because they have in some way gone astray. [64] Apart from the difficulties pointed out in respect of the appellant’s evidence on inadequate monitoring, the appellant had shown herself to be an unreliable witness on a number of other issues. On almost every issue where there was some form of record, her oral evidence was not borne out by it or contradicted it. Her evidence also had internal contradictions and improbabilities. The following are examples: (a) In cross-examination, the appellant disavowed the very basis of Dr Hofmeyr’s opinion – her own factual statement dated 31 August 2017. (b) In cross-examination, the appellant denied that she ever consulted with Prof Solomons. (c) The appellant testified that she consulted her attorney for the first time on 31 August 2017. In the condonation application she stated that she first consulted her attorney during May 2014. A letter giving notice under the Act was sent on 30 June 2014. As the summons was issued in August 2014 ten days after MML had undergone the MRI scan there must have been some contact with the attorneys at around that time, but how it occurred is unclear. (d) The appellant testified that she and the child were discharged on 2 May 2005, in contrast to the Discharge Summary form, which showed the date of discharge to be 3 May 2005. (e) The appellant was untruthful about her HIV status to her attorney and to Dr Gericke, during May 2017 and August 2017, respectively, to whom she claimed to be HIV negative, whereas she knew in 2011 when her second child was born, that she was HIV positive. (f) Regarding the times at which she was examined whilst in hospital, the appellant gave specific and precise times in her evidence-in chief. However, the unreliability of her memory was exposed when she was tested in cross- examination with regard to the birth of her second child on 16 July 2012. For example, she testified that the ambulance was summoned to her home at 03h00 and arrived at 03h30. However, the Maternity Case Record showed that the ambulance was summoned at 04h15 and at 04h51 and arrived at her home at either 05h21 or 05h23. (g) Asked in cross-examination how she was able to recall the exact times about events which had happened 13 years earlier, the appellant explained that there was a watch on the wall in the room she was in, and that she was always checking the time. However, later, when questioned how she remembered the time when the child was brought back to her after being taken away shortly after birth, she testified that she noted the time on her cell phone. The improbability of her having a precise recollection of these times is manifest. (h) With regard to the antenatal period and how her pregnancy was confirmed, Prof Solomons mentioned in his report that the appellant had performed a home pregnancy test. The appellant denied this in her evidence, and testified that her pregnancy was confirmed by a urine test done at a local clinic. (i) The appellant testified that she was told by a nurse at 16h00 not to lie in bed but to walk around. She gave Dr Mogashoa and Dr Kganane two different versions of this. According to Dr Mogashoa’s report, the appellant was advised to lie on her side shortly after her admission at 13h00. According to Dr Kganane’s report, this only happened at 21h30. (j) Dr Hofmeyr testified that when the appellant screamed for help on various occasions, she was ignored. This information, must have been contained in the appellant’s factual statement. It is in direct contrast to the appellants’ own evidence, in terms of which a nurse came to her assistance and examined her each time she screamed for help. [65] These inconsistencies, and the others I have pointed out earlier, are material, and justify the high court’s finding that the appellant was not a reliable witness. Giving two different versions in evidence about the same occurrence is not a sign of a reliable witness. Nor did the inconsistencies in regard to the dates of key events in the litigation occurring between 2014 and 2018, give one any confidence in her ability to recall accurately the precise times of the events of 1 and 2 May 2005. [66] I must emphasise that it is not suggested that the appellant was not a credible witness. Rather, she was an unreliable witness. There are conceptual differences between credibility and reliability, which should not be conflated. Credibility has to do with a witness’s veracity. Reliability, on the other hand, concerns the accuracy of the witness’ testimony. Accuracy relates to the witness’ ability to accurately observe, recall and recount events in issue. Any witness whose evidence on an issue is not credible cannot give reliable evidence on the same point. Credibility, on the other hand, is not a proxy for reliability: a credible witness may give unreliable evidence.10 The passage of time that we have in this case of over 13 years from the relevant events impacts on the reliability of the witness's evidence not her credibility.11 The unreliability of the appellant’s evidence is underscored by the fact that, where relevant, her purported recollection of dates, times and events is not supported by the objective evidence. Seen in this light, the dictum in President of the Republic of South Africa and Others v South African Rugby Football Union and Others,12 which has to do with credibility, does not find application here. [67] It is regrettable that these inaccuracies could not be put to the appellants’ experts, as all of them testified before she did. One will never know how they would have impacted their opinions and evidence. It would have been particularly awkward for Dr Hofmeyr to learn that the very statement she had premised her opinion on, had been disavowed by its supposed source – the appellant. The net effect of all the above is that the factual basis on which Dr Hofmeyr and Prof Nolte concluded that there was inadequate monitoring, was shown to be unreliable. [68] On the balance of probability, the appellant’s latent phase must have started mid-morning on 1 May 2005, at least by the time she was collected by the ambulance around noon. Her evidence was that the mucus plug had been 10 R v H C 2009 ONCA 56; 241 C.C.C.(3d) 45 para 41. 11 R v Morrissey 1995 CanLII 3498 (ONCA); 22 OR (3d) 514 at 526. 12 President of the Republic of South Africa and Others v South African Rugby Football Union and Others [1999] ZACC 11; 1999 (10) BCLR 1059; 2000 (1) SA 1 (CC) para 62. discharged before she was collected by the ambulance, and that her waters broke in the ambulance. She testified that shortly after her admission she was told by the nurse that her cervix was 3 cm dilated. To this may be added that she was admitted to the maternity ward as being ‘in labour’, and not turned away as a person whose labour had not yet started. On that basis, I accept that by the time she was admitted to hospital her latent phase had commenced. But the duration of the latent phase is not scientifically fixed, nor was there evidence that the cervix dilates at a regular rate during the latent phase. [69] There is evidence that the risk of hypoxia during the latent phase is not high because the contractions are weak. The appellant may have had weak, and not yet regular, contractions for some hours after her admission. Dr Hofmeyr said in her report that the latent phase of labour ‘commonly lasts about 8 hours’ and requires the patient to be monitored at four hourly intervals. On the basis of her ward admission at about 13h00 latent labour lasting to 21h00 would be normal. The appellant said that when examined during this time, which occurred twice in accordance with the guidelines, the nurses told her that the baby was ‘far’, so a latent labour after this time is likely. Assuming active labour commenced at shortly before, or about, midnight, when she said that a nurse came in response to her calls, neither the latent labour nor the active labour appears unduly protracted. [70] If the appellant had a conventional active phase of about six hours, her active phase could not have started much before 23h00 on the Sunday night. Was there evidence that the appellant started the active phase earlier than 23h00? According to Dr Hofmeyr the most important indicator of the active phase is that the mother has three strong contractions every 10 minutes coupled with a cervical dilation of 4 cm at the commencement of the active phase. Prof Nolte said that if contractions were not severe, they were not regular. The glaring lacuna in the present case is that it is not known when that started. The appellant was never asked about her contractions. In short, we do not know that the appellant did not have a slightly longer than normal latent phase followed by a normal active phase. All we know is that the appellant said she called for assistance because she was in pain at about midnight. [71] With the unreliability of the appellant’s evidence, the opinions expressed by the experts on her behalf were found by the high court to be speculative. The high court put it as follows: ‘I mentioned supra that the conclusions of [appellant’s] experts in respect of the probable timing of the injury - to wit an intrapartum injury - are not based on a proper factual foundation. Although the experts generally made a good impression on the court, opinions based on incorrect facts and/or speculation are to be ignored. If the factual foundation is proven to be baseless, an opinion falls apart like a house of cards. In casu we have a witness – the appellant - whose credibility and reliability are in tatters. I have shown the internal and external contradictions as well as improbabilities in her version. Her version to experts and evidence in court were aimed at taking advantage of missing records. Insofar as the experts relied on her version, and also the missing records, such evidence does not pass the reasonable and logical requirement test for acceptance of their opinions as mentioned in Oppelt supra. I am not convinced of the cogency of the underlying reasoning of [the appellant’s] experts.’ [72] The presumption is that a trial court’s factual findings are correct in the absence of demonstrable error. To overcome this presumption, an appellant must convince the appellate court on adequate grounds that the trial court’s factual findings were plainly wrong. If the appellate court is merely left in doubt as to the correctness of a factual finding, then it will uphold that finding. It is only in exceptional circumstances that an appellate court will interfere with the trial court’s evaluation of oral evidence, in the light of the advantages enjoyed by the trial court of seeing, hearing and appraising the witnesses. See Sanlam Bpk v Biddulph 2004 (5) SA 586 (SCA) para 5; Roux v Hattingh [2012] ZASCA 132; 2012 (6) SA 428 (SCA) para 12. [73] In the present case, the high court’s conclusion that the appellant was not a reliable witness given the inconsistencies and contradictions in her version of events, was undoubtedly correct. This had a devastating impact on the opinions of Prof Solomons, Dr Hofmeyr and Prof Nolte, upon which appellant’s case rested. In all the circumstances, the substratum of the appellant’s case – the timing of the child’s brain injury to the intrapartum, unravelled when the appellant’s factual foundation floundered. [74] There was another string to the appellant’s bow. Dr Gericke, a specialist paediatrician and geneticist on behalf of the appellant, introduced the possibility of delayed manifestations of an intrapartum brain injury. He placed reliance upon a passage in an article by two Dutch authors, Ms LS de Vries and Ms F Groenendaal.13 There, the authors discuss what they describe as a ‘watershed predominant pattern of injury.’ The authors say the following (references to the footnotes and figures omitted): ‘Watershed predominant pattern of injury (WS) is the other pattern of injury which is also referred to as a pattern seen following ‘prolonged partial asphyxia’. The vascular watershed zones (anterior-middle cerebral artery and posterior- middle cerebral artery) are involved, affecting white matter and in more severely affected infants also the overlying cortex …The lesions can be uni-or bilateral, posterior and/or anterior. Although loss of the cortical ribbon and therefore the grey-white matter differentiation can be seen on conventional MRI, DWI highlights the abnormalities and is especially helpful in making an early diagnosis. A repeat MRI may show cystic evolution, but more often atrophy and gliotic changes will be recognised It is also more common after hypotension, infection and hypoglycaemia all of which may be associated with a more protracted course. Neurological manifestations at birth may be mild 13 L S de Vries and F Groenendaal ‘Patterns of Neonatal Hypoxic-Ischaemic Brain Injury’ (2010) 52(6) Neuroradiology 555. and do not always meet the perinatal asphyxia criteria and onset of neurological signs can be delayed. Severe motor impairment is uncommon in this group of infants, and they are often considered to have an early normal outcome, when seen at 12-18 months. When seen up till early childhood sub-optimal head growth, behavioural problems and delay in language are, however, common. Miller et al were first able to recognise cognitive deficits associated with the watershed pattern of injury at 30 months, while the problems were largely overlooked, when seen at 12 months. More recently, they also showed a correlation with verbal IQ at 4 years of age. Symptomatic parieto-occipital epilepsy may occur later in childhood, often associated with reduced intelligence quotients and visuospatial cognitive functions.’ (Emphasis added.) [75] It was common cause in the present case that MML had suffered a severe motor impairment. Therefore, the statement that ‘severe motor impairment is uncommon in this group of infants’ automatically excluded the appellant’s child. It was put to Dr Gericke in cross-examination that because of this, the child could not be used as an example of a child within the category discussed in the article. Dr Gericke had considerable difficulty in dealing with this. He explained, rather unconvincingly, that the final call to make an assessment whether the child has a brain injury is five years old and that if a brain injury is missed at two years old, this would bring the child within the category, as ‘undetected’. The fallacy of his argument was exposed by a hypothetical question of a child whose brain injury had manifested at six months, which is the case with the appellant’s child, which would take the child out of the stated category. Dr Gericke would blame ‘the health system’ for not picking up the manifestations early in the first year. [76] In any event, even if all the suppositions propounded in the article are accepted, the views expressed by the authors still would not assist to answer the central issue in this case, ie the timing of the brain injury. The article is premised on children in respect of whom an intrapartum brain injury is common cause. That it is not the position here. In the end, there is not much value in this article. [77] Finally, it was submitted that the respondent had failed to ensure proper safe-keeping of the appellant and the child’s hospital records in breach of a statutory duty.14 Therefore, so went the submission, this warranted this Court to regard this as an exceptional case warranting the application of the res ipsa loquitur maxim, and find negligence on the part of the hospital staff on the mere presence of the brain injury. Reliance was placed on the majority decision in Meyers v MEC, Department of Health, Eastern Cape.15 [78] It is necessary to set out the following factual background about the missing hospital records. The facts are distilled from the condonation application, which the respondent opposed. In the answering affidavit in that application, Mr Monyane, the Legal Administration Officer in the Department of Health, Free State (the Department) made the following averments: There were, at that stage, six cases of children with cerebral palsy, born at various hospitals in the province, and in respect of whom claims for compensation had been instituted against the MEC, for alleged negligent conduct of doctors and nurses during birth. This included the appellant’s claim. In all of the claims, legal action had only been instituted many years after the births, and the original hospital files were missing. All of the claims were instituted by the appellant’s attorneys of record, MED Attorneys (formerly known as Mokoduo Incorporated) on behalf of the claimants. In four of the cases, copies of the claimants’ missing hospital records were received from the said attorneys. 14 Section 13 of the National Health Act 61 of 2003 (NHA) provides that subject to the National Archives of South Africa Act 43 of 1996, and the Promotion of Access to Information Act 2 of 2000, the person in charge of a health establishment must ensure that a health record containing such information as may be prescribed is created and maintained at that health establishment. Section 17(1) of that (NHA) enjoins a person in charge of a health establishment in possession of a user’s health records to set up control measures to prevent unauthorised access to those records and to the storage facility in which, or system by which, records are kept. 15 Meyers v MEC, Department of Health, Eastern Cape [2020] ZASCA 3; [2020] 2 All SA 377; 2020 (3) SA 337 (SCA). [79] As a result, Mr Monyane caused a letter to be directed to MED Attorneys requesting them to explain their possession of the missing hospital records. There was no response to Mr Monyane’s letter. An internal investigation revealed that the attorneys had never requested the said copies, or paid for them. It was therefore ‘a complete mystery’ to the Department as to how MED Attorneys had obtained possession of the copies of the missing hospital records. Dr Schoon, an employee of the Department and an expert witness in this case, testified that it was suspected that the missing files had been removed and sold by corrupt individuals in the Department. The fraud unit of the Department was investigating this. [80] The second judgment states that ‘it is not inconceivable that a healthcare professional who becomes aware that his or her negligent acts might be questioned, may be motivated to spoliate the patient records so as to conceal his or her negligence.’ This is true. But the same can be said of a plaintiff or legal practitioner who, aware of the weakness of an intended claim, surreptitiously removes the hospital records to conceal that which reveals the weakness of the claim. In the light of the facts of this case, the absence of the hospital records is a neutral factor. It does not establish that the hospital staff who treated the appellant were negligent. Put differently, in this case, negligence, cannot, without more, be inferred from the absence of the hospital records. [81] The application of the res ipsa loquitur maxim is not appropriate in this case. There is no evidence of what caused the child’s brain injury and when it occurred. In Van Wyk v Lewis16 this Court cautioned that the maxim should rarely, if ever, find application in cases based on alleged medical negligence, where it has not been established what went wrong, and where the views of 16 Van Wyk v Lewis 1924 AD 438 at 462. experts are all based on speculation – giving rise to various but equally feasible possibilities – as to what might have resulted in the injury being sustained. This is such a case.17 [82] The general rule is that he who asserts must prove. As Innes CJ explained in Van Wyk v Lewis,18 the question of onus is of capital importance. A plaintiff who relies on negligence must establish it. If at the conclusion of the case the evidence is evenly balanced, a plaintiff cannot claim a verdict; for he or she will not have discharged the onus resting upon him or her. While true that an intrapartum injury cannot be excluded in this case, both antenatal and postnatal injuries cannot be excluded either. Nor is any one of them more probable than any other. As such, an intrapartum injury is not the most plausible inference to be drawn from the proven facts. [83] There are many proven and objective facts that point to MML’s brain injury as not being typical of an intrapartum one. Some of the important indicators are: a seemingly healthy child at birth, being pinkish in colour; the normal Apgar scores; the available hospital records which show that the child was well enough to be discharged a day after birth and that breast-feeding was initiated successfully; and the child’s normal growth until at least 18 months. There is also academic literature referred to by the experts, such as the ACOG guidelines and Dr Volpe’s textbook, which set out criteria to determine when a brain injury can be deemed to have occurred in the intrapartum period. MML did not fulfil any of the criteria and displays atypical features in the form of spastic diplegia affecting the lower limbs rather than the upper limbs, rather than spastic 17 See also Buthelezi v Ndaba [2013] ZASCA 72; 2013 (5) SA 437 (SCA) para 16. 18 Op cit, fn 16, at 444-445. quadriplegia or dyskinesia, which is normally associated with intrapartum brain injury. [84] Under these circumstances, I agree with the high court that it would be purely speculative to conclude that the child’s brain injury was suffered in the intrapartum period. In sum, the appellant had failed to establish the negligence of the hospital staff in the respects she alleged. Even if one assumes in the appellant’s favour that negligence on some basis has been established, the appellant would still have difficulty to establish causation. The evidence in this case is that a partial prolonged episode lasts at least 30-45 minutes. There is no evidence that regular monitoring, coupled, if necessary, with a prompt Caesarean section, would have resulted in the delivery of MML before the injury was suffered. The high court was therefore correct to dismiss the appellant’s claim. In the result the appeal must fail. Costs must follow the result. [85] Accordingly, the following order is made: The appeal is dismissed with costs of two counsel. _____________ for T Makgoka Judge of Appeal Molemela JA (Rogers AJA concurring) (dissenting) [86] I have read the judgment of my colleague, Makgoka JA (the first judgment). Regrettably, I am unable to agree with its reasoning and conclusion. My disagreement primarily pertains to its endorsement of the high court’s findings. For reasons that will become evident, I respectfully hold the view that the final ruling of the high court was premised on an erroneous application of the rules of engagement relating to a trial, especially in relation to the evaluation of evidence. [87] Although the powers of appellate courts to overturn credibility findings made by a trial court are restricted, it is trite that where the findings of a trial court are based on false premises, or where relevant facts have been ignored, or where the factual findings are clearly wrong, the appeal court is entitled to reverse them.19 Equally well-established is that with the benefit of a full record, a court of appeal can sometimes be in a better position to draw inferences.20 [88] Since I take issue only with the evaluation of the high court’s analysis of the evidence, there is no need for me to traverse the factual ground already covered in the first judgment. Thus, facts will be repeated only to the extent that they are necessary to articulate the reasoning that forms the basis of my dissension. [89] One of the trite principles of our law is that every case must be decided on its own merits. As regards the fact that the claim on behalf of MML was instituted nine years after his birth, a crucial consideration is that it was always open to the appellant to lodge MML’s claim until such time as he attained the age of majority.21 Her averment regarding how she became aware that she could lodge a claim on behalf of the MML is reminiscent of the following observation made by the Constitutional Court in Mohlomi v Minister of Defence:22 ‘That disparity must be viewed against the background depicted by the state of affairs prevailing in South Africa, a land where poverty and illiteracy abound and differences of culture and language are pronounced, where such conditions isolate the people whom they handicap from the mainstream of the law, where most persons who have been injured are either unaware of or poorly informed about their legal rights and what they should do in order to 19 R v Dhlumayo 1948 (2) SA 677 (A) 705-706; Santam Bpk v Biddulph [2004] 2 All SA 23 (SCA); 2004 (5) SA 586 (SCA) para 5; RB v Smith [2019] ZASCA 48; 2020 (4) SA 51 (SCA). 20 Minister of Safety and Security and Others v Craig and Others [2009] ZASCA 97; [2010] 1 All SA 126 (SCA); 2011 (1) SACR 469 (SCA) para 58. 21 It must be borne in mind that all private and public health-care facilities are enjoined to retain patient records relating to minors until they reach the age of 21 years. See the guidelines of the Health Professional Council of South Africa 2009 para 9. 22 Mohlomi v Minister of Defence 1996 (12) BCLR 1559; 1997 (1) SA 124 (CC). enforce those, and where access to the professional advice and assistance that they need so sorely is often difficult for financial or geographical reasons.’23 I echo the same sentiments. It is simply not hard to fathom why an indigent, ill- informed mother who has given birth to a child with severe disabilities would delay litigation. Unjustified credibility findings [90] The salient findings of the high court are set out in paragraphs 108 – 116 of its judgment. It was contended on behalf of the appellant that the high court’s credibility findings are not borne out by the record. Having gone through the record, I can only agree with that contention. The reasons for this view are set out below. The proper test for evaluating a witness’ testimony is not whether a witness is truthful or indeed reliable in all that he or she says, but whether on a balance of probabilities, the essential features of the story which he or she tells are true.24 Courts engaging in the analysis of evidence adduced in a trial must be careful not to fall into the trap of evaluating it in a piecemeal fashion; rather, the mosaic of the evidence that was adduced, must be considered as a whole.25 [91] It is important to bear in mind that the credibility of witnesses and the probability of what they say should not be regarded as separate enquiries to be considered piecemeal, as they are part of a single investigation into the acceptability or otherwise of the appellant’s version.26 In that investigation, the importance of any discrepancies or contradictions is assessed. The story presented by a litigant ‘is tested against facts that cannot be disputed and against the inherent probabilities, so that, at the end of the day, one can say with conviction that one 23 Ibid para 14. 24 Santam Bpk v Biddulph [2004] 2 All SA 23 (SCA); 2004 (5) SA 586 (SCA) paras 10 and 13. 25 S v Shilakwe [2011] ZASCA 104;2012 (1) SACR 16 (SCA) para 11. 26 Mabona and Another v Minister of Law and Order and Others [1988] 3 All SA 408 (SE); 1988 (2) SA 654 (SE). version is more probable and should be accepted, and that therefore, the other version is false and may be rejected with safety’.27 [92] In S v Mkohle,28 this Court held that not all contradictions affect a witness’ credibility. The court cautioned that in each case, the trier of fact has to make an evaluation, taking into account such matters as the nature of the contradictions, their number and importance and their bearing on other parts of the witness’ evidence. In my opinion, the credibility findings made against the appellant were not justified. There were no material contradictions in her evidence. I am of the view that the cardinal rules of cross-examination were not observed. These were reaffirmed by the Constitutional Court in President of the Republic of South Africa and Others v South African Rugby Football Union and Others,29 as follows: ‘. . . 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 an imputation is intended to be made and to afford a 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. . . . 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 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.’30 27 Ibid p 662. 28 S v Mkohle 1990 (1) SACR 95 (A) at 98E-.F. 29 Op cit fn 12, para 62. 30 Ibid paras 61 and 63. [93] It seems to me that the high court did not realise that the appellant’s cross- examination did not conform to the above-stated tenets of fair play. A crucial aspect that comes out clearly from the appellant’s cross-examination is that the version of the respondent was never put to the appellant for her comment. It is also noteworthy that none of the questions posed to the appellant (during cross- examination) directed her attention to the fact that an imputation was intended to be made suggesting that her evidence was untruthful. For instance, no questions were put to the appellant to suggest that at the time of her admission, she had not yet shown the signs of labour, yet this is what was contended for, on behalf of the respondent. This contention found favour with the high court, which also found that there was no proof that the appellant’s labour was prolonged. The basis of that conclusion is unclear to me. I will demonstrate that both findings were not borne out by the record. [94] In my view, there is nothing inherently improbable about the appellant’s version. The essential features of the story told by the appellant are, on the whole, probable. It seems to me that the aspects of the appellant’s evidence, which were corroborated by the respondent’s witnesses, did not receive sufficient consideration. In particular, I could not find any justification for the high court’s conclusion that the appellant’s credibility was ‘in tatters’. Neither do I agree with a view that characterises her version as falling within the category of unchallenged evidence that is ‘so improbable as not to discharge the onus’ resting on her.31 The high court’s purported reliance on McDonald v Young32 and the judgments relied upon in that judgment, was misplaced. [95] In evaluating the appellant’s version, the high court remarked that the complainant was a single witness in relation to the factual matrix. It ought to have 31 See paras 16 and 110 of the judgment of the high court and passages from the judgments cited therein. 32 McDonald v Young [2011] ZASCA 31; 2012 (3) SA 1 (SCA) para 6. heeded this Court’s warning, that ‘the evidence of a single witness to a fact, there being nothing to throw discredit thereon, cannot be disregarded’.33 Moreover, no matter how serious the allegations might be, the onus of proving facts in a civil case is discharged on a preponderance of probabilities and not on any higher standard.34 [96] In my opinion, the theory of the appellant’s case as presented to all the experts remained the same despite minor discrepancies in respect of some detail, and the facts on which the opinions of the different experts were based, were thus established.35 With respect, the high court’s conclusion that the appellant’s version as presented by her experts collapsed like a pack of cards is not supported by evidence. This is because it is quite clear that the difference of opinion between the appellant’s experts and those called by the respondent, was mainly because the latter accepted the correctness of the contents of the hospital records relating to the Apgar score and MML’s alleged stability upon discharge even though the veracity of such documents was in dispute. I will revert later to this aspect. [97] It has been found that there was a discrepancy between the evidence of the appellant’s expert, Prof Nolte, and the appellant regarding whether the appellant’s pregnancy was confirmed by a home pregnancy test or by a urine test done at the local clinic. This discrepancy is self-evidently inconsequential. In so far as doubt was expressed as to whether the appellant had attended an antenatal clinic, it bears noting that at no stage was it put to the appellant that she had not attended an antenatal clinic during her pregnancy. To the contrary, a note in the Maternity Register reflected that she had been ‘booked’, which was understood to mean that 33 Da Mata v Otto N O 1972 (3) SA 858 (AD) at 869C, approving Wigmore Wigmore on Evidence 3 ed, vol VII at 260. 34 Ley v Ley’s Executors and Others 1951 (3) SA 186 (A) at 192-3. 35 See PriceWaterhouseCoopers Inc v National Potato Co-operative Ltd [2015] ZASCA 2; [2015] 2 All SA 403 (SCA). she had attended the antenatal clinic. Besides, the appellant’s attendance at the antenatal clinic is one of the facts agreed upon in the joint minute of the obstetric experts submitted by Dr Schoon and Dr Hofmeyr and therefore cannot be one of the features forming a basis for an attack on the appellant’s credibility. [98] The 2007 Guidelines for Maternity Care in South Africa36 (maternal guidelines) clearly stipulate that a patient’s antenatal record must be handed over to the hospital upon a patient’s admission to the labour ward. This practice was confirmed by Sister Msibi, who also testified that the same antenatal folder becomes part of the patient’s hospital record upon admission. On acceptance of this undisputed practice, it stands to reason that the antenatal clinic records would have formed part of the appellant’s hospital records that could subsequently not be located. [99] The high court found that the appellant was not in labour at the time of her admission to the hospital. I disagree. The definition of labour in the maternal guidelines is helpful in this regard. According to those guidelines, labour is diagnosed if there are ‘persistent painful uterine contractions’ accompanied by at least one of the following: cervical effacement and dilatation, rupture of the membranes and a ‘show’. Considering that the appellant had attended antenatal classes, where pregnant women are educated about the onset of labour and the timing and intensity of contractions, there is nothing improbable about the appellant’s evidence that she felt abdominal pains at approximately 01h00, went back to sleep when the pain subsided, and summoned the ambulance only after noticing a pinkish mucous plug (‘show’). 36 The appellant’s obstetric expert, Dr Hofmeyr, alluded to these guidelines, and their applicability was never disputed. The 2007 Guidelines for Maternity Care in South Africa were admitted into evidence as Exhibit F. [100] It is worth noting that in explaining the entry of ‘in labour’, made in the Ward Admission and Discharge Register, Sister Msibi testified that before recording that a patient was in labour, she would first ask a patient for the history pertaining to the onset of contractions and also physically examine the patient. It can thus be safely inferred that she wrote ‘in labour’ after making an assessment and satisfying herself that the appellant was indeed in labour. [101] Whereas the appellant’s unchallenged evidence revealed that by the time she arrived at the hospital at approximately 13h00 she had manifested all three symptoms of labour, the high court found that her labour could have commenced at 20h00. To the extent that the high court accepted that labour started at 20h00, it misdirected itself, as that conclusion is in direct contrast to the appellant’s uncontested evidence and is not supported by the objective evidence in the form of the maternal guidelines. The high court’s suggestion that the appellant could have mistaken Braxton Hicks pain for contractions and that it was not shown that the appellant was in labour at the time of her admission are without foundation.37 I am also unpersuaded by any suggestion that Dr Hofmeyr, a qualified obstetrician and gynaecologist, and Prof Nolte, a specialist midwife, could make a mistake in relation to distinguishing between abdominal pains and uterine contractions. The first judgment’s preparedness to accept that the appellant was indeed in labour upon admission attests to the unsustainability of the high court’s credibility finding insofar as that aspect is concerned. [102] The high court criticised Prof Nolte’s evidence that the appellant’s labour lasted for approximately 28 hours, and suggested that it was one of the glaring contradictions between her evidence and that of the appellant as regards the onset of labour. This criticism fails to take into account that the first signs and 37 Further and in any event, the contractions that appellant experienced after her admission at the hospital ought to have been investigated, as the maternal care guidelines stipulate that abdominal pain suffered by a pregnant woman admitted to hospital must be investigated to exclude foetal distress. symptoms of labour are also taken into account when the total duration of labour is considered. This is borne out by the medical record with the caption ‘Labour- Initial Assessment’ relating to the birth of the appellant’s second child, which records the appellant’s time of admission as ‘06h10’ but records the onset of labour as ‘01h30’ on 16 July 2012 (long before her admission to the hospital). Furthermore, in a document with the caption ‘Summary of Labour’, the total duration of labour is calculated from 01h30 and not from the time of admission, which shows the relevance of the time at which the signs and symptoms of labour were observed. It is therefore obvious that Prof Nolte’s calculation of the duration of labour commenced from the time the appellant experienced contractions at home and not from her time of admission. There is therefore no contradiction on this aspect. The number of hours that elapsed since the manifestation of labour up to MML’s delivery (28 hours) indeed supports the proposition that the appellant’s delivery fell within the category of prolonged labour within the contemplation of the maternal guidelines. [103] An issue was raised about a statement made by Dr Hofmeyr in her report, in terms of which she stated that the appellant screamed for help on various occasions during her labour but was ignored or not examined. This statement must be considered in proper context. In her evidence, the appellant remained steadfast that, although there were numerous vaginal examinations, the foetal heart rate was monitored only once (by CTG) and was not monitored in any other way. Furthermore, the appellant testified that on one of the occasions after screaming for help, a nurse did come, but only told her where the toilet was situated. To state that she was ignored or not examined is therefore not incorrect. [104] The discrepancies about the exact number of times the appellant was physically examined during her labour do not detract from her evidence that the foetal heart was monitored only once between her admission and MML’s delivery. In my view, there was no material discrepancy between Dr Hofmeyr’s evidence relating to what was presented to her as the appellant’s version and the appellant’s testimony in court. [105] The finding that the appellant contradicted herself in relation to how she ascertained the time at certain stages of her labour is, in my respectful view, unfounded. Crucially, it was never put to the appellant that she was being untruthful when she said that there was a wall-clock in the delivery room. Her truthfulness in this regard was corroborated by one of the nurses who testified on behalf of the respondent; she confirmed that there is indeed a clock that is hanging on the wall of the delivery room. Against that background, there was nothing odd about the appellant noting the time from the wall-clock while she was in the delivery room. The appellant’s allusion to checking the time on her cellular phone does not relate to the time when she was in the delivery room but rather to the time when she was in the post-natal ward while waiting for MML to be brought to her. [106] The appellant did contradict herself as regards the date of her discharge from the hospital. The mistake regarding the date of discharge does not negate or detract from her evidence that MML did not cry; that he had to be resuscitated; and that by the time the appellant and MML were discharged, MML had not started suckling. That contradiction is therefore not material and should not serve to tarnish the appellant’s reliability as a witness. It is trite that not every error made by a witness affects their credibility.38 Of importance is that cross- examination of the appellant by the respondent’s counsel did not shake her evidence in any way. Furthermore, she was not confronted about the fact that the version she presented to her experts was perceived to differ materially from her 38 S v Oosthuizen 1982 (3) SA 571 (T) at 576G. evidence-in-chief, or that any of the respondent’s witnesses would differ with her version. [107] In criticising the appellant’s evidence that she and her baby were discharged on 2 May 2006 when the hospital records showed the discharge date to be 3 May 2006, the high court said the following: ‘I do not understand why plaintiff insisted that she and the minor were discharged on the same day that she had given birth notwithstanding the documentary evidence. It is highly unlikely that she would have been discharged on her version, if it is accepted for the moment that the minor had to be resuscitated and taken away from her for five hours, yet, a few hours later they were discharged on her version.’ I accept that on this aspect the appellant was mistaken. However, the high court failed to follow through its criticism of the appellant to its consistent conclusion. Since the birth took place at 05h00 on the Monday morning, and the appellant was only discharged at 14h30 on the Tuesday afternoon, she was kept in hospital overnight and for a total period of nearly 33 hours from the time of birth. As the high court seemed to appreciate, this delayed discharge is consistent with the fact that the baby had to be resuscitated and was taken away from the mother for five hours. I say discharge was delayed, because Dr Mogashoa testified that if all is well, the mother and child are usually discharged 6 to 24 hours from birth, yet in this case the mother and child were not only kept in hospital for a further night but were not immediately discharged the next morning. [108] In my view, there is nothing extraordinary about a first-time mother remembering the details of the birth of her child. On the probabilities, her labour and the delivery are likely to be imprinted in her mind.39 For the same reason, I would not deem it odd for a woman who has attended an antenatal clinic to have 39 IK obo KK v MEC for Health, Gauteng Province [2018] ZAGPJHC 580 para 230. taken note of the newborn baby not crying after birth or being anxious about that fact. Still at the level of probability, I note that it was not suggested to the appellant that she could not have known that a newborn baby’s cry is generally regarded as one of the indicators of good health. Notably, none of the experts deemed it odd that the appellant was able to observe that MML did not cry after his birth. For these reasons, I am unable to agree with the proposition that the appellant, on account of her youthfulness, could not have known about the importance of a baby’s cry as at the time of her admission to the hospital. [109] Although the fact that MML did not suckle and was always sleepy after joining the appellant in the postnatal ward is an aspect that the experts considered to be in keeping with neonatal encephalopathy, it was downplayed in the evaluation of evidence. In my view, there is nothing implausible about the appellant’s evidence that MML had not cried after birth and that there was an attempt to resuscitate him by using nasal prongs. The manner in which he was resuscitated by using nasal tubes, and the fact that he was injected in the thighs, are aspects that seem to have been rejected on the basis that such a method of resuscitation did not fall within the realm of standard practice. This method of resuscitation could not simply be dismissed as a figment of the appellant’s imagination because Sister Msibi confirmed that nasal prongs were indeed being used on sick babies who required oxygen at Thebe hospital. [110] Sister Mokoena, too, stated that oxygen is administered to babies either by way of nasal prongs or an oxygen mask. However, she could not recall whether the hospital was using nasal prongs at the time of the appellant’s accouchement. Sister Mokoena was asked about the procedure that would be followed if a baby did not cry despite having been suctioned after birth. The exchange between Sister Mokoena and the respondent’s counsel on that aspect was as follows: ‘Counsel: Now Sister if that still does not work you don’t get the baby to cry even after that what do you do? Sister Mokoena: If now we’ve performed everything that we did to the child and the child is not crying then we will have to inform the doctor. What we usually do if the child is not crying then because there is this umbilical cord that is attached to the child and the mother that umbilical cord will be cut and the child will be placed aside on the warm area and there at the warm area she will also be given oxygen while we are waiting for the doctor. Counsel: Now explain very carefully this warm area you are talking about where is the warm area is it in the maternity delivery room or is it somewhere else? Sister Mokoena: At this present moment there is that warm area in that maternity ward but in the past I don’t remember whether we were having those warm areas in the ward but I remember there were times when the child was not feeling well after birth then the child will be taken to a separate place where there are incubators and the child will be put into those incubators. Counsel: Do you take this child to the incubators outside of the delivery room before or after the doctor has seen the child? Sister Mokoena: Like I already indicated we had that warm area in that maternity delivery room then the child will be placed in that room in that warm area but I don’t remember at that time whether we were using that but if that was the case the child will be placed there on that warm area and the oxygen will also be on the child while we were waiting for the doctor. Counsel: Now let’s go to the provision of this oxygen that you are talking about, how do you administer and how do you give this child oxygen? Sister Mokoena: When coming to the oxygen issue this is in two ways and at this moment we are using two things we call those nasal prongs and they have two holes and you put those things into the nostrils of the child, at this present moment we are having those prongs because I don’t know I don’t remember at that time in the past time that we were using those things but what I remember is that when we were giving the child the oxygen we were using an oxygen mask at the time. Counsel: Now sister the [appellant] informed the court that when her baby was delivered the baby was not crying and the baby was immediately given oxygen with the nostril is it the nostril tube that you just spoke about? Sister Mokoena: Nasal [prongs].’ [111] Dr Hofmeyr’s evidence that ‘if there is no sign of breathing, no crying or any attempt to make respiration, then it is highly unlikely that the baby would be pink’ was taken out of context and fails to take into account that the appellant never suggested that there was ‘no attempt to make respiration’. Dr Hofmeyr did not discount resuscitation by nasal prongs as something that cannot be initiated in the delivery room under any circumstances. She considered applying oxygen through the nostrils as a possible alternative, but added that ‘it speaks to me of a more prolonged administration of oxygen, not just a quick intervention to help baby recover from the trauma of the delivery.’ Notably, Dr Kganane stated that an injection known as naloxone, was ‘a reversal injection just to wake a baby up . . . [which] might happen if you worry that a baby is not responsive’. In this regard, the evidence of Sister Mokoena about the steps actually followed whenever resuscitation of a new-born was necessary at Thebe hospital cannot be disregarded. [112] MML’s initial Apgar score of 7 is at the lowest level of ‘normal’, and after five minutes the score was only 8. One can see from the hospital’s records that most of the babies delivered at around the same time had initial Apgar scores of 9 or 10. Sister Mokoena testified that she did not know why they did not score ‘score the child well’ because ‘usually it will have to be 9 out of 10 or 10 out of 10’. Dr Hofmeyr said that in the absence of maternal records one did not know why the baby initially scored only 7, but that based on the limited information available to her, the suppressed score was probably attributable to the fact that the baby did not cry and that there was thus a low respiration count. She also said that Apgar scores are usually matters of impression recorded retrospectively rather than contemporaneously. [113] In the course of decrying the appellant’s credibility as a witness, the high court inter alia found that the appellant’s version to the experts and her evidence in court were aimed at taking advantage of the missing records. This finding is refuted by the fact that both the Discharge Summary Form (Discharge Summary) and the Road to Health Chart were made available by the appellant despite some of the information set out therein, like the high Apgar score, being considered to militate against the presence of an intrapartum brain injury. [114] It is undisputed that the Road to Health Chart was not completed in detail. One of the nurses who attended to MML at the clinic, Sister Mosia, admitted that besides recording the weight, none of the assessments of the tests referred to in the Road to Health Chart were recorded in that document. The high court found that even though parts of the information were ‘clearly missing’, the health chart provided objective evidence of MML's growth and confirmed that he had reached his developmental milestones until the age of at least fourteen months.40 It seems to me that this is one of the reasons why the high court regarded the appellant’s evidence pertaining to MML’s inability to suckle and constant sleepiness, as unreliable. [115] I am of the view that in the face of some information not having been fully recorded in the Road to Health Chart, there is no reason to doubt the appellant’s assertion that she had previously raised a concern about MML’s inability to sit when he was seven months old. Furthermore, the apparent surprise about MML’s normal weight gain in his first year does not take into account the appellant’s 40 Paragraph 112 of the high court’s judgment. evidence that when MML could not suckle, she expressed breast milk and cup- fed him. In the face of a concession that some of the assessments were not recorded, there was no basis for considering the Road to Health Chart to be objective evidence that served to prove that MML had not manifested the symptoms of cerebral palsy in his infancy; nor was there any basis for finding that MML’s growth and development were ‘not indicative of a child that suffered from an intrapartum injury’. Missing hospital records and the failure to call the author of the disputed hospital records as a witness [116] It is trite that documents may be used in evidence for a number of purposes other than establishing the truthfulness of the contents thereof.41 The high court considered the Discharge Summary as objective evidence despite the fact that the veracity of some of the contents thereof was never admitted, and that certain entries in that form remained in dispute throughout the proceedings. It is common cause that three nurses attended to MML’s delivery. However, only one of these nurses, Sister Mokoena, was called to testify. Although she stated that she could not dispute that she was one of the midwives who had delivered MML, she stated that the handwriting on the Discharge Summary was not hers. She neither completed nor signed the Discharge Form. [117] Although it is trite that a document that is introduced as evidence in court proceedings must be identified by a witness who is either the writer or signatory thereof, the other two midwives who were on duty at the time of MML’s delivery, including a chief professional nurse, were not called as witnesses.42 No explanation was given for not calling them as witnesses. Surprisingly, not only 41 ABSA Bank Ltd v Ons Beleggings BK 2000 (4) SA 27 (SCA) ; [2000] 3 All SA 199 (A) para 6. 42 See Howard and Decker Witkoppen Agencies and Fourways Estates (Pty) Ltd v De Sousa 1971 (3) SA 937 (T) at 940E; Maize Board v Hart 2005 (5) SA 480 (O) at 484E-J; CRC Engineering (Pty) Ltd v J C Dunbar & Sons (Pty) Ltd 1977 (1) SA 710 (W); [1977] 1 All SA 146 (W) at 147. did the high court find that the Discharge Summary constituted objective evidence, it also found that ‘the objective evidence supports the respondent’s contention of proper record-keeping’. It was never the appellant’s case that the nurses never made any notes at any stage. The fact that some entries were made in some of the documents cannot be equated with ‘proper’ record-keeping. Nor does that mitigate the loss of patient records. It is necessary to briefly consider the precepts that impel healthcare facilities to preserve patient records. [118] Section 27 of the Constitution guarantees for everyone the right to have access to health care services, including reproductive health care. The foreword to the maternal guidelines recognises that maternal health care is one of the priority reproductive health issues that have been identified as requiring urgent attention in South Africa. It bears emphasising that hospitals have a constitutional obligation to dispense reasonable care. It therefore comes as no surprise that hospitals have a statutory duty to create and maintain proper records. Medical records frequently serve as medico-legal documents. [119] The international standard for medical records has been adopted as a national standard in South Africa.43 The National Health Act 61 of 2003 (the National Health Act) obliges the person in charge of a health facility to set up control measures to prevent unauthorised access to the storage facility in which those records are kept. In terms of that Act healthcare professionals have a legal duty to make contemporaneous notes of the medical care given to a patient. Section 17(2) of the National Health Act imposes stiff penalties for the failure to keep medical records and for their disappearance, falsification or alteration. All these prescripts speak to a recognition of the prejudice that a plaintiff in a medical 43 International Organisation for Standardisation (ISO/IEC) 15489.2001; South African National Standards (SANS) 15489:2004. negligence claim stands to suffer if the healthcare professional or facility fails to create or safeguard patient records. [120] The disappearance of hospital records has been lamented in a plethora of judgments in this country; in some instances, the records disappeared permanently and, on a few occasions disappeared but mysteriously re-surfaced; and, in other instances, the hospital records were altered. Various articles have been written about missing hospital records in this country, and it is quite evident that records have gone missing even in circumstances where no litigation was involved.44 The problem has become endemic. Plainly, it is not inconceivable that a healthcare professional who becomes aware that his or her negligent acts might be questioned, may be motivated to spoliate the patient records so as to conceal his or her negligence. To the extent that there was an insinuation that the appellant’s legal representatives were behind the disappearance of the appellant’s hospital records, counsel for the appellant categorically raised this issue and placed the following on record: ‘If it is the [respondent’s] case that our attorney was involved [in the unlawful removal of the appellant’s file] or anybody else for that matter and they want to advance that case, it has not been pleaded. Now the mere suggestion that our attorney might have been involved is a very serious one and then it must be pleaded in detail . . . We can continue to deal with the issues. If that is not going to happen, they must refrain from making any suggestions to any witnesses, accusing my attorney of the unlawful removal of these files.’ The amendment that was subsequently made did not implicate the appellant’s attorneys. Reference was made to the hospital’s filing system, and the key-holder of the storage room was identified. This person was not called as a witness. Instead, the respondent decided to deal with the matter by adducing the evidence of Ms Tshabalala. 44 See L Wegner and A Rhoda ‘Missing Medical Records: An Obstacle to Archival Survey-Research in a rural community in South Africa’ (2013) 69 (2) SA Journal of Physiotherapy at 15-19. [121] The high court remarked that there was no proof that a register was kept in respect of the files stored at the hospital’s filing or archive room. It also found that there was no proof that the appellant’s file in respect of the birth of MML was ever taken to the filing or archive room. These findings are borne out by the record and are therefore correct. The high court further said: ‘[The respondent] applied for amendment of its plea as indicated supra. The alleged [filing] system at the hospital and the identity of the key holder of the storage facilities were pleaded. This person was not called without any explanation about his unavailability. Ms Tshabalala not only contradicted the pleaded version, but her testimony was also difficult to [comprehend]’. [122] Since it is clear that the methods for the preservation of the records were inadequate, the blame for the missing records cannot be laid at the door of the appellant. Although the high court’s judgment criticised the respondent’s filing system, and rightly so,45 it stated that it would be wrong to blame the hospital staff for ‘improper care and record-keeping’. [123] In the absence of medical records, claimants who lodge a medical negligence claim might stand to be prejudiced, as they might not be in a position to substantiate their assertions, thus hampering them in discharging the burden of demonstrating the negligence of the defendant healthcare professionals. Given that the creation and safeguarding of the records fulfils a right guaranteed by the Constitution, I venture, as an aside, to opine that where healthcare records were not properly safeguarded, it is only just and equitable that the healthcare facility in question must bear the evidentiary burden of showing that the care and service given to the patient were consistent with good medical practice. If this approach 45 S v Mkohle op cit, fn 27, para 50. is not followed, the prejudice to the appellant (and any plaintiff in a matter in which the respondent has not produced medical records) would be immeasurable. [124] In the present matter, a significant consideration regarding the missing records is that most of the expert witnesses who compiled medicolegal reports stated that the record-keeping was suboptimal and indicated that they were hamstrung by the lack of availability of the hospital records. The prejudice the appellant stood to suffer was perhaps downplayed by the obfuscation of matters insofar as reference was made to unrelated cases where the hospitals in the Free State had mysteriously lost patient records. It is quite interesting that the respondent was able to deliver its plea in this matter despite the absence of medical records. [125] The respondent in this matter is a state respondent and all the hospital staff members are employees of a hospital falling within the respondent’s jurisdiction. There was no suggestion that the other staff members who attended to the appellant were not available to testify. It would seem that there were simply no efforts expended in securing their attendance. This is a disconcerting state of affairs. In MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd46 the Constitutional Court made the following insightful observation: ‘. . . [T]here is a higher duty on the state to respect the law, to fulfil procedural requirements and to tread respectfully when dealing with rights. Government is not an indigent or bewildered litigant, adrift on a sea of litigious uncertainty, to whom the courts must extend a procedure- circumventing lifeline. It is the Constitution’s primary agent. It must do right, and it must do it properly.’ [126] In circumstances like the present, where hospital records are not properly safeguarded and are lost to the detriment of a litigant, a charitable approach that gives cognisance to the plight of the litigant is required. Where some of the 46 MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC) para 82. hospital staff members who treated a litigant are, despite their availability, not called as witnesses to explain some of the entries they made in the limited records that are available, a court should not hesitate to draw an adverse inference from the failure to call such a witness. [127] It was important to call the midwife who completed the Discharge Summary so that she could explain her basis for stating that MML’s breastfeeding had been successfully initiated. This was an important aspect of evidence, as the appellant’s version was that one of the symptoms exhibited by MML, which was consistent with HIE, was MML’s inability to suckle. It is well-established that a court is entitled to draw a negative inference from a party’s failure to call a relevant witness. Given that no reason was proffered for not calling the author of the Discharge Summary as a witness, there was justification for inferring that the reason for not calling her as a witness was that her evidence might not have been in the respondent’s favour. [128] The high court stated that it was not prepared to draw any adverse inferences ‘in view of the time lapse and the obvious and probable lack of independent memory of such witnesses’. Considering that there is a statutory duty to safeguard a minor patient’s records until the minor has reached majority, the time lapse between the date of the treatment and the institution of the claim should not be a reason to assume that there will be a lack of independent memory of witnesses who attended to the patient. I agree with the contention that the high court ought to have drawn an adverse inference from the respondent’s failure to call the other midwives as witnesses. Regrettably, its remissness in failing to proffer a valid reason for not presenting the oral evidence of all the relevant witnesses, in order to supplement the inadequate record, was condoned. In the end, the respondent benefitted from the hospital’s failure to secure the appellant’s medical records. [129] It must be borne in mind that the appellant vehemently denied that breastfeeding had been ‘successfully initiated’ as claimed in the Discharge Summary. It was thus crucial for the respondent to call the nurse who completed and signed the Discharge Summary and recorded that breastfeeding had been successfully initiated. Since this witness was not called, the recordal that breastfeeding had been successfully initiated remained inadmissible hearsay evidence. Despite this, the high court found that ‘the information contained in the Discharge Summary form is factually correct’. [130] Much was made about an entry in the Delivery Register, describing the condition of the appellant and MML as ‘stable’. Both Sister Mokoena and Sister Msibi confirmed that the hospital staff member who made that entry, and signed next to it (Ms Hlophe), was an assistant nurse who only did administrative work in files and was not authorised to examine patients. She could accordingly not have made the entry on the basis of a medical examination that she had personally performed. The primary source of Ms Hlophe’s information was not identified, nor was Ms Hlophe called as a witness. Under the circumstances, the description of the appellant and MML’s status at discharge as ‘stable’ clearly constitutes inadmissible hearsay evidence. However, this piece of hearsay evidence was used to discredit the appellant’s evidence that up to the date of discharge, the baby had not been able to suckle from her breast. Further, and in any event, even if it is accepted, without so deciding, that MML was described as ‘stable’ at the time of discharge, two days after his birth, that does not, without more, diminish the value of the appellant’s evidence that after his birth, MML did not cry, had to be resuscitated and was constantly sleepy.47 47 It is noteworthy that in IK obo KK v MEC for Health, Gauteng Province [2018] ZAGPJHC 580, an infant who was later confirmed to have suffered intrapartum HIE was discharged from hospital within two days of his birth, the hospital staff apparently not having noticed immediate manifestation of adverse sequelae. [131] The high court placed a high premium on the fact that the appellant testified that at birth, MML’s colour was pink. It is self-evident from how an Apgar score is assessed that skin colouration of the new-born patient is but one of several features that serve as indicators of the health status of a new-born infant. The appellant’s evidence that at birth her minor child did not cry despite being resuscitated in the delivery room is a relevant factor in the Apgar scoring but seems to have been downplayed. I pause to mention that it is worth noting that in the 1996 article alluded to by Dr Kganane, it was also observed that 75% of children with cerebral palsy had normal Apgar scores at birth. For its part, the 2014 ACOG Report acknowledges that an Apgar score assigned during a resuscitation is not equivalent to a score assigned to a spontaneously breathing infant. [132] What remains clear is that three crucial aspects remained unproven throughout the trial: evidence of a reliable assessment of the Apgar score, evidence of Sister Hlophe as the person who recorded that the appellant and MML were stable upon discharge, and evidence of the witness who recorded that breastfeeding was successfully initiated. In the absence of that proof, the foundation on which the respondent’s case rested, crumbled. The joint minutes of the experts [133] It is trite that admissions made by the parties significantly narrow down the issues in dispute. In relation to the status of joint minutes filed by experts, this Court in Bee v Road Accident Fund,48 held that where experts in the same field reach agreement, a litigant cannot be expected to adduce evidence on the agreed matters. It cautioned that, unless a trial court that was for any reason dissatisfied with the experts’ agreement, had alerted the parties to the need to adduce evidence 48 Bee v Road Accident Fund [2018] ZASCA 52; 2018 (4) SA 366 (SCA). on the agreed material, it would be bound to accept the matters as agreed by the experts.49 [134] In this matter, several joint minutes were handed in as exhibits. There can be no debate that the agreed-upon aspects recorded in the joint minutes that were furnished, were binding on the high court. In evaluating the evidence, the high court should have taken cognisance of the various joint minutes furnished by the parties. Notably, two radiologists, namely Dr Kamolane and Prof Andronikou, had signed a joint minute in terms of which they agreed that MML sustained a hypoxic ischemic injury of the partial prolonged variety, which occurred when the appellant’s pregnancy was equal or greater than 37 weeks and that there were no MRI features that suggested intracranial congenital infection, congenital anomalies, metabolic disorders, inflammatory disorders or haemorrhage. The high court did not quibble with any part of the joint minute and did not ask for any further evidence to be adduced on that aspect. Dr Kamolane also testified that ‘an MRI pattern of a child up to the age of 12 months, with the same insult, taken at the age of nine will still show the same pattern’. That opinion was not contested. Notwithstanding this, the high court found that the probabilities did not suggest that MML had suffered an HIE.50 This finding in my view, constitutes a misdirection. Negligence [135] In the present matter, some of the hospital records that could have substantiated the appellant’s version and proven negligence more conclusively were unavailable. This is through no fault of the appellant. I align myself with the approach suggested in Monteoli v Woolworths (Pty) Ltd,51 where the court 49 Ibid para 73. 50 Paragraph 113 of the judgment of the high court. 51 Monteoli v Woolworths (Pty) Ltd 2000 (4) SA 735 (W) paras 25 and 29. observed that notwithstanding that a plaintiff bears the onus of proving negligence on a balance of probabilities, a plaintiff is sometimes not in a position to produce evidence on a particular aspect. It suggested that in those instances, less evidence would suffice to establish a prima facie case, especially where the matter is peculiarly in the knowledge of the defendant. In my view, that approach is consistent with the following finding of this Court in Sea Harvest Corporation (Pty) Ltd and Another v Duncan Dock Cold Storage (Pty) Ltd and Another (Sea Harvest):52 ‘It is probably so that there can be no universally applicable formula which will prove to be appropriate in every case. As Lord Oliver observed in Caparo Industries plc v Dickman and Others [1990] 2 AC 605 (HL) at 633 F-G [1990] 1 All ER 568 at 585 in fine-586a), “the attempt to state some general principle which will determine liability in an infinite variety of circumstances serves not to clarify the law but merely to bedevil its development in a way which corresponds with practicality and common sense”. I agree. A rigid adherence to what is in reality no more than a formula for determining negligence must inevitably open the way to injustice in unusual cases. Whether one adopts a formula which is said to reflect the abstract theory of negligence or some other formula there must always be, I think, a measure of flexibility to accommodate the “grey area” case. . . . Inevitably, the answer will only emerge from a close consideration of the facts of each case and ultimately will have to be determined by judicial judgment.’ [136] As stated before, the appellant’s factual evidence regarding her labour, which culminated in MML’s birth, is probable. Dr Hofmeyr’s evidence regarding the provisions of the maternal guidelines about the monitoring of a woman in labour was not challenged. She opined as follows: 52 Sea Harvest Corporation (Pty) Ltd and Another v Duncan Dock Cold Storage (Pty) Ltd and Another [2000] 1 All SA 128 (A); 2000 (1) SA 827 para 22. ‘In the absence of antenatal and obstetric records, I cannot accurately evaluate or comment on fetal53 heart rate patterns or the adequacy of fetal monitoring. However, the [appellant’s] statement regarding the events surrounding labour reflects inadequate fetal heart rate monitoring in direct contrast to prescribed minimum standards of care. The fetal heart rate should have been monitored every 30 minutes during the active phase of labour but was only performed once during the (more than) 14 hour admission, through the initial admission CTG. Without regular fetal heart rate monitoring attending staff would not be able to detect fetal distress depicting a possible intra-partum event.’ (Own emphasis). [137] No credible and persuasive evidence was put forward to challenge Dr Hofmeyr’s evidence that the appellant’s labour was prolonged, thus requiring interventions aimed at expediting MML’s delivery. Furthermore, Prof Nolte’s evidence that a prolonged labour leads to foetal compromise was not challenged. In underscoring the importance of monitoring a woman in labour and the foetal, Dr Hofmeyr stated that the general principle is that ‘if the baby is in trouble, the baby needs to be delivered’. Having considered the absence of the further monitoring of the foetal heart rate after the CTG which was performed immediately after the appellant’s admission, inadequate maternal monitoring and probable prolonged labour, Dr Hofmeyr concluded that ‘the most likely timing of an hypoxic event capable of causing neonatal encephalopathy in [MML] (as was formally diagnosed by the relevant experts), was during the labour and/or delivery on 1-2 May 2005 at Thebe Hospital’. That conclusion is justified by the facts. [138] The high court found that the appellant’s labour was not protracted. I disagree with the proposition that on the assumption that active labour commenced at approximately midnight, neither the latent nor active phase of labour appeared to be ‘unduly protracted’. With respect, this hypothesis does not 53 There are different ways of spelling the medical term ‘foetus’ (fetus) and the corresponding adjectives. In this judgment I have use 'fetus' where that usage appears in a quotation and the English spelling 'foetus' and 'foetal' elsewhere. take sufficient account of the maternal guidelines and the entirety of Dr Hofmeyr’s evidence, in particular the correlation between uterine contractions, the supply of blood to the foetal and the foetal heart rate. The maternal guidelines unequivocally provide that ‘the latent phase is prolonged when it exceeds eight hours’. The guidelines then go on to set out how poor progress in labour is to be managed; that management includes investigating the cause of abdominal pains, among others. [139] It is clear from the maternal guidelines that foetal distress can be reliably detected by monitoring the foetal heart rate. Once there are indications of foetal distress, the attending midwives must expedite the baby’s delivery to eliminate the eventuation of harm. The maternal guidelines stipulate that where foetal distress is detected when delivery is imminent (where the cervix is fully dilated), the baby must be delivered immediately; where delivery is not imminent, the patient must be prepared for immediate caesarean section. [140] My understanding of Dr Hofmeyr’s unchallenged evidence on this aspect is that the duration of labour is not a stand-alone factor; the condition of the woman during that time, which can only be ascertained through adequate monitoring, is a crucial consideration. The healthcare professionals attending to a woman’s labour are duty bound to monitor the labour and to take steps to ensure that the foetal is not in distress. In stressing the importance of monitoring the foetal heart rate, Dr Hofmeyr explained that as the uterine contractions increase in strength (during labour), the blood vessels in the placenta become constricted and the blood supply to the foetal via the umbilical cord contains increasing levels of carbon dioxide and less oxygen. A series of late decelerations of the heartbeat, which can only be detected when the foetal heart is monitored, are a cause for concern, as they may suggest that the foetal is in distress. Absent timeous intervention, the increasing levels of reduced oxygen supply to the foetal (hypoxia) will result in brain damage. [141] Dr Hofmeyr’s evidence about the different phases of labour was not disputed. Similarly, her evidence about the interventions that should be made when there is no satisfactory progress in labour were not disputed. Moreover, her evidence about the progression of labour after the first phase, ie that the dilation is expected to be at the rate of 1cm per hour, was not disputed. The evidence of Dr Hofmeyr leaves no doubt that the appellant’s labour was indeed prolonged. [142] A further consideration is that, against the backdrop of the undisputed evidence regarding the correlation between uterine contractions and foetal distress, the appellant’s evidence of more severe contractions that caused her to scream, and rendered her unable to walk five hours before MML’s delivery suggested the presence of foetal distress. Even under those alarming circumstances, the foetal heart rate was not monitored. That there are no records regarding the severity of her uterine contractions at that stage is neither here nor there. It cannot be right that the absence of the complete patient records is simply lamented but the claimant is faulted for not substantiating the allegations of ischemia with CTG tracings showing patterns suggestive of foetal distress during labour. What is clear from the appellant’s evidence is that (i) the contractions she was experiencing at that stage were much more severe than the ones she had experienced earlier, and (ii) that the vaginal examination that was done by the nurses at that particular stage led one of the nurses to conclude that her baby’s delivery was imminent. To my mind, these are circumstances that called for the invocation of the interventions aimed at excluding foetal distress, as laid down in the maternal guidelines. However, these interventions were not invoked. [143] The available hospital records do not suggest that the labour ward was particularly busy at the time of the appellant’s admission up to the time of MML’s delivery. Furthermore, insufficiency of resources to follow the steps set out in the maternal guidelines was not pleaded in this matter. On the probabilities, nothing precluded the invocation of any of the interventions, set out in the maternal guidelines, to expedite MML’s delivery once the appellant’s labour became prolonged. In my view, it can be accepted on the basis of the evidence adduced, that the notional reasonable healthcare professional in the position of the nurses who attended to the appellant would have monitored the appellant in accordance with the maternal guidelines and would have intervened once her labour became prolonged. [144] The evidence canvassed in the foregoing paragraphs permits a finding that the inadequate monitoring during the appellant’s prolonged labour led to MML suffering a partial prolonged type of brain injury, culminating in cerebral palsy. In my view, the general manner of the occurrence of harm to the foetal as a result of inadequate monitoring was reasonably foreseeable. Despite this, the hospital staff failed to act with the required degree of care, skill and diligence that was warranted in circumstances where similarly qualified healthcare workers would have taken steps to prevent harm by expediting the delivery of MML. [145] As regards the yardstick by which the conduct of healthcare professionals is gauged, it is trite that the law expects of them to act in accordance with a notional standard set by a reasonable healthcare professional with their experience and qualification in their circumstances. Thus, the question is whether healthcare professionals in the position of the hospital staff would have foreseen the reasonable possibility of their conduct causing harm and, if so, whether they would have taken steps to guard against that harm.54 The team of nurses who attended to the appellant’s delivery were midwives, and one of them was a chief professional nurse. A midwife in their position would have foreseen the reasonable possibility of the lack of adequate foetal monitoring leading to foetal distress not being detected, which in turn could lead to brain damage resulting in the sequelae suffered by MML, and would have taken steps to prevent the harm. I am fortified in this view by the following remarks made by this Court in Sea Harvest:55 '. . . [I]t should not be overlooked that in the ultimate analysis the true criterion for determining negligence is whether in the particular circumstances the conduct complained of falls short of the standard of the reasonable person. . . . [I]t has been recognized that while the precise or exact manner in which the harm occurs need not be foreseeable, the general manner of its occurrence must indeed be reasonably foreseeable.’ (Own emphasis.) [146] With the benefit of the maternal guidelines and the expert evidence of Dr Hofmeyr and Prof Nolte regarding how inadequate monitoring can lead to foetal distress not being detected, I see no reason why that evidence, coupled with the appellant’s unchallenged evidence on the inadequate medical care she received during her labour (which fell far short of the monitoring stipulated in the maternal guidelines), should not suffice in proving the respondent’s negligence. I am satisfied that on the probabilities and circumstances of this case, the conclusion that is more plausible, from several conceivable ones, is that MML suffered hypoxic ischemia which was not timeously detected during labour as a result of the failure of the hospital staff to adequately monitor the appellant’s 54 This is in accordance with the two-step enquiry laid down in the seminal judgment of Holmes JA in Kruger v Coetzee 1966 (2) SA 428 (A) at 430 E-G. 55 Sea Harvest Corporation (Pty) Ltd and Another v Duncan Dock Cold Storage (Pty) Ltd and Another paras 21- 22. labour. What remains is to show the nexus between the negligent conduct of the hospital staff and MML’s brain damage and its sequelae. Causation [147] It is trite that where the defendant has negligently breached a legal duty and the plaintiff has suffered harm, it must still be proved that the said negligence caused the harm suffered. It is well-established that causation has two elements, namely: (i) the factual issue, the answer to which can be determined by applying the ‘but for’ test; and (ii) legal causation, which answers the question whether the wrongful act is linked sufficiently closely to the harm suffered; if the harm is too remote, then there is no liability.56 [148] The high court held that ‘it will be highly speculative to pin-point the precise timing of the injury’. In my respectful view, this finding is misconceived at two levels: (i) the applicable test for causation and (ii) the mechanism of MML’s brain injury, which speaks to the link between the negligent conduct and the harm suffered. It is to those interlinked aspects that I now turn. Various judgments of this Court have cautioned against a rigid application of the ‘but-for’ test.57 In Minister of Finance and Others v Gore,58 this Court cautioned that the application of the ‘but for’ test does not require the precision of mathematics, pure science or philosophy; instead, it requires the invocation of common sense, where things are viewed against the backdrop of everyday life experiences. [149] Similarly, this Court in Minister of Safety and Security v Van Duivenboden59 observed that a determination of a causal link was not an exercise 56 International Shipping Company (Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700E-I. 57 See Mashongwa v Passenger Rail Agency of South Africa [2015] ZACC 36; 2016 (3) SA 528 (CC); 2016 (2) BCLR 204 (CC) and the judgments quoted therein. 58 Minister of Finance and Others v Gore N O 2007 (1) SA 111 (SCA) ; [2007] 1 All SA 309 (SCA) para 33. 59 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA); [2002] 3 All SA 741 (SCA). in metaphysics; rather, it ought to be based on the evidence adduced and what can happen in the ordinary course of human affairs. Therefore, the appellant did not need to prove the causal link with certainty, but only needed to establish that the wrongful conduct of the hospital staff was the probable cause of the loss.60 The finding that establishing causation necessitated the pin-pointing of the precise timing of the injury goes against the grain of many judgments of this Court and the Constitutional Court and misconceived the nature of the enquiry. This much is also attested by the fact that the Task Force made this telling conclusion in the 2014 ACOG Report: 'The multidimensional aspect of the assessment process is key to recognising that no single strategy to identify hypoxic-ischemic encephalopathy is infallible and will achieve 100% certainty of the cause of neonatal encephalopathy in all cases.’ [150] In this matter, the nature and mechanism of MML’s brain injury was described as the partial profound type, which is a type of brain injury that generally occurs in instances where the insult on the foetal had lasted longer than in the acute profound type of injury. On that score, this case is distinguishable from the line of judgments of this court which dealt with causation in the context of an acute profound brain injury. That distinction is crucial.61 [151] As mentioned before, the nature of the injury is a crucial determination in this matter. It bears emphasising that the paediatricians, Dr Gericke and Dr Kganane, were agreed that the pattern of the injury sustained by the infant was consistent with a partial prolonged type of hypoxic ischemic injury. It was common cause that a partial prolonged type of brain injury generally occurred in instances where the episode of the insult on the foetal had lasted at least 30 – 45 minutes. Expert evidence revealed that severe uterine contractions have an impact 60 Sea Harvest op cit, fn 54, para 6. 61 Compare AM obo KM v Member of Executive Council for Health, Eastern Cape [2018] ZASCA 141 para 65. on the foetal heart rate and are discernible in CTG tracings. I have already alluded to the severity of appellant’s contractions, which worsened at approximately midnight. MML’s foetal heart rate was not monitored again after the CTG monitoring that was done immediately after her admission. The more plausible inference is that subsequent to the admission CTG monitoring, MML suffered foetal distress. On probabilities, his non-reassuring heart rate was not detected because the nurses had stopped monitoring the foetal heart rate. The inescapable inference is that the non-detection of foetal distress ultimately caused MML to sustain a brain injury of the partial prolonged type. [152] It is important to note that the conclusion made in the 1996 article62 mentioned by Dr Kganane, stating that an infant who has suffered hypoxia proximate to delivery should demonstrate all the four criteria mentioned in the first judgment, had been revised and was no longer the applicable benchmark at the time of the hearing of the case in the high court. It was also recognised that using the Sarnat classification system to stratify the severity of neonatal encephalopathy was insufficient as a stand-alone test. Prof Solomons’ conclusion that MML did not meet the essential criteria must be seen in context; it was clear that the absence of the relevant criteria was linked to the absence of hospital records, hence his qualification that MML’s case was ‘complicated by the absence of any antenatal, obstetric and resuscitation records’ . [153] The 2014 ACOG Report states as follows: ‘Thus, for the current edition, the Task Force on Neonatal Encephalopathy determined that a broader perspective may be more fruitful. This conclusion reflects the sober recognition that knowledge gaps still preclude a definitive test or set of markers that accurately identifies, with high sensitivity and specificity, an infant in whom neonatal encephalopathy is attributable to an acute intrapartum event. 62 American Academy of Paediatrics ‘Use and Abuse of the Apgar score’ Paediatrics Vol 98 No 1 July 1996. . . . [T]o determine the likelihood that an acute hypoxic-ischemia event occurring within close temporal proximity to delivery contributed to neonatal encephalopathy, it is recommended that a comprehensive multidimensional assessment be performed of neonatal status and all potential contributing factors, including maternal medical history, obstetric antecedents, intrapartum factors (including foetal heart rate monitoring results and issues relating to the delivery itself) and placental pathology.’ [154] In this matter, there were no antenatal, intrapartum or postnatal records, save for the Discharge Summary and the Road to Health Chart, which were made available by the appellant, as well as the Maternity Register and Delivery Register made available by the respondent. Almost all the experts lamented the absence of the other hospital records. The prejudice suffered by the appellant on account of the missing hospital records is self-evident.63 [155] The ACOG Report lists a variety of ‘markers’ regarded to be consistent with intrapartum brain injury. It goes on to mention that ‘when more of the elements from each of the item categories are met, it becomes increasingly more likely that peripartum or intrapartum hypoxia–ischemia played a role in the pathogenesis of neonatal encephalopathy’.64 Due to the absence of some hospital records, some of the intrapartum factors, which constitute important variables in the equation, are ‘unknown’. In particular, information pertaining to (i) the foetal heart rate patterns as observed on CTG tracings, (ii) the issues pertaining to the delivery, and (iii) placental pathology65 was not available. It can be discerned 63 The prejudice suffered by the appellant on account of the missing records is also evident from the finding in (i) paragraph 39 of the first judgment, where it is stated that none of the factors mentioned in the 1996 article are present despite there being no evidence suggesting that a blood sample was obtained for purposes of determining the presence of metabolic or mixed acidemia; as well as the finding in paragraph 40, where it is stated that ‘[b]ecause the medical records were missing, there was no evidence as to the presence or absence of foetal distress.’ 64 2014 ACOG Report at 208. 65 The 2007 Guidelines for Maternity Care in South Africa provide that in addition to recording the heart rate patterns, the CTG tracings must be retained. The same guidelines also stipulate that one of the things that have to from the 2014 ACOG Report that the scientific community considers that if the cord arterial gas pH levels are above 7.2, it is unlikely that intrapartum hypoxia played a role in causing neonatal encephalopathy.66 Information pertaining to this fourth ‘marker’ was also not available, apparently because no cord blood sample was analysed. Dr Hofmeyr’s undisputed remark on this aspect is critical: she stated in her report that the recordal of blood gas analysis of cord blood at birth ‘was not prescribed care and not standardly available in all healthcare facilities.’ The point here is that the existence of gaps in the necessary information as a result of ‘unknown’ factors is through no fault of the appellant. [156] The high court expressed its dissatisfaction with the cogency of the underlying reasoning of the appellant’s experts and also stated that their evidence ‘does not pass the reasonable and logical requirement test for acceptance of their opinions’. It went on to find that the experts’ testimony was based on incorrect facts. With respect, I could not find any justification for that finding. It is clear that heavy reliance was placed on the evidence of Dr Mogashoa. The appellant’s counsel contended that Dr Mogashoa’s evidence was not satisfactory; most criticism related to her evidence under cross-examination. I have to assess whether this contention holds water. It bears emphasising that the function of an expert is to assist the court to reach a conclusion on a matter in respect of which the court itself does not have the necessary knowledge to decide. It is not the mere opinion of the witness which is decisive but his or her ability to satisfy the court that because of his or her skill, training or experience, the reasons for the opinion he or she has expressed are acceptable.67 This Court in Coopers (South Africa) be done once the baby has been delivered (third stage of labour) is to ‘examine the placenta for completeness and any abnormalities.’ 66 2014 ACOG Report at 208. 67 Glenister v President of the Republic of South Africa and Others [2013] ZACC 20; 2013 (11) BCLR 1246 (CC) para 7. (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung MBH (Coopers)68 held that a proper evaluation of the opinion of an expert can only be undertaken if the process of reasoning which led to the conclusion, including the premises from which the reasoning proceeds, are disclosed by the expert. [157] I accept Dr Mogashoa’s qualifications and respect her training as a paediatric neurologist. However, having gone through the record, I had difficulties with certain parts of her evidence which, in my view, lend credence to counsel’s criticism. With respect, I found it quite astounding that having stated in her medico-legal report that formulating an opinion on this matter was ‘impossible’, Dr Mogashoa, in the same report, went on to venture an opinion in terms of which she categorically found that ‘[MML’s] impairments were not caused by intrapartum hypoxia’. [158] In my view, Dr Mogashoa’s conclusion that the injury was not an intrapartum event based on a ‘lack of an overt neonatal syndrome, history of regression and current clinical features with predominance of lower limb involvement’ clearly disregarded the appellant’s evidence of MML having been resuscitated and the poor reflexes he presented after his birth. Insofar as she limited herself to only a few criteria, her approach seems out of sync with the scientific community, as the 2014 ACOG Report recommended a multidimensional assessment of all contributing factors.69 [159] As regards one of the ‘markers’ considered to be consistent with HIE, Dr Mogashoa inexplicably made an assumption in favour of the respondent. This is evident from the fact that after noting (in her medico-legal report) that there were 68 Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung MBH 1976 (3) SA 352 (A) at 371A-H. Also see Bee v Road Accident Fund op cit, fn 48, para 73; Michael and Another v Linksfield Park Clinic (Pty) Ltd and Another op cit, fn 8, paras 36-7. 69 2014 ACOG Report at 4. no neonatal records that evidenced the presence of multisystem organ failure consistent with HIE, she recorded that ‘one can assume that blood workup was not done because the baby was well at birth'. [160] The joint minute of the radiologists confirmed that MML had HIE-related cerebral palsy which was probably sustained during the perinatal period (up to one month after birth). This means that by the time Sister Mosia examined him, MML had already sustained his brain injury. It is noteworthy that Sister Mosia, a qualified health professional, did not observe any of the clinical features associated with cerebral palsy when she assessed MML at the age of three months, on 8 August 2005. This loudly attests to the ACOG Task Force’s acknowledgment that ‘the clinical features of neonatal encephalopathy can be difficult to recognise reliably and consistently in newborns’.70 The fact that Sister Mosia did not, during her assessments, observe these features in MML does not mean that he never exhibited the signs and symptoms. The preoccupation with obvious signs and symptoms of neonatal encephalopathy was clearly misplaced. [161] A number of the respondents’ experts appeared to consider the high APGAR score allocated to MML as a basis for excluding intrapartum hypoxia. Dr Hofmeyr stated that the assessment of an Apgar can be subjective. Support for this statement can also be found in the evidence of Dr Bekker, who was called as the respondent’s witness. Dr Hofmeyr pointed out that Apgar scores are assessed by the attending midwives, such that the score reflected in the Discharge Summary and the Road to Heath Chart was probably based on the midwives’ score. Her evidence that APGAR scores are not diagnostic in nature was uncontroverted. Moreover, that evidence is borne out by the 2014 ACOG Report. 70 2014 ACOG Report at 4. It is noteworthy that in IK obo KK v MEC for Health. [2018] ZAGPJHC 580, an infant who was later confirmed to have suffered intrapartum HIE was discharged from hospital within two days of his birth, the hospital staff apparently not having noticed any manifestation of an overt neonatal syndrome. [162] It is of significance is that in the 2014 ACOG Report, it was acknowledged that; ‘an APGAR score assigned during a resuscitation is not equivalent to a score assigned to a spontaneously breathing infant. There is no accepted standard for reporting an APGAR score in infants undergoing resuscitation after birth because many of the elements contributing to the score are altered by resuscitation . . . In order to correctly describe such infants and provide accurate documentation and data collection, an expanded APGAR score report is encouraged’. In my view, the fact that the accuracy of the assessment of MML’s APGAR score was never proven is an important aspect that must be borne in mind when considering the opinion of various experts in relation to the high APGAR score allocated to MML. [163] There was nothing to gainsay the appellant’s evidence that she had not bumped her tummy against any hard object and that she had not been involved in any accidents during her pregnancy. The appellant’s obstetric expert, Dr Hofmeyr, concluded from the available records that there were no documented concerns suggesting that MML was born prematurely. This conclusion was not disputed. The conclusion that the appellant’s admission CTG reading was reassuring was deduced from the fact that after approximately 15 minutes, the CTG monitoring of the appellant was terminated. It can be accepted that had there been any problems that had been observed in the appellant’s antenatal clinic records at the time of the appellant’s admission or in the CTG tracings pertaining to the monitoring that was done upon her admission, a senior midwife or medical practitioner would have been summoned so as to follow the interventions stipulated in the maternal guidelines. Dr Hofmeyr’s conclusion that the appellant was a low-risk patient with an uncomplicated antenatal course, that she had a spontaneous onset of labour and that the admission CTG was reassuring was not attacked under cross-examination. At no stage did Dr Hofmeyr, in her oral evidence, change the views expressed above. This unrefuted evidence is vital in relation to the timing of MML’s brain injury. [164] Moreover, Dr Schoon and Dr Hofmeyr, in their joint minute, accepted that the appellant booked and attended an antenatal clinic during her pregnancy. During the appellant’s cross-examination, she was cross-examined on whether she had displayed any symptoms inconsistent with a normal pregnancy, like bleeding, abnormal vaginal discharge etc. She answered in the negative. Her evidence that she had not experienced any problems with her pregnancy and was not on any chronic medication was not challenged. The ineluctable inference is that the appellant had had an uneventful pregnancy. At no stage was it put to her that she had any pre-existing conditions that posed a risk to the foetus. In her report, Dr Mogashoa observed that MML was not dysmorphic and opined that a genetic abnormality was unlikely. In their joint minute, Dr Gericke and Dr Kganane, too, were agreed that there were no neurocutaneous lesions or dysmorphic features suggestive of genetic chromosomal abnormalities. Based on all those factors, any probability of a medical predisposition to antepartum injuries was therefore eliminated. [165] At the end of the day, the appellant’s factual evidence remains uncontroverted. There is nothing improbable about the appellant’s evidence that MML did not cry at birth and had to be resuscitated immediately after delivery. There is also no evidence to disclaim the appellant’s evidence about MML’s poor reflexes, which manifested themselves in his inability to suckle and being constantly sleepy. The appellant’s evidence that at the time when MML was unable to suckle, she fed him by expressing milk into a cup and that his feeding was gradually supplemented is the most logical explanation for MML’s apparent normal weight gain in the first 12 months of his life. She did not assert that MML was only breastfed throughout his infancy. To make much about MML’s apparent normal weight gain in that period ignores the alternative method of feeding employed and presupposes that MML was only being breastfed for that entire period, when there was no evidence to that effect. [166] In their joint minute, Dr Gericke and Dr Kamolane were in agreement that ‘neurological manifestations of partial profound HIE at birth may be mild and do not always meet the perinatal asphyxia criteria and neurological signs can be delayed’. This conclusion was based on an article that Dr Gericke had relied on, authored by Ms LS de Vries and Ms F Groenendaal.71 Moreover, Dr Kamolane expressly reaffirmed his concurrence on this aspect during his testimony in court. In any event, when reading that text in the context of the entire article, it is evident that the article does not suggest that severe motor impairment is absent in the group alluded to, but merely acknowledges that it is uncommon. I am therefore unable to agree with the first judgment’s conclusion that the statement that ‘severe impairment is uncommon in this group of infants’ automatically excludes MML. [167] I have already alluded to the fact that a number of ‘markers’ consistent with an intrapartum brain injury are missing due to the unavailability of hospital records. They remain ‘unknown’ factors. In this case, the appellant is unable to show the existence of more ‘markers’ because the patient records that were supposed to be safeguarded by the hospital were not available. The fact of the matter is that there are circumstances that point to the injury having occurred intrapartum. This Court must do the best it can based on all the material presently before it, mindful of the fact that the unavailability of some of the information is through no fault of the appellant. 71 L S de Vries and F Groenendaal ‘Patterns of Neonatal Hypoxic-Ischaemic Brain Injury’ (2010) Neuroradiology. [168] In my view, the interests of justice permit an approach consistent with the following dicta of Holmes JA, expressed in his dissenting judgment in Ocean Accident and Guarantee Corp. Ltd v Koch:72 'The fact that, scientifically speaking, the aetiology of the disease is uncertain, does not hamper the court in deciding, on the facts and on the expert evidence adduced in a given case, whether a likely cause was proved in such a case. Judicial decisions reflect the particular facts and testimony of each case, and are not intended and cannot be regarded as scientific treatises. Accordingly, the possibility of future scientific disproof of the opinion of one or the other of the expert medical witnesses is, judicially, a matter of no moment - the Court must do the best it can on the material presently before it in each case.’ (Own emphasis.) Conclusion [169] To sum up, each case must be decided on its specific facts as gleaned from the evidence. In this matter, there is evidence of negligence, on the one hand and there is evidence of harm, on the other hand. I am satisfied that these elements of a delictual claim have been proven on a balance of probabilities. The experts who submitted medico-legal reports and/or testified deferred to obstetric experts regarding the timing of the injury. There was unanimity among all the experts that foetal distress is one of the most common causes of intrapartum HIE. [170] As stated before, the maternal guidelines provide that a woman in labour must be regularly monitored so as to ensure the safe delivery of the baby. Dr Hofmeyr testified that the intrapartum hypoxic ischaemia was probably as a result of foetal distress that was not detected during the appellant’s prolonged labour because of inadequate monitoring of the foetal heart rate, which constitutes negligence. Alongside this evidence is the joint minute of the radiologists, confirming that the partial prolonged type of the injury suggested that the insult 72 Ocean Accident and Guarantee Corporation Ltd v Koch 1963 (4) SA 147 (A) at 159E-F; Hulse-Reutter and Others v Godde 2001 (4) SA 1336 (A); [2002] 2 All SA 211 (A) para 14. on the brain was as a result of hypoxic ischaemia. Dr Gericke and Dr Kganane were agreed that the type of the brain injury sustained by MML was consistent with a partial prolonged type of hypoxic ischemic injury. [171] The credible and unchallenged expert evidence of Dr Hofmeyr and Dr Gericke militates against the probability of the occurrence of an antepartum injury. Their evidence fortifies the view that MML’s brain injury occurred intrapartum as a result of the failure of the hospital staff to (i) adequately monitor the foetal heart rate during the appellant’s prolonged labour, (ii) to detect foetal distress and (iii) to timeously intervene to prevent the brain injury. This is the more probable version. [172] A significant aspect in relation to the timing of MML’s brain injury is that, under cross-examination, one of the respondent’s experts, Dr Kganane, conceded that if MML was indeed not suckling after birth that would presuppose that the severe brain injury must have happened before birth, as opposed to after birth. Given this concession by the respondent’s witness, as well as the appellant’s evidence that MML had not cried after birth, had to be resuscitated and was constantly sleepy, as well as her unchallenged evidence that MML sustained no injuries after her discharge from the hospital, there is no basis for entertaining the possibility of MML having sustained a postpartum injury after the appellant’s discharge. Since there is no evidence of an injury having occurred before or after MML’s birth, inferentially the highest risk period during which the injury occurred, was during labour. [173] The persuasive evidence that the partial prolonged type of injury occurred intrapartum, viewed against the backdrop of the radiologists’ joint minute confirming that the injury arose as a result of hypoxic ischemia and the rest of the joint minutes, collectively constitute sufficient scientific evidence of a probable connection between the negligence of the hospital staff and the harm suffered by MML. [174] On acceptance of the appellant’s evidence and expert evidence, supported by scientific data, the mosaic of evidence points to the presence of the following ‘markers’, recognised by the ACOG Task Force as being consistent with an intrapartum event: (i) the neuroimaging patterns seen on MRI are consistent with hypoxic ischemia (the respondent’s expert, Dr Kamolane, testified that the MRI patterns after the first year of life remain the same); (ii) there is no evidence of other factors that could be regarded as contributing factors (on the unchallenged evidence of the appellant and the available medical records as interpreted by Dr Hofmeyr,73 there was nothing to suggest the presence of any predisposing intrapartum events); (iii) on the available medical records, there was no evidence of any sentinel event occurring immediately before or during labour and delivery; (iv) the developmental outcome is spastic quadriplegia.74 [175] Pursuant to physically examining MML, a paediatric neurologist and neurodevelopmental paediatrician, Prof Solomons, concluded that he had spastic quadriparetic cerebral palsy. It is clear from the record that, during the trial, the respondent’s counsel agreed to the admission of the joint minute of Prof Solomons and Dr Griessel. While there are areas where the two experts were not in agreement, it is of significance that they did pertinently agree that ‘there exists a good correlation between [MML’s] brain abnormalities [which showed features of chronic evolution of a hypoxic ischaemic injury] and the type of cerebral palsy MML was suffering from’. They also agreed that MML’s motor disability is severe and classified it as Gross Motor Function Classification System V. Notably, the joint minute of Prof Solomons and Dr Mogashoa, acknowledged that 73 See para 140 – 1 of this judgment. 74 See the 2014 ACOG Report at 208 – 211. ‘the MRI findings of white matter abnormalities do correlate with the severe spasticity’. To my mind, their joint minute should therefore be given the status of any joint minute, such that their points of consensus should be regarded as proven, in line with the principle laid down in Bee v Road Accident Fund.75 These constitute a sound basis for finding that MML suffered an intrapartum HIE. The ACOG Report speaks for itself. To state, as a fact, that MML did not fulfil ‘any of the criteria’ is clearly incorrect. [176] Had the appellant’s labour been properly monitored, interventions aimed at expediting delivery in accordance with the maternal guidelines would have been taken once the first stage of labour became prolonged. Clearly, there was sufficient opportunity to intervene by performing a caesarean section timeously. As stated before, the type of brain injury suffered by MML (partial profound) generally occurs in instances where the insult on the foetal had lasted longer than in the acute profound type of injury. The mechanism of the injury is different from the acute profound type of injury, which typically happens moments before the delivery of the baby. It is for those reasons that I am unable to agree with the first judgment’s conclusion that there is no evidence that suggests that regular monitoring coupled with a caesarean section would have resulted in the delivery of MML before the injury was suffered. In my view, all the evidence canvassed in this part of the judgment suffices to prove all the elements of delictual liability on a balance of probabilities. [177] To the extent that further substantiation in the form of additional ‘markers’ may be considered lacking, it has to be borne in mind that this is attributable to the hospital’s non-compliance with applicable prescripts. Thus, sight should not be lost of the fact that the respondent did very little to shift the evidentiary burden 75 Bee v Road Accident Fund op cit, fn 48, para 73. Also see Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung MBH op cit, fn 68, 371A-H. of showing that the care and service given to the appellant were consistent with good medical practice.76 Regard being had to those aspects, this matter neatly falls within the ambit of the test laid down in Lee v Minister for Correctional Services77 on the basis that the conspectus of the evidence has shown on a balance of probabilities that the harm suffered by MML is closely connected to the omissions of the hospital staff in relation to the monitoring of the appellant’s labour. [178] For all the reasons set out above, my conclusion is that a balanced evaluation of all the evidence reveals that the more probable inference is that MML’s intrapartum brain injury could have been avoided by expediting delivery if the hospital staff had properly monitored the appellant’s labour.78 In the result, causative negligence has been proven on a balance of probabilities, thus rendering the respondent vicariously liable for damages. I would therefore uphold the appeal with costs. _______________ for M B Molemela Judge of Appeal Wallis JA (Makgoka JA and Unterhalter AJA concurring) [179] I have had the privilege of reading the judgments of my colleagues Makgoka JA and Molemela JA and am in full agreement with that of Makgoka JA. I write separately to express my disquiet over two matters. They are the circumstances in which these proceedings were brought and the approach 76Compare Athey v Leonati [1996] 3 SCR 458, 1996 CanLII 183 (SCC), where the Supreme Court held that where the court is satisfied that a claimant would otherwise be unjustly deprived of a remedy by reason of the inability to establish direct causation, the claimant should not be held to a strict standard; rather, the claimant could succeed by establishing that the healthcare practitioner’s breach of the standard of care materially contributed to the occurrence of the injury. 77 Lee v Minister for Correctional Services [2012] ZACC 30; 2013 (2) SA 144 (CC); Also see Mashongwa v PRASA [2015] ZACC 36 para 60. 78 Life Healthcare Group (Pty) Ltd v Suliman [2018] ZASCA 118; 2019 (2) SA 185 (SCA) para 16. to the conduct of this trial, typical of others in the medical negligence cases that are now burgeoning in our courts. Institution of the litigation [180] MML was born on 2 May 2005. The action was instituted on 2 September 2014, over nine years later. There are two different descriptions in the record of how his mother (HL), who my sister describes in her judgment as indigent and ill-informed, came to commence proceedings. [181] The first description was in her affidavit in an application for condonation of her failure to give notice in terms of s 3(2) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002. HL testified that she had been unaware of the possibility of making a claim arising out of MML's cerebral palsy until early 2014, when she met a woman, apparently at Thebe Hospital, who indicated that she had instituted an action for damages against the government due to negligence on the part of a hospital when she gave birth. Her affidavit then reads: She suggested that I contact her attorneys and after receiving details of my current attorneys from her, I consulted Kagiso Mokoduo of Mokoduo Incorporated currently known as MED Attorneys during May 2014.' The oddity of a chance encounter with an unidentified stranger79 leading an indigent, unemployed person living in or near Harrismith, to consult an attorney practising in Johannesburg, was not explained. According to her the attorney advised that there needed to be further investigation of a potential claim, but that they should in the meantime give notice of her intention to institute an action. 79 HL said in her replying affidavit that she did not have the details of this woman who was a 'complete stranger' who helpfully provided her with the details of her attorney. [182] Notice was given by registered post on 30 June 2014. As was to be expected, the letter was bereft of any detail about the claim. It read: 'We are advised that the medical and nursing staff at the hospital failed to render and provide the necessary medical, surgical and nursing care, advice, treatment and supervision with such skill and diligence as is reasonably required and expected of doctors, nurses and other medical and administrative staff acting within the course and scope of their employment with the Department of Health of the Free State Provincial Government … As a result of this the minor sustained various birth injuries, as a result of which the minor now suffers with inter alia Cerebral Palsy and mental retardation …' [183] Notwithstanding the failure to make any attempt to comply with s 3(2)(b) of the statute by providing 'the facts giving rise to the debt', a claim for R20 million was made. The letter's speculative nature was demonstrated by what followed, which was twenty-five paragraphs of demands for information from the MEC. The letter manifestly did not serve its statutory purpose of informing the MEC of sufficient particulars to enable the matter to be investigated and consideration to be given to whether to resist the claim.80 It was largely a fishing expedition. [184] The Constitutional Court has explained the purpose of provisions such as these in Mohlomi.81 It is that: '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.' 80 Avex Air (Pty) Ltd v Borough of Vryheid 1973 (1) SA 617 (A) at 621H-I; 81 Mohlomi v Minister of Defence [1996] ZASCA 20;1997 (1) SA 124 (CC) para 11. I appreciate that there are good reasons why HL had not approached attorneys at an earlier stage, but that does not mean that the problems of litigating in relation to a delayed claim such as the present one disappear. They remained and were manifest when the matter came to trial thirteen years after MML was born. [185] At the trial an entirely different and more plausible explanation emerged when HL was cross-examined about the circumstances in which she consulted her attorneys. She said that she first saw her attorney on 31 August 2017 and described what happened as follows: 'And how did it happen that you decide to visit an attorney, to see an attorney, in 2017? _ _ _ What happened exactly My Lord is that there was a certain lady who arrived at Dimakatso Disabled Centre. At the what, sorry … _ _ _ Dimakatso Disabled Centre and she told us about their attorneys and there were children there at that centre and five children were selected and we were taken for an interview. Sorry, who selected the children _ _ _ That lady selected those five children and my child was also amongst those five. We went for an interview but four of those five did not qualify … Yes, only my child qualified. That is why he was picked.' [186] HL explained that the woman who came to the school was called Charmaine. When asked who made the decision of who qualified and who did not qualify, her answer was: 'We were told at school that a certain lady arrived and she picked up [Quaere: out] five children and we as the parents to those children, we also accompanied our children and [on] our arrival there, there were these two ladies… that Charmaine lady and the other white lady. And what happened is that we got into a room, but we did not got in [at] the same time, we got into that room one by one for that interview.' [187] No doubt concerned by this turn of events, which was wholly inconsistent with the explanation given in the condonation application and involved an egregious example of touting for work among vulnerable children, HL's counsel questioned the relevance of this line of cross-examination. The objection was correctly rejected and HL was asked on what basis the selection had taken place. She was hard put to say, her evidence being: 'After I explained everything to that lady, she said to me that child might have got injured during birth, because I have already told her everything about the birth of the child, the whole process. That is how she said that she qualified to take this matter to the lawyers based on the information I furnished to her.' HL said that the lady later called and arranged for her to see a doctor, but not at that stage – which she placed in July or August 2015 – an attorney. [188] If the version to which HL attested in court is correct, other than in respect of the dates, it seems to me to be a matter for investigation by the Legal Practice Council. While many rules have been relaxed to aid access to justice, such as the rules governing advertising and those permitting the charging of contingency fees, active touting is not permitted. Going to a school for disabled children to select promising cases for litigious purposes strikes me as something that should not be condoned. Rule 18(10) of the Code of Conduct for attorneys promulgated in terms of the Legal Practice Act 28 of 2014, provides that attorneys may not: 'buy instructions in matters from a third party and may not, directly or indirectly, pay or reward a third party, or give any other consideration for the referral of clients other than an allowance on fees to an attorney for referral of work.' Rule 18.22 provides succinctly that attorneys may not: 'Tout for work' and provides that: 'An attorney will be regarded as being guilty of touting for professional work if he or she either personally or through the agency of another, procures or seeks to procure, or solicits or for, professional work in an improper or unprofessional manner or by unfair or unethical means …' On the face of the appellant's evidence it appears that these rules may have been breached in this case. Conduct of the trial The pleadings [189] The action commenced by the issue of summons on 2 September 2014. According to the medical reports in the record the only investigation of MML's condition at that stage was an MRI scan in respect of which a report by Prof Andronikou dated 20 August 2014 was available. The report's conclusion was that the MRI scan showed: 'Features are those of chronic evolution of a global insult to the brain due to hypoxic ischaemic injury, of the partial prolonged variety, most likely occurring at term.' As was to be expected the report said nothing about the cause of the injury or what, if anything could have been done by the hospital staff to prevent the injury or ameliorate its consequences. [190] The necessary consequence of this was that the particulars of claim were based entirely on the imagination of the attorney who drafted them, rather than any endeavour to comply with the Uniform Rules governing pleadings. Rule 18(4) requires a pleading to contain a clear and concise statement of the material facts upon which the pleader relies for the claim, with sufficient particularity to enable the opposite party to reply thereto. The latter is obliged by rule 18(5) not to plead evasively, but to meet the point of substance. If that point does not emerge from the particulars of claim they cannot do this. [191] In breach of Rule 18(4) the particulars of claim made no attempt to identify the facts giving rise to the claim. It consisted entirely of vague generalities summarised in the following paragraphs: 'During the course of 1 and 2 May 2005 the Plaintiff endured prolonged periods of labour in circumstances where more and/or alternative and dedicated medical attention, treatment and/or advice was required to ensure the safe birth of a healthy child and in particular a timely Caesarean Section. As a result of the prolonged labour, a lack of attention and medical care as may be reasonably required in the circumstances and in particular a failure to timeously perform Caesarean Section to deliver the Minor, the Minor suffered a hypoxic-ischemic insult due to peri-natal asphyxia and/or hypoxia, causing the Minor to sustain severe brain damage, as a result of which the Minor is permanently suffering from cerebral palsy and mental retardation ("the Complications"). The Complications occurred as a result of the negligence of the Defendant, alternatively as a result of the negligence of the Defendant's employees and/or representatives and/or agents, alternatively, as a result of the combined and cumulative negligence of the Defendant and the Defendant's aforesaid employees, representatives and/or agents.' [192] The pleaded particulars of negligence were if anything even vaguer. It was alleged that 'the Defendant and/or the Defendant's aforesaid employees, representatives and/or agents' were negligent in one or more or all of the following respects: '10.1 they failed to employ and/or ensure medical attention by suitably qualified and/or proficient and/or experienced medical practitioners and/or nursing staff who would be available, able and/or capable to examine, treat and/or provide whatever reasonably required assistance and/or advice to the Plaintiff as may be reasonably required and/or appropriate regarding her labour and delivery, and in particular in respect of performing a Caesarean Section if and when required, either at the Hospital or at all; 10.2 they failed to ensure that such medical practitioners and/or nursing staff were in attendance at all material and relevant times; 10.3 they failed to employ and/or ensure medical attention by suitably qualified and/or proficient and/or experienced medical practitioners v nursing staff who were able to assess, monitor and manage the Plaintiff's labour and delivery; 10.4 they failed to ensure that the Hospital was suitably, adequately, appropriately and/or properly equipped to provide such medical attention as was reasonably required by the Plaintiff at all relevant times hereto, and in particular to allow the timeous and proper performance of a Caesarean section when it was required; 10.5 they failed to take any and/or any reasonably required steps to ensure the proper, timeous and professional assessment of the Plaintiff, her monitoring and management of labour and/or assistance during the Plaintiff's labour and her process of birth; 10.6 they failed to implement such steps as could and would reasonably be required to prevent the occurrence of the Complications; 10.7 they failed to avoid the Complications when by the exercise of reasonable care, skill and diligence they could and should have done so.' [193] Not content with this exercise in obfuscation, the pleader added a further paragraph with eighteen sub-paragraphs of equally general allegations about the hospital staff, culminating with the allegation that they failed to prevent MML from suffering a hypoxic-ischemic incident, causing him to suffer severe brain damage, as a result of which he suffers from cerebral palsy and mental retardation, when by the exercise of reasonable skill, care and diligence they could have done so. One can allow a measure of generality in pleading allegations of negligence, but simply to allege everything the pleader can conjure up as potential negligence is unacceptable. There needs to be clarity as to the case being made and the nature of the impugned conduct on the part of the defendant, or those for whose conduct the defendant is said to be liable, who must at the least be identifiable. [194] There is much to be said for the proposition that these particulars of claim could have been set aside as an irregular proceeding under Rule 30, but instead the defendant pleaded a bald and general denial of all these allegations. An attempt was then made by way of a detailed request for further particulars for trial to ascertain what the case was that the defendant had to meet. By way of example, para 4 of the request read: '4.1 What were the risk factors presented by the mother indicating the need for a caesarean section? 4.2 What were the risk factors presented by the unborn child indicating the need for a caesarean section? 4.3 Exactly in what time, during 1st and 2nd May 2005, was each indicator present? 4.4 Who was the surgeon who should have performed the caesarean section? 4.5 At what hospital was the operation to be performed? 4.6 The exact date and approximate time and duration of Plaintiff's stages of labour. 4.7 The exact date and approximate time and duration of Plaintiff's second stage of labour. 4.8 The exact date and approximate time and duration of Plaintiff's third stage of labour.' The utterly unhelpful response to the first of these questions was: 'In so far as the particulars sought are not contained in the Notices filed and to be filed by the Plaintiff in terms of Rule 36(9)(b), they remain matters for evidence.' That answer was repeated in response to a question whether MML suffered any birth injury during the delivery process and to the detailed questions in paras 10 to 27 of the request. The end result was that after this the defendant was no wiser as to the factual basis for the claim. Neither the defendant, nor the court, should be required to analyse the expert notices and accompanying reports in order to ascertain what the case is about. [195] Two other questions and answers deserve mention. In response to a question about the qualifications that the relevant medical practitioners and nursing staff should have possessed – relevant given the allegations that they were not suitably qualified – the answer was: 'The Defendant is the party better suited to answer this question.' In response to questions about which doctors and nurses attended to HL and the date and time of her admission to a general ward, the maternity ward and the labour ward, the answer was: 'The Defendant is directed to the Thebe Hospital records held under number 840821 in the possession of the Thebe Hospital.' At the time this answer was given discovery had been made of the records that were available and HL's attorney knew that the remaining records were missing. The impression this leaves is that HL's attorneys were unwilling, or unable, to clarify their case. [196] The pre-trial conferences did nothing to address the problem that the issues in dispute were wholly undefined. Both the pleadings process and the pre-trial procedures failed to serve their purpose of clarifying the issues in dispute between the parties. HL's legal representatives seem to have laboured under the misapprehension that everything was resolved by way of a series of joint minutes by medical experts consulted by the parties. I will revert to those later in this judgment, but for the present it suffices to say that minutes of experts are no substitute for a proper definition of the issues in the pleadings, preferably narrowed by the proper conduct of pre-trial conferences under rule 37. As matters stood, when the trial commenced all that could be said about the nature of the claim was that MML had cerebral palsy caused by a hypoxic-ischemic incident, which may or may not have occurred during labour. It was alleged that some unidentified member or members of the medical or nursing staff should have prevented this by unspecified means, possibly including delivery by Caesarean section. [197] It has on several occasions been said by this court that litigation is not a game. This case resembles nothing so much as a game commenced by hopefully kicking the ball of a summons into play, without any factual basis for a claim beyond knowing that MML had cerebral palsy caused by a hypoxic-ischemic incident and, if I may mix my metaphors, hoping Micawber-like that something would turn up in the course of pre-trial preparation. The end result was that, when counsel opened the case before the judge, he was unable to identify the issues to be decided crisply and coherently. Beyond saying that the insult suffered by MML had probably occurred intra-partum, he said nothing about the specific acts of negligence that were to be relied on, who was responsible for those acts, and what should have been done if there had been no negligence. [198] This diffuse, unfocussed approach to the conduct of complex litigation is to be deprecated. If the issues are not properly and clearly defined the conduct of the trial cannot be controlled in a properly efficient manner. On appeal, by which stage the issues should have been clear and the alleged negligence defined in terms of the acts or omissions of specific individuals, HL's counsel contented themselves with saying that the appellant's case was that: '… as a result of her prolonged labour and the lack of attention and medical care she received, in particular the failure by the personnel to properly monitor her and the foetal in order to either expedite delivery or perform an emergency caesarean section delivery upon detecting foetal distress, [MML] suffered a hypoxic ischemic insult in the intrapartum period.' The heads of argument proceeded by saying that the trial focussed on an almost complete absence of hospital records and submitting that the res ipsa loquitur principle should be applied.82 The impression is that even at this stage the precise basis of the claim is uncertain. [199] The remedy is straightforward. In any case where the pleadings and pre- trial procedures have not resulted in a clear statement of the issues, the trial judge should require the parties to deliver a statement of the issues in accordance with Rule 37A(9)(a), that is, a statement of what is not in dispute and a statement of what is in dispute, setting out the parties' respective contentions on those issues. If the matter is subject to judicial case management under that rule such a detailed statement is a requirement. If it is not, it is within the judge's powers, under Rule 38(8)(c) and their inherent power to regulate the proceedings, to require that such a statement be provided. Sequence of witnesses [200] This is where the next problem arose. The first three witnesses for the appellant were experts – a professor of nursing, an obstetrician and a specialist paediatrician and medical geneticist. Only the last of these had consulted with the plaintiff and her son, and the usual documentary material that is sometimes a sufficient basis for the experts to consider and express their opinions was not available. The only available hospital records reflected that the appellant experienced a normal delivery with nothing untoward occurring. Her baby was delivered at 5.00 am on 2 May 2005 and she was discharged the following afternoon. Nothing untoward was noted in the Road to Health Chart of her clinic visits until some 18 months later. 82 Counsel cited Meyers v MEC, Department of Health, Eastern Cape, op cit, fn 15, paras 71, 80 and 82 in support of this submission, but the case is of no assistance. It dealt with a surgical procedure that had clearly gone wrong in a way that should not have occurred. In those circumstances the failure to provide an explanation for how the injury was suffered was held by the majority to support an inference of negligence. The law remains that, save in extreme and unusual cases, the principle has no application in medical negligence cases. Buthelezi v Ndaba, op cit, fn 17, para 16. [201] The judge needed to determine when the insult that caused MML's cerebral palsy occurred; the underlying cause; whether foetal distress should have been detected during the appellant's labour and, if so, what should have been done about it. The experts were unable to answer these questions on the basis of an MRI scan; the scanty medical records, which reflected that his birth was normal and not attended by any complications; the examinations of MML in the presence of the appellant undertaken by Prof Solomons, Dr Gericke and Dr Kganane and the interview of the appellant by Dr Mogashoa. All of the experts based their reports and, where they gave oral evidence, that evidence, on information obtained from the appellant either directly, or by reference to Prof Solomons report and notes or a statement apparently provided by the appellant's attorneys. This underpinned all the opinions being expressed. [202] The evidence of the appellant as to what had occurred was essential for the conduct of her case. Nine years had elapsed since MML's birth before the action was instituted and the trial took place four years after that. In the absence of medical records, it could not be expected that the nursing staff would have any independent recollection of the plaintiff, or MML's delivery, especially if the delivery was normal as reflected in the available records. Only the appellant could give any direct evidence. The reliability of her evidence was accordingly fundamental. If it was reliable then the opinions of the experts based upon it would be acceptable. If it was not, that evidence could not be accepted. [203] The report of the first witness, Prof Nolte, dated 20 September 2017, was based on information provided by third parties in the form of a report by Prof Solomons and what she described as 'consultation records' of the plaintiff. The second witness, Dr Hofmeyr, whose report was dated 6 September 2017, relied on the Road to Health Chart, the Maternity Register, appellant's obstetric Discharge Summary, a report on the MRI scan on MML by Prof Andronikou, the report of Prof Solomons and a 'factual statement' dated 31 August 2017 by the appellant. Neither the statement, nor the consultation records, which may have referred to the same document, were made available to the court. [204] The third witness, Dr Gericke, whose report was dated 21 September 2017, had at least seen HL and examined MML on 31 August 2017. In addition, he relied on 'the personal injury claims consultation notes', which may have been the same document as was provided to Prof Nolte and Dr Hofmeyr, but was not disclosed, the Road to Health Chart, the report by Prof Andronikou and the report by Prof Solomons. [205] Prof Solomons did not give evidence because the parties agreed, during the course of the trial and before the appellant testified, that the joint minute between him and Dr Griessel could stand as a record of what they agreed, subject to qualifications expressed by Dr Griessel. That agreement did not render anything other than Prof Solomons' opinions admissible. While his report was before the court, insofar as it contained factual matter on which the evidence of these three witnesses was based, it was inadmissible hearsay. The following facts set out in his report were accordingly not facts on which the other experts were entitled to rely without proof, namely that: (a) On 1 May 2005 at 01h00 HL presented with mild lower abdominal pain; (b) At 07h00 this had 'increased in severity' indicating that this was a continuation of the pain at 01h00; (c) HL's membranes ruptured at 11h00 that morning and she went to Thebe Hospital at 12h00 arriving at 12h30; (d) At the hospital she was assessed by nursing staff and was told that the baby was 'still far' and the cervix was 3 cm dilated; (e) On one occasion a CTG was placed on her whilst she was in the labour ward, but she did not recall any abnormalities; (f) HL was assessed by the nursing staff at 18h00 and 20h00 on 1 May and at 01h00; 02h00 and 04h00 on 2 May 2005; (g) On each occasion she was told that the baby was 'far' and that she should not push, but lie on her left side; (h) The abdominal pains were severe from the previous evening; (i) The baby's head crowned at 04h45 and the mother shouted for assistance and three nurses came to help; (j) MML was born at 05h00 on 2 May 2005; (k) At delivery MML did not cry and two tubes were placed in his nostrils indicating nasal prong oxygen; (l) The nursing staff did not inform HL of MML's condition, which suggested that there was something to inform her about. [206] Almost all of those facts depended upon HL. The only ones derived from the hospital records were that she had been admitted to the hospital on 1 May 2005 at about 13h00 'in labour' and that MML was born at 05h00 on 2 May 2005. Yet the basis for Prof Nolte's report was that labour commenced at 01h00 on 1 May 2015. She said that there was prolonged labour of about 28 hours duration. Her description of HL's labour was taken directly from Prof Solomons' report, although she omitted the assessments by the nursing staff at 01h00 and 02h00 that he reported. Did she in that regard rely on the statement by HL in preference to the report of Prof Solomons? We do not know. What we do know is, for example, that she was apparently unaware that HL would testify that she felt a minor pain on her bladder at 01h00 on 1 May, but it passed and she went back to sleep until 07h00. Prof Nolte did not mention that and she could not be cross-examined on it. Nor did she or any of the experts mention that between 20h00 and midnight HL would say that she slept again and awoke because of a pain. The implications of this could not be explored because that evidence had not been given. Nor could any of them take into account her answer under cross- examination that she was not told on her initial examination at the hospital that she was 3cm dilated. [207] The materiality of the appellant's evidence was apparent from the reports of these two experts. Dr Hofmeyr based her opinion on an absence of foetal monitoring during labour; inadequate maternal monitoring and probable prolonged labour. Her report and the joint minute compiled by her and Dr Schoon noted the absence of records and said that it hindered their ability as witnesses to fairly assess the circumstances surrounding the claim of obstetric negligence. Prof Nolte said that HL was in prolonged labour for 28 hours; that the active stage of labour was only 20 minutes; and that the nursing care was sub-standard. These opinions were all based on hearsay material said to emanate from the appellant. [208] In those circumstances HL had to be the first witness in order to set the stage for the experts. When the trial commenced and appellant's counsel indicated that Prof Nolte would be the first witness, respondent's counsel objected that, because HL would not have given evidence, he did not know on which data the expert would base her evidence. He correctly pointed out that the facts on which the expert evidence was based needed to be admitted or proved.83 That is clear. This court has said that84 before any weight can be given to an expert’s opinion, 83 Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung MBH, op cit, fn 68, 1976 (3) SA 352 (A) at 371 A-H. 84 PriceWaterhouseCoopers Inc and Others v National Potato Co-operative Ltd and Another, op cit, fn 35, para 99. the facts upon which the opinion is based must be found to exist and an opinion based on facts not in evidence has no value for the court. [209] The judge responded to the objection by saying: 'Well your viewpoint might be that the evidence that is relied upon would be hearsay evidence and that you object thereto and you have got an assurance that the witness be called.' Counsel replied that this was an expert witness who had to report on a factual basis, or on some data, if there was to be any merit to their evidence. He pointed out that in her expert summary Prof Nolte referred to Prof Solomons' report and a 'kind of statement' of HL that someone else had drafted. He expressed concern over the value of evidence given on that basis. [210] The judge then said that he could not tell the plaintiff how to call the witnesses and that experts rely on factual foundations provided to them so that if the factual foundation falls away the expert evidence is worthless. He then said, with counsel's acquiescence, that the hearsay evidence would be admitted provisionally and could be struck out later. Counsel for HL then intervened to say that the experts on both sides had used 'basically the same information' and, if a dispute arose, he would then call her. In other words, there was no certainty that HL would give evidence. [211] This was not an appropriate way in which to conduct the trial. In my view the judge erred in his response to the objection. It was an objection to the expert witnesses being permitted to give evidence on the basis of factual hearsay. Given the fundamental importance of HL's evidence in this case, the objection should have been upheld. Until the factual basis for the experts' evidence had been established their opinions were inadmissible. Judging by his comment that he could not tell the HL's counsel in what order he should call his witnesses, the judge regarded this as a matter of counsel's discretion in regard to the presentation of a case. I think that was wrong, as the objection raised issues of the admissibility of the experts' evidence. Rejecting it placed counsel for the respondent in an impossible position, where he was unable to challenge HL's experts on the basis that the facts on which they relied were not supported by her evidence. Nor could he test her evidence against the evidence by the experts of what they had been told, either by her or by Prof Solomons, or by the attorneys in the mysterious 'consultation record'85 or the factual statement by HL dated 31 August 2017.86 I leave aside for present purposes the question whether the obligation of the experts to set out the materials on which their opinions were based, meant that any privilege that might otherwise have attached to these documents was waived.87 [212] In AM v MEC for Health,88 another medical negligence case, I had occasion to describe the functions of an expert witness in the following terms: 'The functions of an expert witness are threefold. First, where they have themselves observed relevant facts that evidence will be evidence of fact and admissible as such. Second, they provide the court with abstract or general knowledge concerning their discipline that is necessary to enable the court to understand the issues arising in the litigation. This includes evidence of the current state of knowledge and generally accepted practice in the field in question. Although such evidence can only be given by an expert qualified in the relevant field, it remains, at the end of the day, essentially evidence of fact on which the court will have to make factual findings. It is necessary to enable the court to assess the validity of opinions that they express. Third, they give evidence concerning their own inferences and opinions on the issues in the case and the grounds for drawing those inferences and expressing those conclusions.' (Footnotes omitted.) 85 Prof Nolte. 86 Dr Hofmeyr. 87 It appears that extensive consideration has been given to this in the United States of America under Federal Rule 26(a)(2)(B). See Roger S Heydock and David F Herr Discovery Practice §5.03; Jerome G Snider, Howard A Ellins and Michael S Flynn Corporate Privileges and Confidential Information §3.08(2) at 3-49 to 3-52. 88 AM v MEC for Health, Western Cape [2020] ZASCA 89; 2021 (3) SA 337 (SCA) para 17. See also The Member of the Executive Council for Health, Eastern Cape v DL obo AL [2021] ZASCA 68 paras 10 and 11. [213] In dealing with the necessity for the expert's opinion to be based on admitted or proved facts, the judgment continued:89 The opinions of expert witnesses involve the drawing of inferences from facts. The inferences must be reasonably capable of being drawn from those facts. If they are tenuous, or far-fetched, they cannot form the foundation for the court to make any finding of fact. Furthermore, in any process of reasoning the drawing of inferences from the facts must be based on admitted or proven facts and not matters of speculation.' (Footnotes omitted.) [214] There may be cases where it is permissible, or even necessary in order to set the scene for the court to appreciate the issues, for experts to give evidence at the outset of the proceedings when the factual evidence on which they base their opinions may still need to be led. That will ordinarily be so where the factual dispute is narrow and clear-cut and the expert can properly express an opinion on all relevant factual scenarios, without relying on disputed facts. This was not such a case and nor are most similar cases.90 [215] It is not apparent whether HL's counsel adopted this approach as a tactical device, or with a view to meeting the convenience of expert witnesses, but in my view it was impermissible. Where the facts are central to the opinions of the experts, courts should require that those facts be led in evidence before the experts express their opinions. Primarily that is for the benefit of the court, which is thereby placed in a position where the expert's opinion can be assessed, and, if need be, queried or elucidated, in the light of the factual material before it. It is also conducive to fairness in cross-examination of the experts on behalf of the defendants. Where the case comes on appeal it facilitates a reading of the record. Lastly, if this principle is borne in mind and objections are upheld to leading the expert evidence without a proper factual foundation being laid, that should avoid 89 Ibid para 21. 90 AB obo KM v Member of Executive Council for Health, Eastern Cape [2018] ZASCA 141 paras 47-50. situations, such as that in Madikane,91 where the case was conducted entirely on the basis of expert evidence without any factual foundation at all for the opinions being expressed. Expert minutes [216] It has become a practice in medical negligence cases for parties to arrange for the expert witnesses to meet and to file agreed minutes of their opinions. In some divisions of the high court this may be a requirement. It is a useful practice that may facilitate the running of the litigation by narrowing the issue and enabling the court and the parties to focus on the central issues in the case. That is reflected in the decision of this court in Bee.92 That was a case involving the computation of damages for loss of past and future earnings. Forensic accountants were employed by the parties and they signed a joint minute setting out the facts on which they were agreed and the areas where they were unable to agree. At the trial the Road Accident Fund's forensic accountant sought to depart from the factual agreement by relying on a report not available at the time the joint minute was signed and using that to recalculate the agreed figures on which the joint minute had been based. Contrary to the agreement, he also sought to contend that there was no gratuitous element to the remuneration Mr Bee had been receiving since the accident. [217] In Bee the majority judgment, authored by my brother Rogers AJA, rightly held that this could not be countenanced. The trial had been prepared and conducted under this head of damages on the limited issues identified in the joint minute. Those included an agreement as to the basis for calculating the loss of earnings of the business in which the plaintiff was involved and an agreement 91 Road Accident Fund v Madikane [2019] ZASCA 103. Molemela JA and I were both parties to that decision. 92 Bee v Road Accident Fund, op cit, fn 48, para 66. The judgment broadly endorsed the approach in Thomas v BD Sarens (Pty) Ltd [2012] ZAGPJHC 161 (Thomas). that a proportion of his earnings after his injuries was gratuitous and paid only because it was a family business involving him and his brother. To permit a departure from that course would have required an adjournment and probably the filing of a supplementary expert's opinion. The decision was expressly based upon the need for fairness in the conduct of legal proceedings and the avoidance of trial by ambush. [218] The effect of Bee in relation to the agreed minutes of experts in this case involved two misconceptions. The first related to the need to call the experts to give oral evidence in support of their opinions and, where experts were called, their entitlement to expand upon and explain the basis for their opinions. The second related to the weight to be attached to the opinions themselves. [219] There appeared to be a perception, reflected in both the record and the heads of argument that such agreements are contractual in nature. The agreements were described as having been 'struck' and not having been 'repudiated'. That is the language of contract, and the give and take of negotiation, to arrive at a compromise. It is wholly inappropriate to describe the endeavours of independent experts to explain for the benefit of a court the matters on which they hold the same view and those on which they differ. That is why it was suggested in AM v MEC for Health93 that the experts should be required to draft these minutes themselves and that the lawyers should play no part in that process. [220] A clear distinction in principle needs to be drawn between factual evidence given by an expert witness and the opinions expressed by that witness. As to the former, there is no difficulty in applying Bee to the facts on which the experts agree, any more than there is a difficulty where the parties themselves reach 93 Op cit, fn 88, para 26. agreement on factual issues. The opinions of the experts stand on a completely different footing. Unlike agreements on questions of fact, the court is not bound by such opinions. It is still required to assess whether they are based on facts and are underpinned by proper reasoning. Bee94 endorsed a remark by Sutherland J in Thomas95 that the occasions on which that occurs are likely to be rare, but that will only be in cases where the opinion is clear and there is nothing in the evidence to controvert it. Before a court accepts an opinion, it must pay close attention to the qualifications attaching to it. Furthermore, agreement by two experts on an opinion cannot preclude another expert with appropriate qualifications from expressing a different view, either in a report or in oral evidence. That is especially so when the third expert's views are based on their own speciality, which differs from that of the other two. The only constraint on that is that it should not result in unfairness to the party that has relied on the agreed opinion. [221] This point can be illustrated by reference to the agreed minute signed by the specialist radiologists, Prof Andronikou and Dr Kamolane. The minute read: 'The radiologists agree that the MRI demonstrates features of chronic evolution of hypoxic ischaemic injury, of the partial prolonged variety, occurring in a brain of term maturity (≥ 37 weeks), probably occurring in the perinatal time-period and should therefore be correlated with clinical parameters by paediatric and obstetric experts for the establishment of a more exact time-period and causes that led to this result.' [222] In accordance with her report, Dr Kganane said in evidence that MML had spastic diplegic cerebral palsy that was not typical of HIE. That had been recorded in her joint minute with Dr Gericke. When she explained this in her evidence in chief, she said that if there had been a profound insult to MML's brain during or around the time of his birth, his clinical features would have been different. This 94 Bee op cit, fn 48, para 64. 95 Thomas op cit, fn 92, para 13. attracted an objection that this evidence was inconsistent with the agreement between the radiologists. Counsel's approach was that the radiologists' agreement confined the insult suffered by MML to the perinatal period and it was not open to Dr Kganane to question the severity of the insult at that time. But the agreed minute related to their opinion in regard to the period when the insult occurred, not to a question of fact. It was always clear that there was a dispute about when MML suffered the insult, and evidence that MML's condition was not typical of HIE was relevant to whether the judge should accept the joint opinion. In addition, Dr Kganane was expressing a view based on her own speciality and, as has been pointed out elsewhere, experts in the medical field do not operate in hermetically sealed compartments. The court is entitled to the full picture. [223] Similarly, when Dr Mogashoa came to give her evidence, in accordance with her report and joint minute with Prof Solomons, both of which were in existence before the trial commenced, her evidence was objected to on the grounds that it was inconsistent with the joint minute between Prof Solomons and Dr Griessel.96 The latter referred to MML's injury being 'at term' and Dr Mogashoa sought to explain that a 'term brain' was from 35 weeks, while a 'term pregnancy' was from 37 weeks. [224] In pursuing this objection, counsel referred to item 6 of the Solomons/Griessel joint minute, which read: 'In the setting of absent medical records and maternal history of sucking and swallowing abnormality, timing of the partial prolonged hypoxic ischemic injury to the interpartum period cannot be excluded. – Agree. If disagree state reasons for same. Additional comment: D Griessel: The normal growth first year of life makes severe feeding difficulty unlikely.' 96 The objection is dealt with in paras 47-49 of my brother's judgment. [225] Counsel relied on the first part as having been agreed, but this disregarded the qualification added by Dr Griessel, which challenged the factual basis for the opinion. As this court recently pointed out, the necessary corollary to an agreement in a joint minute limiting the issues on which evidence is necessary is that, where there is no agreement, the minute can be disregarded and, if a party wishes to pursue the disputed point, evidence will be necessary.97 [226] In Huntley v Simmons98 Waller LJ said in relation to expert minutes that: 'The evidence of experts is important evidence but it is nevertheless only evidence which the judge must assess with all other evidence. Ultimately issues of fact and assessment are for the judge. Of course if there is no evidence to contradict the evidence of experts it will need very good reason for the judge not to accept it and he must not take on the role of expert so as to, in effect, give evidence himself. So far as Joint Statements are concerned parties can agree the evidence but (as happened in this case) it can be agreed that the joint statements can be put in evidence without the need to call the two experts simply because they do not disagree; but either party is entitled to make clear that the opinion expressed in the joint statement is simply evidence that must be assessed as part of all the evidence.' [227] Reference to the record indicates that this was the basis upon which the joint minute of Prof Solomons and Dr Griessel was placed before the trial court. Counsel for HL said that 'the defendant accepts and abides by those agreements, as qualified by Dr Griessel'. Counsel for the MEC confirmed that: 'we agree that the joint minute can stand, as per between Dr Solomons and Dr Griessel. Important is that Dr Griessel did make some qualifications that must be included of course.' [228] It is clear that the joint minute was simply evidence of the opinions of the two signatories to it, subject to the qualifications raised by Dr Griessel, and was to be taken into account along with all other evidence bearing upon the issue of 97 MEC for Health and Social Development, Gauteng v MM on behalf of OM [2021] ZASCA 128 para 16. 98 Huntley (aka Hopkins, by his litigation friend) v Simmons [2010] EWCA Civ 54 para 7. when the insult causing MML's condition occurred. That evidence included the expert testimony of Dr Kganane and Dr Mogashoa as well as the factual evidence derived from the testimony of the factual witnesses and the medical records that were available. [229] In summary, the position in regard to agreements between experts, is as follows. In accordance with Bee, if they agree on issues of fact and the appropriate approach to technical analysis, the litigants are bound by those agreements, unless they have been withdrawn in circumstances where no prejudice results, or any prejudice can be cured by an adjournment or other means. If the experts have reached agreement on a common opinion on a matter within their joint expertise, that is merely part of the total body of evidence. The court must still determine whether to accept the joint opinion. The existence of that agreement between the experts will not ordinarily preclude evidence that qualifies or contradicts their opinion, unless the case has been conducted on the basis of the agreement and the admission of that evidence will prejudice the other party in a manner that cannot be cured. If the parties choose to place an agreed minute before the court reflecting both shared opinions and areas of disagreement and do not call the parties to the minute to deal with the areas of disagreement, the minute will do no more that reflect that there is disagreement on the point. While it is for the parties to determine which witnesses they call, if they fail to call the authors of a joint minute they cannot object when other witnesses express views that qualify or dissent from the views in the minute. [230] The existence of joint minutes may not be used to prevent witnesses from explaining the reasons for the conclusions expressed in the minute. For example it would have been most helpful for one or both of Prof Andronikou and Dr Kamolane to have explained how they arrived at the view that the injury occurred in the peri-natal period. That is the sort of question that a court would ask in order to understand the degree of certainty about this opinion. They could also have been asked to comment on Dr Mogashoa's view that the nature of MML's disability was more consistent with injury occurring to the preterm brain and inconsistent with hypoxia. The passage from AM cited in para 212 identifies the second purpose of expert evidence as being 'to provide the court with abstract or general knowledge concerning their discipline that is necessary to enable the court to understand the issues arising in the litigation'. The existence of a joint minute of experts cannot be used to prevent that function from being fulfilled, whether by the experts who were party to the minute or by another expert. The decision in Bee does not relate to the admissibility of expert opinions, but to the fairness of the trial. Expert opinion evidence should only be excluded when it impacts adversely on the latter. [231] My final point is that the joint minute does not render the whole of the expert's report admissible in evidence. Unless the expert gives evidence, or it is agreed that the report will be admissible, it remains inadmissible. The deficiencies in a joint minute cannot be resolved by reference to the report of the expert. As the trial judge remarked in Huntley99 a joint minute is a useful document, but by its nature it is never more than a summary. Conclusion [232] Had the issues in this case been properly narrowed prior to trial, the evidence been led in its correct sequence and the function and standing of joint expert minutes been properly appreciated, I venture to suggest that the proceedings would have been curtailed and would have been completed with far greater expedition than a ten day trial, with a six month adjournment after the first week. 99 Ibid, para 12. [233] As noted at the outset of this judgment I concur in the judgment of Makgoka JA. _______________ M D J Wallis Judge of Appeal Appearances For Appellant: G J Strydom SC (with him A Viljoen) Instructed by: M.E.D Attorneys, Johannesburg McIntyre & Van der Post, Bloemfontein. For Respondent: J Y Claasen SC (with him L Manye) Instructed by: State Attorney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 22 October 2021 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. HAL obo MML v MEC for Health, Free State (Case no 1021/2019) [2021] ZASCA 149 (22 October 2021) Today, the Supreme Court of Appeal (the Court) dismissed an appeal against an order of Free State High Court, Bloemfontein, dismissing a medical negligence claim by the appellant, HAL, on behalf of her minor child, MML, who was born at a public hospital. When he was nine years old, a magnetic resonance imaging (MRI) scan of MML’s brain revealed that he had suffered a hypoxic ischemic encephalopathy (HIE), a brain injury caused by lack of oxygen and lack of blood flow in the brain. It was further confirmed that this was a partial prolonged type brain injury. In a subsequent action, the appellant instituted action against the respondent, the Free State Member of the Executive Council (MEC) for Health, in the Free State Division of the High Court, Bloemfontein (the high court). She claimed that MML had suffered the brain injury during the latter stages of the labour and birth process (ie the intrapartum period). She attributed MML’s injury to the negligence of the hospital staff, alleging they did not adequately monitor her and her unborn child, as a result of which they failed to detect foetal distress. This, she alleged, led to MML’s brain injury. The trial was hampered by the absence of neonatal and obstetric records. The experts who compiled their reports did so on the basis of the limited available records and the appellant’s factual statements. After considering the limited hospital records, the evidence of the appellant and several expert witnesses, the high court dismissed the appellant’s claim. On appeal, the main issue was whether MML’s brain injury was suffered during the latter stages of the labour and birth process (ie the intrapartum period). After a survey of the experts’ opinions, the majority concluded that there were many proven and objective facts that point to MML’s brain injury as not being typical of an intrapartum one. Some of the important indicators the majority considered were: a seemingly healthy child at birth, being pinkish in colour; the normal APGAR scores; the available hospital records which show that the child was well enough to be discharged a day after birth and that breast-feeding was initiated successfully; and the child’s normal growth until at least 18 months. The majority also considered academic literature referred to by the experts, which set out criteria to determine when a brain injury can be deemed to have occurred in the intrapartum period. It concluded that MML did not fulfil any of the criteria. As a result, the appeal was dismissed with costs. On the other hand, the minority judgment concluded that the evaluation of the evidence by the trial court was flawed. It reasoned that given the lack of hospital records, which was the respondent’s responsibility, the appellant’s evidence should have been treated more generously than would ordinarily be the case. The minority found that the appellant had established both the negligence and the necessary causation and would thus have upheld the appeal. In a third judgment, the majority deprecated the manner in which the trial was conducted, in respect of the status and role of expert reports and joint minutes; the admissibility of evidence; and the sequence in which the witnesses were called. The Court also clarified the effect and reach of this Court’s decision in Bee v Road Accident Fund [2018] ZASCA 52; 2018 (4) SA 366 (SCA).

4002

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1009/2020 In the matter between: GIFTWRAP TRADING (PTY) LTD APPELLANT and VODACOM (PTY) LTD FIRST RESPONDENT MOBILE TELEPHONE NETWORKS (PTY) LTD SECOND RESPONDENT TELKOM SA LTD THIRD RESPONDENT CELL C (PTY) LTD FOURTH RESPONDENT Neutral citation: Giftwrap Trading (Pty) Ltd v Vodacom (Pty) Ltd and Others (1009/2020) [2023] ZASCA 47 (4 April 2023) Coram: VAN DER MERWE, GORVEN and MABINDLA-BOQWANA JJA and OLSEN and SIWENDU AJJA Heard: 16 February 2023 Delivered: 4 April 2023 Summary: Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002 (RICA) – disclosure of customer information obtained and stored by Internet and cellular phone service providers under ss 39 and 40 of RICA – s 42(1)(c) of RICA permits disclosure if required as evidence in a court of law – not for purposes of identifying wrongdoers. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mokose J, sitting as court of first instance): The appeal is dismissed. The registrar of this court is directed to bring this judgment to the attention of the Cabinet members responsible for the administration of justice and state security. JUDGMENT Van der Merwe JA (Gorven and Mabindla-Boqwana JJA and Olsen and Siwendu AJJA concurring): [1] The first respondent in this appeal, Vodacom (Pty) Ltd (Vodacom), does business as a cellular phone and Internet service provider (service provider). So, too, do the other three respondents. As I shall show, service providers are required by law to obtain and keep specified information in respect of their customers (customer information). The appeal concerns rights of access to the customer information of the respondents and arose in the manner set out below. Background [2] The business of the appellant, Giftwrap Trading (Pty) Ltd (Giftwrap), is online sales of products such as corporate gifts and clothing. This means that it markets and sells its products on the international computer network known as the Internet. Giftwrap advertises its products on online platforms provided by the international technological company Google LLC. Giftwrap, of course, has to pay for the advertisements posted. These advertising fees are calculated with reference to the number of visits to a particular advertisement. [3] For some years, however, Giftwrap has been the victim of what is referred to as ‘click fraud’. Click fraud takes place when an advertisement on the Internet is repeatedly visited (clicked upon) with the intention of increasing the costs of the advertisement and/or draining the sales revenue of the advertiser. Revenue is lost because the repeated click fraud visits limit genuine access to the advertisement. [4] Giftwrap employed various experts and strategies in attempts to put an end to the click fraud that it experienced. These efforts were unsuccessful until a breakthrough was made during March 2019. With the assistance of an expert, Giftwrap managed to obtain a large number of local Internet protocol (IP) addresses of devices from which, so Giftwrap believed, the click fraud on it had emanated. The information at its disposal also identified the service provider that each of these IP addresses used to gain access to the Internet. Giftwrap was therefore able to compile a list of IP addresses suspected of having perpetrated click fraud, for each service provider. The lists of IP addresses that pertained to the respondents (the listed IP addresses) formed the basis of the litigation that followed. [5] During June 2019, Giftwrap launched an application in the Gauteng Division of the High Court, Pretoria against the respondents. In essence, Giftwrap sought the disclosure of the customer information in respect of each of the listed IP addresses. The purpose of the relief was to identify wrongdoers in order to take legal action against them. Giftwrap initially founded the application on the decision in Nampak Glass (Pty) Ltd v Vodacom (Pty) Ltd & Others [2018] ZAGPJHC 481; 2019 (1) SA 257 (GJ) (Nampak). In a supplementary founding affidavit, however, it placed reliance on s 42(1)(c) of the Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002 (RICA). I shall reproduce this subsection shortly. For purposes of the narrative it suffices to say that it would permit access to customer information which is required as evidence in a court of law. [6] The second to fourth respondents abided the outcome of the application, but Vodacom delivered an answering affidavit. It clarified its stance from the outset. This was that Vodacom did not dispute Giftwrap’s factual averments nor that the information in question could be useful for the purpose for which it was required. It said that were the decision solely up to it, Vodacom would have provided the information to Giftwrap. In its view, however, the provisions of RICA precluded the disclosure that Giftwrap sought, hence the opposition to the application. [7] The court a quo (Mokose J) agreed with Vodacom. It essentially reasoned that s 42(1)(c) of RICA does not permit disclosure of customer information for the purpose of identifying wrongdoers. It accordingly dismissed the application with costs. Giftwrap’s appeal against that order is with the leave of this court. In this court Vodacom continued to adopt the aforesaid stance. Relevant RICA provisions [8] Sections 39 and 40 of RICA are concerned with customer information. Before I turn to their provisions, however, it is necessary to deal with an oddity in RICA. When it was enacted, RICA contained definitions of ‘telecommunication system’, ‘telecommunication service’ and ‘telecommunication service provider’. These expressions were widely employed in RICA, especially in Chapter 5 (ss 30-31), Chapter 6 (ss 32-38) and Chapter 7 (ss 39-41). [9] Section 97 of the Electronic Communications Act 36 of 2005 amended RICA by replacing the ‘telecommunication’ definitions with definitions of ‘electronic communication system’, ‘electronic communications service’ and ‘electronic communication service provider’. Curiously, however, corresponding amendments were not effected in the body of RICA, not even in ss 30 and 32, which were amended in other respects. When s 40 of RICA was subsequently substituted by Act 48 of 2008,1 however, the ‘electronic communication’ expressions were employed. [10] The result is that many provisions of RICA still employ the ‘telecommunication’ expressions, even though they were replaced by the ‘electronic communication’ definitions. In particular, s 39 refers to information to be kept and obtained by certain telecommunication service providers. Section 40, as I have said, concerns information to be obtained and kept by an electronic communication service provider (which provides a mobile cellular electronic communications service). [11] The Telecommunications Act 103 of 1996 was repealed and replaced by the Electronic Communications Act and s 97 thereof introduced amendments to reflect that fact. There are no intrinsic differences between the ‘telecommunication’ and ‘electronic communication’ definitions. The definition of ‘telecommunication service 1 The Regulation of Interception of Communications and Provision of Communication-Related Information Amendment Act 48 of 2008. provider’ included an Internet service provider and so does the definition of ‘electronic communication service provider’. [12] In the result it must be concluded that the legislature intended to replace all the ‘telecommunication’ expressions with the ‘electronic communication’ expressions, but as a result of an unfortunate oversight failed to effect that. In these peculiar circumstances, I think that the proper thing to do is to read the ‘telecommunication’ expressions in RICA as ‘electronic communication’ expressions as defined. That would, as a matter of statutory interpretation akin to filling in a casus omissus, give effect to the intention to the legislature. The legislature should, however, correct this with expedition and for that purpose I shall direct that this judgment be brought to the attention of the Cabinet members responsible for the administration of justice and for state security.2 [13] Various provisions of RICA enable an ‘applicant’ to obtain disclosure of information, including customer information (under ss 39(3) and 40(7)). An ‘applicant’ is defined in RICA. It is not necessary to reproduce this rather extensive definition. It suffices to say that only specified government officials (such as officers in the South African Police Service) are included in the definition and that Giftwrap is not an ‘applicant’ under RICA. [14] As I have demonstrated, ss 39 and 40 of RICA apply to service providers. Section 39(1)3 specifies the customer information that a service provider other than a 2 ‘Minister’ is defined in RICA as the Cabinet member responsible for the administration of justice, except in Chapter 6 where it means the Cabinet member responsible for state security. 3 Section 39(1) reads: ‘(1) Before a telecommunication service provider, other than a telecommunication service provider who provides a mobile cellular telecommunication service, enters into a contract with any person for the provision of a telecommunication service to that person, he or she- (a) must, if that person is a natural person- (i) obtain from him or her- (aa) his or her full names, identity number, residential and business or postal address, whichever is applicable; and (bb) a certified photocopy of his or her identification document on which his or her photo, full names and identity number, whichever is applicable, appear; (ii) retain the photocopy obtained in terms of subparagraph (i) (bb); and (iii) verify the photo, full names and identity number, whichever is applicable, of that person with reference to his or her identification document; or (b) must, if that person is a juristic person- (i) obtain from the person representing that juristic person- (aa) his or her full names, identity number, residential and postal address, whichever is applicable; cellular phone service provider, must obtain and verify before it enters into a contract with any person for the provision of an electronic communications service to that person. Section 39(1)(a) lists the customer information to be obtained and verified in respect of a natural person and s 39(1)(b) with those of a juristic person. The keeping of records of this information is prescribed in s 39(2).4 [15] In terms of s 40(1)(a) a service provider who provides a cellular phone service shall not activate a Subscriber Identity Module (SIM-card) on its electronic communications system unless s 40(2)5 has been complied with. That section (bb) the business name and address and, if registered as such in terms of any law, the registration number of that juristic person; (cc) a certified photocopy of his or her identification document on which his or her photo, full names and identity number, whichever is applicable, appear; and (dd) a certified photocopy of the business letterhead of, or other similar document relating to, that juristic person; (ii) retain the photocopies obtained in terms of subparagraph (i) (cc) and (dd); and (iii) verify the- (aa) photo, full names and identity number, whichever is applicable, of that person with reference to his or her identification document; and (bb) name and registration number of that juristic person with reference to its business letterhead or other similar document; and (c) may obtain from such person any other information which the telecommunication service provider deems necessary for purposes of this Act.’ 4 Section 39(2) provides: ‘(2) A telecommunication service provider referred to in subsection (1) must ensure that proper records are kept of- (a) the information, including the photocopies, referred to in subsection (1) and, where applicable, any change in such information which is brought to his or her attention; (b) the telephone number or any other number allocated to the person concerned; and (c) any other information in respect of the person concerned which the telecommunication service provider concerned may require in order to enable him or her to identify that person.’ 5 Section 40(2) reads: ‘(2) From the date of commencement of this section an electronic communication service provider must, subject to subsection (4), at own cost implement a process to record and store, and must record and store- (a) the Mobile Subscriber Integrated Service Digital Network number (MSISDN-number) of the SIM- card that is to be activated by an electronic communication service provider at the request of a person contemplated in paragraphs (b) and (c); (b) in the case of a person who- (i) is a South African citizen or is lawfully and permanently resident in the Republic, the full names and surname, identity number and at least one address of such person who requests that a SIM-card referred to in subsection (1) be activated on the electronic communication system of an electronic communication service provider; or (ii) is not a South African citizen or who is not permanently resident in the Republic, and who requests that a SIM-card referred to in subsection (1) be activated on the electronic communication system of an electronic communication service provider, the full names and surname, identity number and at least one address of such person and the country where the passport was issued; or (c) in the case of a juristic person- (i) the full names, surname, identity number and an address of the authorised representative of the juristic person; and (ii) the name and address of the juristic person and, where applicable, the registration number of the juristic person.’ specifies the information that such a service provider must record, verify and store in respect of South African citizens, non-South African citizens and juristic persons. When a customer sells or otherwise provides a SIM-card to a person other than a family member, the customer and the person who is to receive the SIM-card are obliged, in terms of s 40(5), to provide similar information to the service provider. In terms of s 40(6) that information must also be recorded, verified and stored as contemplated in s 40(2). [16] Section 40(3)6 prescribes the process of verification of information for purposes of s 40(2). In terms of s 40(4) a service provider must ensure that the process contemplated in s 40(2), the information recorded and stored in terms of that subsection and the facility in or on which the information is recorded and stored ‘are secure and only accessible to persons specifically designated . . .’. Section 40(10) essentially provides that customer information must be stored for a period of five years after the termination of the contract between the customer and the service provider. Analysis [17] In determining whether Giftwrap is entitled to disclosure of the customer information in respect of the listed IP addresses, it is firstly necessary to have regard to Nampak.7 There the applicant had been the victim of a robbery. In an urgent application, it sought information from Vodacom and a number of other cellular phone service providers on the basis that the information would assist in an investigation to 6 Section 40(3) provides: ‘(3) (a) For the purposes of subsection (2), an electronic communication service provider must, in the manner provided for in paragraph (b), verify- (i) the full names, surname, identity number and identity of the person contemplated in subsection (2) (b) and (c) and, where applicable, the country where the passport was issued; (ii) the name and, where applicable, the registration number of the juristic person; (iii) in the case of a person contemplated in subsection (2)(b) (i) and (c), the address; and (iv) the authority of the representative of a juristic person. (b) An electronic communication service provider must verify- (i) the information contemplated in paragraph (a)(i) by means of an identification document; (ii) the information contemplated in paragraph (a)(ii) by means of documentation, including a registration document, founding statement, document issued by the South African Revenue Service or any other similar document; (iii) the address contemplated in paragraph (a) (iii) by means of documentation, including a bank statement, a municipal rates and taxes invoice, telephone or cellular phone account of not older than three months, or any other utility bill or an account of a retailer of not older than three months, or an existing lease, rental or credit sale agreement, insurance policy, a current television licence or a new motor vehicle licence document; and (iv) the authority of the representative of the juristic person by means of a letter of authority or an affidavit.’ 7 Para 5 above. identify the wrongdoers. The information sought firstly related to the identification of all the cellular phones that had been used in the vicinity of the applicant’s premises during a specified period (approximately an hour). Secondly, the applicant essentially sought customer information and detailed call logs in respect of all the cellular phones so identified. Vodacom and the service providers did not oppose the urgent application. [18] The court nevertheless determined to develop the common law as expounded in House of Jewels & Gems & Others v Gilbert & Others 1983 (4) SA 824 (W). It did so on the basis of: the applicant’s constitutional right to access to courts; the ‘regrettable omission’ of the Uniform Rules of Court to provide a remedy in advance of litigation having been instituted; and the inherent power of the High Court to regulate its own process. After adopting English law in this regard, the court granted the far- reaching relief sought. [19] The court was not, however, referred to the provisions of RICA. A development of the common law in this regard could not legitimately have been undertaken without consideration of the provisions of RICA. For the reasons furnished below, RICA precluded the disclosure of customer information. To this extent Nampak was wrongly decided. It also appears to me that at least the bulk of the call logs in Nampak constituted archived communication-related information, the disclosure of which is strictly regulated by RICA.8 However, it is not necessary for purposes of this case to make a final determination in respect of the call logs. [20] Returning to RICA, the starting point is s 42(2). It inter alia provides that no service provider may disclose any information obtained in the exercise of its powers or the performance of its duties in terms of RICA, except for the purposes mentioned in s 42(1). This clearly applies to customer information obtained under s 39 and s 40. [21] Section 42(1) reads: ‘(1) No person may disclose any information which he or she obtained in the exercising of his or her powers or the performance of his or her duties in terms of this Act, except- (a) to any other person who of necessity requires it for the performance of his or her functions in terms of this Act; 8 Part 2 of Chapter 2 of RICA. (b) if he or she is a person who of necessity supplies it in the performance of his or her functions in terms of this Act; (c) information which is required in terms of any law or as evidence in any court of law; or (d) to any competent authority which requires it for the institution, or an investigation with a view to the institution, of any criminal proceedings or civil proceedings as contemplated in Chapter 5 or 6 of the Prevention of Organised Crime Act.’ [22] It is necessary to point out that in terms of s 13 of the Prevention of Organised Crime Act 121 of 1998 (POCA), proceedings under Chapter 5 (Proceeds of Unlawful Activities) are civil proceedings and not criminal proceedings. In terms of s 37 of POCA the same applies to proceedings under Chapter 6 (Civil Recovery of Property). It follows that s 42(1)(d) of RICA applies to the institution of criminal proceedings, as well as to proceedings under Chapters 5 and 6 of POCA. [23] As I have said, Giftwrap requires the customer information to identify the perpetrators of click fraud in order to take legal action against them. It goes without saying that disclosure of the customer information in respect of the listed IP addresses would not necessarily lead to legal action against a person so identified. It follows that in reality Giftwrap requires the customer information as part of an investigation with a view to taking appropriate legal action. The question is whether s 42(1)(c) permits this. The answer must, of course, be found in an interpretation of s 42(1)(c) of RICA by a holistic consideration of its text, context and apparent purpose. [24] According to its text (‘information which is required . . . as evidence in any court of law’), s 42(1)(c) conveys that the information must at the time of its disclosure be required as evidence in a court of law. It therefore envisages disclosure of information which is required as evidence in proceedings that are pending in a court of law. On this basis, information that is required to investigate whether legal proceedings could be instituted, falls outside the ambit of s 42(1)(c). This is supported by the context provided by s 42(1)(d). It expressly provides that information may be disclosed for purposes of ‘an investigation with a view to the institution’ of (criminal or POCA- related) proceedings. The absence of a similar provision in s 42(1)(c) indicates that disclosure for the purpose of an investigation or identification of wrongdoers is excluded from s 42(1)(c). [25] In the main, RICA prohibits the interception of the contents of communications and the disclosure of related and other specified information, subject to prescribed exceptions. The purpose of s 42(1) is to prohibit the disclosure of private information, save in limited cases where it is justified in the public interest. Thus, the limited ambit of s 42(1)(c) that its text and context indicate, accords with the purpose of s 42(1). [26] This interpretation would not render a person in the position of Giftwrap remediless. As counsel for Vodacom rightly pointed out, RICA does not preclude the preservation of customer information pending the institution of legal proceedings in which it would be required as evidence. A criminal complaint could also be laid, after which s 205 of the Criminal Procedure Act 51 of 1977 or s 42(1)(d) of RICA could be employed to obtain customer information. [27] For these reasons I conclude that s 42(1)(c) of RICA does not permit the disclosure of customer information of a service provider for purposes of investigation or identifying wrongdoers. It follows that the appeal must fail. Vodacom did not ask to be awarded costs of the appeal. [28] The following order is issued: The appeal is dismissed. The registrar of this court is directed to bring this judgment to the attention of the Cabinet members responsible for the administration of justice and state security. ________________________ C H G VAN DER MERWE JUDGE OF APPEAL Appearances For appellant: F W Botes SC with A S L van Wyk Instructed by: Hefferman Attorneys, Pretoria Webbers Attorneys, Bloemfontein For 1st respondent: S Budlender SC with H P Pretorius and K A R Thobakgale Instructed by: Adams & Adams 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: 4 April 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Giftwrap Trading (Pty) Ltd v Vodacom (Pty) Ltd and Others (1009/2020) [2023] ZASCA 47 (4 April 2023) Today the Supreme Court of Appeal (SCA) dismissed an appeal against a decision of the Gauteng Division of the High Court of South Africa, Pretoria (the high court). The appellant, Giftwrap Trading (Pty) Ltd (Giftwrap), was an online store trading in corporate gifts and clothing. As a result of the nature of the business it fell victim to a type of internet fraud called ‘click fraud’ which lead to Giftwrap losing a lot of revenue. To combat that fraudulent activity, and hold the culprits accountable, Giftwrap through the assistance of an IT specialist compiled a list of IP addresses suspected of having perpetrated click fraud. These IP addresses were customers of various service providers, Vodacom being one. In June 2019, Giftwrap, relying on s 42(1)(c) of the Regulation of Interception of Communications and Provision of Communication-related Information Act 70 of 2002 (RICA)), launched an application in the high court against the service providers seeking the disclosure of the customer information in respect of each of the listed IP addresses. Vodacom opposed that application and contended that the provisions of RICA precluded the disclosure which Giftwrap sought. The high court ruled in favour of Vodacom. Giftwrap appealed that decision. In essence, the issue that the Court had to decide on was whether Giftwrap was entitled to the disclosure of the customer information in respect of the listed IP addresses? The SCA found that Giftwrap required the customer information to identify the perpetrators of click fraud in order to take legal action against them. However, s 42(1)(c) conveyed that the information must at the time of its disclosure be required as evidence in a court of law. It therefore envisaged disclosure of information which was required as evidence in proceedings that were pending in a court of law. On that basis the SCA found that information required to investigate whether legal proceedings could be instituted, fell outside the ambit of s 42(1)(c). Furthermore, that stance was supported by the context provided by s 42(1)(d) where it expressly provided that information may be disclosed for purposes of ‘an investigation with a view to the institution’ of (criminal or POCA-related) proceedings. The absence of a similar provision in s 42(1)(c) indicated that disclosure for the purpose of an investigation or identification of wrongdoers was excluded from s 42(1)(c). Thus, it followed that the appeal had to fail. ~~~~ends~~~~

1252

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 395/07 NOT REPORTABLE In the matter between: SANNA SUZAN OLIPHANT APPELLANT v THE ROAD ACCIDENT FUND RESPONDENT Coram: Harms ADP, Scott, Heher, Mlambo et Cachalia JJA Heard: 12 May 2008 Delivered: 30 May 2008 Summary: Motor vehicle ‘driver’ working on his engine – spanner he was using slipped and dropped onto two electrical contact points causing vehicle to start and set off in reverse injuring the claimant – ‘freak accident’ – negligence not proved. Neutral citation: This judgment may be referred to as Oliphant v The Road Accident Fund (395/2007) [2008] ZASCA 68 (30 May 2008). CACHALIA JA [1] The appellant instituted proceedings in the Free State High Court against the Road Accident Fund for damages arising from injuries she sustained when her husband’s motor vehicle knocked her over in front of her house on 5 December 1999. The evidence was that while he was investigating a mechanical problem with the vehicle’s engine, a spanner slipped from his hand and dropped onto two electrical contact points of the vehicle’s starter. This caused the vehicle to start unexpectedly and set off in reverse, knocking her over in the process. The accident left her paraplegic. [2] The High Court (Ebrahim J) was asked to consider only the merits of the dispute. It found, in favour of the appellant, that her husband’s (the insured driver’s) negligence caused the accident. The Fund’s appeal to the full court (Van der Merwe J, Hattingh J and van Zyl J concurring) was upheld. The appellant appeals with special leave of this court. [3] Other than the appellant and her husband, Mr Isaac Ndeleni Oliphant, who both testified more than six years after the incident, no one else witnessed the occurrence. The appellant and the Fund each called an expert to testify on the plausibility of Mr Oliphant’s version as to how the accident happened. Mr B Grobbelaar testified on behalf of the appellant and Mr D L van Onselen for the respondent. [4] The appellant’s case rests mainly on her husband’s version of how the accident occurred, which the trial court accepted but the court below did not. The court below summarised his evidence thus: ‘Mnr Oliphant het getuig dat die voertuig ‘n outomatiese ratkas gehad het. Hy het egter die ratkas sodanig gebrug dat die enjin in enige rat aangeskakel kon word en nie net in die parkeerrat nie. Omdat hy probleme gehad het om die voertuig aan die gang te kry, het Mnr Oliphant ‘n aansitknoppie in die kajuit geïnstalleer met twee drade deur die paneelbord direk aan die aansittermotor gekoppel. Ten einde die aansitterknoppie te gebruik om die voertuig aan te skakel, moes die vonkskakelaar (“ignition switch”), wat met ‘n sleutel gewerk het, egter aangeskakel word deur die sleutel na regs te draai. Sodoende het daar twee liggies op die paneelbord aangekom. Op die betrokke oggend het Mnr Oliphant die enjinkap oopgemaak en toe omgeloop en die enjin op die gebruiklike manier aangeskakel en laat luier. Die ratkas was in die parkeerrat geskakel. Volgens Mnr Oliphant het hy toe ‘n ongewone geluid van die kant van die enjin gehoor, as gevolg waarvan hy die enjin weer afgeskakel het, waarna hy die sleutel uit die vonkskakelaar getrek het en in sy sak gedruk het. Hy het die regterkantste voordeur oopgelos. Hy het vasgestel dat ‘n moer waarmee die petrolpomp vasgetrek word, los was. Hy het ‘n moersleutel geneem en die moer stywer gedraai. Hy het toe aan die regterkant van die voertuig gestaan en oor die enjin gebuk. Op daardie stadium was die respondent in die huis enkele tree daarvan af. Die moersleutel het gegly en uit sy hand geval en op die solenoïde en aansittermotor geval. Volgens Mnr Oliphant het die aansittermotor toe begin draai, die enjin aangeskakel en, soos hy dit gestel het, “onmiddellik het die kar sommer weggegaan van my af” en wel agteruit. Die voertuig het ‘n paar meter verder tot stilstand gekom, aangesien die regtervoordeur daarvan aan ‘n sinkgeboutjie gehaak het. Hy het die enjin doodgemaak deur die drade van die klos en die vonkpropdrade uit te trek. By ondersoek het hy vasgestel dat die respondent onder die voertuig lê en dat sy beseer is. Hy het opgemerk dat die ratkas van die voertuig in trurat geskakel was en dat die stuurwielslot aangeskakel was. Die stuurwielslot word losgemaak deur die vonkskakelaar aan te skakel.’ [5] The court below then analysed the evidence and concluded that Mr Oliphant’s evidence on how the accident occurred was improbable and could not be accepted. I agree with the court’s reasoning on this aspect and for convenience will merely repeat what appears at paragraph’s 7-13 of the judgment. ‘[7] Dit is gemeensaak dat die voertuig in die onderhawige geval slegs deur middel van die enjin daarvan agteruit kon beweeg indien ten minste al vier die ondervermelde gebeur het of van toepassing was: (i) Die moersleutel moes voldoende en lank genoeg kontak bewerkstellig het tussen die positiewe pool van die aansittermotor en die positiewe pool van die solenoïde sodat die aansittermotor die enjin kon aansluit. (ii) Die vonkskakelaar moes aangeskakel gewees het, sodat die elektriese stroombaan voltooi was tussen die battery en die klos en vonkverdeler. (iii) Die ratkas moes in trurat geskakel gewees het. (iv) Die enjin moes voldoende revolusies opgebou het om die voertuig te laat wegtrek. [8] Die getuienis van Mnr Oliphant op elkeen van hierdie aspekte en des te meer op almal tesame, is myns insiens so onwaarskynlik dat dit nie aanvaar kan word nie. Oorkoepelend moet op grond van algemene waarskynlikhede in gedagte gehou word dat die probleem met hierdie tipe ou voertuig juis is om dit aan die gang te kry en nie andersom nie, wat ook strook met Mnr Oliphant se eie ervaring. [9] Dit is natuurlik in die eerste plek besonder eienaardig dat die moersleutel toevallig presies gelyktydig geval het net op die positiewe pool van die aansittermotor en die positiewe pool van die solenoïde. Boonop het Mnr Oliphant gesê dat die moersleutel nie vasgewig was nie, maar bloot op die twee pole geval het, vir ‘n wyle vasgebrand het daarop en toe afgeval het. Mnr Grobbelaar het self gesê dat hy dit betwyfel dat die enjin aangeskakel kon word indien die moersleutel nie op die betrokke twee pole vasgewig was of vasgesteek het nie. Daar is verwys na brandmerke wat op die betrokke pool of pole voorgekom het. In die omstandighede is hierdie getuienis vir my van min waarde. Dit is ‘n baie ou voertuig en dit is duidelik dat Mnr Oliphant bewus was van hoe ‘n voertuig aangeskakel kon word deur kontak tussen die twee pole te bewerkstellig. Trouens, hy het self verduidelik hoe hy dit tot verbasing van een van die persone wat hom met betrekking tot die saak besoek het, op die voertuig gedemonstreer het. Selfs Mnr Grobbelaar het, volgens sy eie getuienis, ‘n toets gedoen voor sy demonstrasie in die hof om aan te dui hoe die aansittermotor aangeskakel kon word deur die twee genoemde pole meganies te verbind. [10] Mnr Grobbelaar het in sy getuienis die moontlikheid geopper dat die vonkskakelaar aangesluit kon gebly het, indien dit erg uitgeslyt was. Hy het egter nie die vonkskakelaar ondersoek nie. Dat die vonkskakelaar moontlik aangeskakel kon gebly het, is egter myns insiens in die omstandighede tot die hoogste mate onwaarskynlik en berus op ‘n baie bedenklike getuienisbasis. Mnr Oliphant se getuienis hieromtrent was duidelik. Toe hy die moer begin vasdraai, was die vonkskakelaar afgeskakel, die sleutel in sy sak, was daar geen krag vanaf die battery na die klos en vonkverdele nie en kon die enjin op geen manier aan die gang gesit word nie. Klaarblyklik het hy pas voordat die moersleutel uit sy hand sou geval het, die enjin afgeskakel deur juis die vonkskakelaar af te skakel. Dit verbaas derhalwe nie dat Mnr Oliphant in kruisverhoor op die vraag aangaande hoe dit desondanks dan moontlik is dat die enjin aangeskakel kon word, onsamehangend soos volg geantwoord het: “Kan u net vir die Hof sê hoe op aarde is dit moontlik dat hierdie enjin ge-idle en geloop het terwyl die ignition nie aan was nie? --- Wat daar is, dit kan moontlik wees die ignition, al is hy aan, dan kan ek die sleutel uittrek. Al is hy af, ek kan die sleutel uittrek.” Mnr Oliphant het dus nie op hierdie kritiese vraag geantwoord dat die vonkskakelaar erg uitgeslyt was en daarom aangeskakel gebly het al het hy dit so pas afgeskakel nie. In sy hoofgetuienis het hy in ‘n ander konteks, nl as die rede waarom hy die aansitterknoppie geïnstalleer het, gesê dat die vonkskakelaar ‘n bietjie uitgewerk was. Eers in herverhoor het hy op ‘n erg leidende vraag geantwoord dat die vonkskakelaar baie uitgewerk was. Hierby moet gevoeg word dat volgens Mnr Oliphant die stuurwielslot ontkoppel word deur die vonkskakelaar aan te skakel en die stuurwielslot onmiddellik na die voorval aangeskakel of gekoppel was. Indien die stuurwielslot gekoppel was, volgens die onbetwiste getuienis van Mnr Van Onselen, duit dit aan dat die vonkskakelaar af was. [11] Die moontlikheid dat die ratkoppeling vanuit die parkeerrat na trurat kon “gespring” het, was gebaseer op ‘n beweerde vorige voorval waartydens iets soortgelyks sou gebeur het. Mnr Oliphant se getuienis hieromtrent is egter so weersprekend en onbevredigend dat dit nie aanvaar kan word nie. In sy hoofgetuienis het hy in die uiterste vae terme en sonder om eers na die ratkoppeling te verwys, vertel hoe die voertuig by geleentheid ook “. . . sommer skielik agtertoe gegaan” het. Mnr Van Onselen het getuig dat toe hy vir doeleindes van die saak vir Mnr Oliphant besoek het en die voertuig ondersoek het, Mnr Oliphant aan hom ten aansien van die beweerde vorige geleentheid vertel het dat die motorvoertuig vorentoe beweeg het. Hy het notas hiervan geneem en daardie notas is tot beskikking van die respondent se advokaat gestel. Toe Mnr Van Onselen se gemelde getuienis in kruisverhoor aan Mnr Oliphant gestel is, het hy dit nie ontken nie. Wat oorbly is die onbetwiste getuienis van Mnr Van Onselen dat dit moeilik was om ratskakeling te verkry, die rathefboom moes gemanipuleer word om dit te kon doen. Ek aanvaar dat daar skade aan die regterdeur voordeur van die voertuig was wat ooreengestem het met die tipe skade wat daaraan verwag sou word indien die oop deur aan die sinkhuis gehaak het, soos beskryf. In lig daarvan dat op Mnr Oliphant se getuienis dit onverklaarbaar is hoe die voertuig in trurat kon gekom het, het hierdie getuienis vir my weinig waarde. [12] Mnr Oliphant het in sy getuienis vertel dat wanneer hy met die voertuig byvoorbeeld by ‘n stopstraat gestop het, die voertuig nie weer beweeg het tensy hy die versneller getrap het nie en dat selfs dan “hy vat ‘n tydjie om te gaan, maar hy gaan”. Mnr Grobbelaar het getuig dat dit gebeur wanneer die olievlak in die ratkas laag is. Mnr Oliphant het bevestig dat hy dikwels olie vir die ratkas moes ingooi. Dat die luierspoed hoog gestel was, is neutraal. Dit geld ook wanneer by die stopstraat gestop word. Hierdie getuienis rym dus nie op waarskynlikhede met die getuienis dat op die betrokke dag die voertuig onmiddellik weggetrek het sonder dat die versneller in werking gestel is nie. [13] Dit is nie namens die respondent betoog dat op die respondent se eie feitelike getuienis alleenstaande ‘n bevinding ten gunste van die respondent gegrond kan word nie. Ek meen dat dit ‘n korrekte benadering is. Die probleem is dat die respondent se eie getuienis in die utierste vaagheid gehul is. Behalwe dat sy sê dat sy agter die voertuig verbygeloop het, sê sy herhaaldelik daarna net dat “toe sien ek dat ek lê” onder die voertuig. Sy het nie bewus geword daarvan dat die voertuig beweeg nie en kan nie bevestig of die enjin geloop het of nie. Die ongelukkige resultaat is dat geen aanvaarbare getuienis deur of namens die respondent aangebied is aangaande hoe die respondent beseer is nie.’ [6] The court below also found that negligence on the part of Mr Oliphant was, in any event, not proved. It is trite that to establish negligence, the person whose conduct is under scrutiny, must foresee the possibility of harm ensuing from it and fail to take reasonable steps to prevent its occurrence.1 Whether harm is foreseeable will thus depend first, on the degree of probability of it occurring,2 and second, whether reasonable precautions were taken to avoid the harm materialising.3 [7] To recapitulate the main facts which are relevant to the first leg of the inquiry: Mr Oliphant was not a qualified mechanic. His mechanical experience of motor vehicles appears to have been confined mainly to dabbling with his own vehicle. On the morning of the accident he was preparing to go to church. He started the vehicle, as he usually did, by inserting the key into the ignition to generate power and then pushing the button on the dashboard to start it. He heard an unusual noise from the engine. The engine idled for a few minutes. He then switched it off, removed the key, put it into his pocket and proceeded to investigate the source of the noise in the area of the petrol pump. And while working on the pump, which is not in the immediate vicinity of the starter, the spanner slipped, lodged between two electrical contact points and caused the vehicle not only to start, but also to reverse. [8] In my view the chances of the accident happening in this manner were too remote to be reasonably foreseeable. It consisted of the spanner slipping from his hand dropping on exactly the specific spot causing it to start and then reverse without the accelerator being depressed or the gear lever activated. [9] In regard to the second leg of the inquiry, whether Mr Oliphant 1 Kruger v Coetzee 1966 (2) SA 428 (A) 430E-F. 2 J Neethling, J M Potgieter, P J Visser (translated and edited by J C Knoble) Law of Delict 5 ed (2006) p 129. 3 Ibid p 130. could have taken reasonable precautions to prevent the harm materialising, it is difficult to see what more he could have done, other than remove the key from the ignition. Once he had done this, he had no reason to think that the vehicle would start and reverse because of a chain of unforeseen events. [10] To conclude, if the accident did occur as Oliphant said it did, it was simply a ‘freak accident’ for which the law ought not to hold anyone culpable. It follows that the court below was correct in its finding that the appellant had not proved negligence on the part of her husband. [11] The following order is made: ‘The appeal is dismissed with costs.’ ______________ A CACHALIA JUDGE OF APPEAL CONCUR: HARMS ADP HEHER JA [12] I shall assume, without deciding, that the court a quo erred in not finding that the appellant proved on a balance of probabilities that she was injured in the circumstances to which her husband testified. [13] I agree, nevertheless, with Cachalia JA that no reasonable person in the position of Mr Oliphant, working over the engine of his vehicle, would have foreseen the possibility of harm resulting to any other person when he dropped the spanner into its bowels. For that reason his negligence was not proved and the appeal should fail. ___________________ J A HEHER JUDGE OF APPEAL CONCUR: SCOTT JA MLAMBO JA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 May 2008 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Sanna Suzan Oliphant v The Road Accident Fund The Supreme Court of Appeal (SCA) today dismissed an appeal by Mrs Sanna Suzan Oliphant against a ruling of the Free State High Court which held that she did not have a claim against the Road Accident Fund for injuries that she apparently sustained in a motor vehicle accident. The injuries left her paraplegic. The evidence showed that her husband, Mr Isaac Ndeleni Oliphant, who is the insured driver, had been investigating a problem with the engine of his vehicle, a 1970’s Chevrolet Commodore, when according to him, a spanner slipped from his hand and dropped onto two electrical contact points of the vehicle’s starter. This, he said, caused the vehicle to start unexpectedly and set off in reverse, knocking her over in the process. The SCA found that if the accident had occurred as Mr Oliphant had described, it had been a ‘freak accident’ that was not foreseeable. In these circumstances the law could not find that Mr Oliphant was negligent, and the RAF liable, for Mrs Oliphant’s injuries.

227

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 618/2017 In the matter between: THE NATIONAL CONSUMER COMMISSION APPELLANT and UNIVISION SERVICES ASSOCIATION NPC FIRST RESPONDENT VACATION RECREATIONAL SERVICES SECOND RESPONDENT QUALITY TIME MARKETING (PTY) LTD THIRD RESPONDENT QUALITY VACATION CLUB FOURTH RESPONDENT AFRICAN CLUB INNOVATIONS FIFTH RESPONDENT MULTI DESTINATION CLUB SIXTH RESPONDENT LIFESTYLE VACATION CLUB SEVENTH RESPONDENT AFRICAN VACATION CLUB EIGHTH RESPONDENT VIP EXPRESS NINTH RESPONDENT MILCAR DEVELOPMENT CC TENTH RESPONDENT INVESTAGE 192 (PTY) LTD ELEVENTH RESPONDENT THE NATIONAL CONSUMER TRIBUNAL TWELFTH RESPONDENT Neutral citation: The National Consumer Commission v Univision Services Association NPC (618/2017) [2018] ZASCA 44 (28 March 2018) Coram: Navsa, Leach, Seriti and Mocumie JJA and Hughes AJA Heard: 12 March 2018 Delivered: 28 March 2018 Summary: Complaint to the National Consumer Commission under the Consumer Protection Act 68 of 2008 – complaint referred to the National consumer Tribunal under s 73(2)(b) of that Act – s 147 of the National Credit Act 34 of 2005 precluded the Tribunal from granting a costs order against the Commission on it withdrawing the referral. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Thobane AJ sitting as court of first instance): The appeal succeeds, with costs. The order of the court a quo is set aside and substituted with the following: ‘The application to review and set aside the order of the Tribunal of 16 November 2015 is dismissed, with costs.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Leach JA (Navsa, Seriti and Mocumie JJA and Hughes AJA concurring) [1] A finding in regard to costs lies at the heart of this appeal. As a general rule this court declines to hear appeals solely against costs. But that is due to costs of legal proceedings being a matter which lies within the discretion of the court of first instance, a discretion which if exercised judicially brooks no interference. The relief sought in this appeal, however, is not whether a discretion to award costs was properly exercised. It is whether the twelfth respondent, the National Consumer Tribunal (the Tribunal) established under s 26(1) of the National Credit Act 34 of 2005 (the NCA), had the power to make a costs award in the circumstances of this case.1 That is a matter of law, which 1 Section 27 of the NCA extends the following functions to the Tribunal: is appealable. The Gauteng Division of the High Court, Pretoria held that the Tribunal indeed had the power in the circumstances of this case to make such an award, but granted leave to appeal to this Court. [2] The appellant, the National Consumer Commission (the Commission), was established by s 85(1) of the Consumer Protection Act 68 of 2008 (the CPA) ‘as an organ of state within the public administration, but an institution outside the public service’. As appears from what is set out below, at the heart of this appeal is a complaint against the first to eleventh respondents which the Commission had referred to the Tribunal, but subsequently withdrew. [3] The first to eleventh respondents are all entities conducting business in a particular sector of what is commonly referred to as ‘the timeshare industry’ in which the holders of so-called ‘points’ use them to access accommodation at holiday resorts. Those who purchase these points become obliged to pay levies which, in turn, are used to administer and maintain the various resorts. The first to eleventh respondents have made common cause and, for convenience, I intend to refer to them collectively as ‘Univision’, as did counsel in the appeal. [4] The Commission received hundreds of complaints from consumers relating to matters such as Univision’s advertising, marketing and sale of points and collection of levies. These complaints brought into play the provisions of Chapter 3 (ss 68-78) of the CPA. The statutory matrix relevant to dealing with complaints of this nature, are as follows: ‘The Tribunal or a member of the Tribunal acting alone in accordance with this Act or the Consumer Protection Act, 2008 may─ (a) adjudicate in relation to any─ (i) application that may be made to it in terms of this Act, and make any order provided for in this Act in respect of such an application; or (ii) allegations of prohibited conduct by determining whether prohibited conduct has occurred and, if so, by imposing a remedy provided for in this Act; (b) grant an order for costs in terms of section 147; and (c) exercise any other power conferred on it by law.’ (a) Section 4(1) of the CPA provides for various persons who allege that a consumer’s rights in terms of that Act have been infringed, impaired or threatened, or that ‘prohibited conduct’2 has occurred or is occurring, to approach a court, the Tribunal or the Commission. (b) Section 69 goes on to provide that a person contemplated in s 4(1) may seek to enforce any right in terms of the CPA or in terms of a transaction or agreement, or otherwise resolve any dispute with a supplier by, inter alia, filing a complaint with the Commission3 in accordance with s 71 (which provides for a complaint to be filed in a prescribed manner and form.) (c) Upon receiving such a complaint, the Commission has various options open to it under s 72. First, depending on the facts, it may issue a notice of non-referral which, subject to the provisions of s 75(1)(b) set out below, would be the end of its involvement in the matter. In the event of it not issuing such a notice, the Commission may either refer the complaint to alternative dispute resolution – s 72(1)(b) – or to another regulatory authority having jurisdiction – s 72(1)(c) – or it may direct an inspector to investigate the complaint as quickly as practicable – s 72(1)(d). (d) If an investigation is held, s 73 provides that when it is concluded the Commission, once again, may issue a notice of non-referral to the complainant – s 73(1). But if it does not do so, and is of the view that a person may have engaged in prohibited conduct, s 73(1)(c)(iii) provides that the Commission may, inter alia, refer the complaint to the Tribunal under s 73(2)(b). (e) In the event of the Commission issuing a notice of non-referral in the above circumstances, all is not lost for a complainant as s 75(1)(b) provides that as long as such notice is not issued on grounds 2 Defined in s 1 of the CPA as an act or omission in contravention of the CPA. 3 Section 69(c)(iv) of the CPA. contemplated by s 116, the complainant may refer the matter directly to the Tribunal with its leave. [5] As is apparent from this, there are two paths by way of which a complaint may be referred to the Tribunal: first, after investigating the complaint, the Commission refers it under s 73(2)(b); second, with leave of the Tribunal despite the Commission having issued a notice of non-referral, the complainant refers it under s 75(1)(b). [6] In November 2014, the Commission used the first of these paths to refer the complaints it had received against Univision to the Tribunal under s 73(2)(b) of the CPA. Section 75(3) required it to do so in the prescribed form, which is set out in the regulations for matters before the Tribunal, promulgated by the Minister of Trade and Industry under s 171 of the NCA4 (all references hereinafter to regulations are to these regulations). Somewhat unusually for a referral of this nature, the regulations require this to be done by way of a notice of motion in which an order is claimed.5 In its notice of motion, the Commission sought an order that, inter alia, provided: ‘1. That the Marketing; Offering and or Sale of “Points” as “Timeshare/s” in terms of the Property Time-sharing Control Act and or Share Blocks Control Act is declared an unconscionable conduct in violation of Section 40 of the (CPA) and are interdicted. 2. That the agreement; demand and collection of levies from “Points Purchasers” on the basis of an obligation established in terms of the Property Time-sharing Control Act and; Share Blocks Control Act and or Sectional Titles Act amount to false misrepresentation; misleading and deceptive marketing or conduct and therefore a violation of section 41 of the (CPA). 4 Published under GN 789, GG 30225, 28 August 2007 and amended by GN 428, GG 34405, 29 June 2011. 5 See the definition of ‘Applicant’ in reg 1 as read with reg 4 and form TI.r4 appended to the Regulations. 3. That the business; act and or conduct of the Respondents in terms of which the “Points” are sold as Timeshare is declared a “fraudulent Scheme” and therefore in violation of section 42 of the (CPA). ALTERNATIVELY: and in the event the National Consumer Tribunal finds that it does not have the jurisdiction and or authority to give Orders as prayed for above . . . the Tribunal (makes) . . a finding that the “agreement” in terms of which Points are sold; is a fixed term agreement in terms of section 14 of the (CPA)… and can therefore be terminated in terms of the provisions of section 14 of the CPA.’ …’ [7] The regulations, which refer to proceedings before the Tribunal as ‘an application’, require the notice of motion to be supported by affidavits and other documentary proof,6 and provide for the filing of answering7 and replying affidavits.8 The founding affidavit in this application, deposed to by a senior investigator of the Commission, Mr Mabuza, was a lengthy affair of some 150 pages and was supported by hundreds of pages of annexures. To this the Univision respondents filed a reply which included a number of points in limine. In their final form, the papers in the referral totalled almost 900 pages. [8] On 1 October 2015, a so-called ‘pre-hearing’ was held in terms of reg 17. Presided over by a member of the Tribunal, its minutes record that the parties were informed that the Tribunal wished to be addressed on a number of issues at the commencement of the hearing. These included the provisions of the CPA relied upon in support of the relief claimed; the powers of the Tribunal to issue a declaratory order of the nature sought; the powers of the Tribunal to hear an application based on contracts entered into prior to the CPA coming into operation; and the possible application of prescription. It was also agreed that a number of preliminary points would be dealt with at the commencement of the hearing. These included whether Mr Mabuza had the necessary authority to 6 Regulation 4(2) read with reg 7. 7 Regulation 13. 8 Regulation 14. bring the application on the Commission’s behalf; the failure to join various parties having a direct and substantial interest in the outcome; and whether the Commission was only entitled to make a referral after concluding an investigation in accordance with s 73(2) of the CPA. [9] The matter was set down for hearing by the Tribunal on 9 November 2015. That morning, before the hearing commenced, the Commission served a notice of withdrawal under reg 19(1) which provides that an application may be withdrawn before it has been decided. Regulation 19(2) goes on to provide that a notice of withdrawal ‘may include a consent to pay costs, or the other party may apply to the Tribunal for an order for costs’. Not only did the notice of withdrawal not contain a tender of costs, but it specifically recorded that the Commission ‘does not consent to pay costs, pending the award of costs by the Tribunal’. [10] Univision was aggrieved at this turn of events. It felt it had been dragged before the Tribunal at great expense; that the Commission had pursued the matter in a frivolous and vexatious manner; and that, in the circumstances, and in the light of the provisions of reg 25(7), to which I shall refer in due course, the Commission ought to pay its costs on a punitive scale. It immediately applied to the Tribunal for such an order. [11] There was a substantial obstacle to such an order. The referral had come before the Tribunal under s 73(2)(b) rather than s 75(1)(b). Section 147 of the NCA, which applies to hearings before the Tribunal, provides: ‘147(1) Subject to subsection (2), each party participating in a hearing must bear its own costs. (2) If the Tribunal- (a) has not made a finding against a respondent, the member of the Tribunal presiding at a hearing may award costs to the respondent and against a complainant who referred the complaint in terms of section 141(1) or section 75(1)(b) of the (CPA) as the case may be; or (b) has made a finding against a respondent, the member of the Tribunal presiding at a hearing may award costs against the respondent and to a complainant who referred the complaint in terms of section 141(1) or section 75(1)(b) of the (CPA) as the case may be.’ [12] Relying on this section, the Commission argued that the Tribunal could only make a costs award against a party if the matter had been referred to it under s 73(5): that, as the referral had been under s 73(2), and there had in any event not been a finding made against it, the Tribunal was precluded from making a costs award when the referral was withdrawn; and that each party thus had to bear its own costs. In its judgment delivered on 16 November 2015, the Tribunal upheld this argument and ordered accordingly. [13] Smarting at this, Univision applied to the court a quo for an order reviewing and setting aside the Tribunal’s order, and remitting the matter to the Tribunal for it to take a decision on the issue of costs. The Tribunal and the Commission were cited, respectively, as first and second respondents. The Tribunal filed a notice, indicating its intention to abide the decision of the court, but the Commission opposed the review. [14] In doing so, the Commission contended that the Tribunal had been correct in concluding that s 147 of the NCA precluded a costs award other than each party pay its own costs. In addition, and in response to an allegation that the referral to the Tribunal had been frivolous and vexatious, and an associated allegation that punitive costs were justified, the Commission stated that a fundamental question in the referral had been whether the points system fitted comfortably into a property time-sharing scheme and a time-sharing interest within the meaning of the Property Time Sharing Control Act 75 of 1983. It described this as a ‘controversial question which lay at the heart of the referral’ that had been preceded by no less than 281 complaints to the Commission. It went on to state that the referral had ‘suffered from a number of technical defects, which was the predominant reason for the withdrawal’ and that in these circumstances, even if the Tribunal could award costs, which it denied, there was no basis for it to be ordered to do so. [15] In reaching its decision on the issue in dispute, the court a quo placed considerable emphasis on regs 19(2), 25(4) and 25(7) which provide: ‘19(2) A notice of withdrawal may include a consent to pay costs, or the other party may apply to the Tribunal for an order for costs. . . . 25(4) The Tribunal may award costs in the circumstances contemplated in section 147 of the Act, in the following terms- (a) The fees of a single representative may be allowed between party and party; (b) the costs between party and party must be taxed by the Registrar according to the tariff agreed between the parties or otherwise according to the tariff applicable in the High Court; (c) the Registrar may tax a bill of costs for services actually rendered in connection with proceedings, and call for any book, document paper or account that in the opinion of the Registrar is necessary to properly determine any matter relating to the taxation. . . . 25(7) The Tribunal may award punitive costs against any party who is found to have made a frivolous or vexatious application to the Tribunal.’ [16] Reading these regulations together with the provisions of the CPA, the court a quo concluded that s 147 did not preclude a costs order being issued against the Commissioner. In doing so, it said: ‘I see no reason why the Tribunal should not, when dealing with an application for an award of costs brought after the matter is withdrawn, adjudicate over the application and determine whether or not an award of costs is warranted in the given circumstances. The same bar, would again in my view, not exist where a party seeks such an award of costs on the basis of vexatiousness and frivolity, in which event such costs may be punitive in nature. . . . I do not agree with the submission that (the Tribunal) is not empowered to consider an award of costs.I find that in terms of the regulations the (Tribunal) is empowered to consider an award of costs . . . .’ It therefore set aside the Tribunal’s decision of 16 November 2015, and remitted the matter back to the Tribunal for it to reach a decision on Univision’s application that the Commission pay its costs. [17] In considering the correctness of this decision, it is necessary to state at the outset that the court a quo overlooked the essential difference between a referral to the Tribunal under s 73 of the CPA, on the one hand, and civil litigation in which costs, as a general rule, follow the event, on the other. The Commission is not an ordinary civil litigant. It is, as I have stated, an organ of state. It serves to protect the economic welfare of consumers, who of course play a vital role in the economy and thereby contribute to the fiscus and development of the country. The Commission functions, inter alia, to prohibit unfair marketing and business practices and to promote a consistent legislative and enforcement framework for consumer transactions. Section 99 of the CPA spells out the various enforcement functions the Commission has to protect consumer rights.9 In referring a matter to the Tribunal under s 73(2), it does not 9 Section 99 reads: ‘The Commission is responsible to enforce this Act by─ (a) promoting informal resolution of any dispute arising in terms of this Act between a consumer and a supplier, but is not responsible to intervene in or directly adjudicate any such dispute; (b) receiving complaints concerning alleged prohibited conduct or offences, and dealing with those complaints in accordance with Part B of Chapter 3; (c) monitoring─ (i) the consumer market to ensure that prohibited conduct and offences are prevented, or detected and prosecuted; and (ii) the effectiveness of accredited consumer groups, industry codes and alternative dispute resolution schemes, service delivery to consumers by organs of state, and any regulatory authority exercising jurisdiction over consumer matters within a particular industry or sector; (d) investigating and evaluating alleged prohibited conduct and offences; (e) issuing and enforcing compliance notices; (f) negotiating and concluding undertakings and consent orders contemplated in section 74; merely seek redress for a personal infringement of a civil right, but acts in the public interest in pursuance of its statutory obligation to do so in order to enforce consumer rights, not only on behalf of those who have complained to it, but also of the public at large. Consequently, there is no reason for the general rule in regard to costs in civil litigation to apply to referrals made by the Commission to the Tribunal. [18] On the other hand, the same cannot be said in regard to complainants who refer matters to the Tribunal under s 73(5). Such a referral would have been made in the face of the Commission, the regulatory body with the necessary expertise, having decided that the complaint lacks merit – either on receiving the complaint for the reasons set out in s 72(1)(a), or after investigating the matter. In these circumstances, where a complainant persists in advancing its complaint without the Commission’s support, a referral is far more akin to a civil trial. And if the complaint is upheld by the Tribunal, there is every good reason to award costs to the successful complainant. On the other hand, where the complaint is unsuccessful and the outcome vindicates the Commission’s issue of a notice of non-joinder, policy considerations justify the Tribunal ordering the complainant to pay the costs. [19] There is thus every reason for the legislature to have limited the Tribunal’s power to award costs as it did in s 147. But more importantly, there is another fundamental flaw in the reasoning of the court a quo. It appears to (g) referring to the Competition Commission any concerns regarding market share, anti- competitive behaviour or conduct that may be prohibited in terms of the Competition Act, 1998 (Act 89 of 1998); (h) referring matters to the Tribunal, and appearing before the Tribunal, as permitted or required by this Act; and (i) referring alleged offences in terms of this Act to the National Prosecuting Authority.’ have lost sight of the regulations being subordinate to the empowering statute under which they were promulgated, and that it is impermissible to treat them as a single piece of legislation. It is trite that regulations can neither be used as an aid to interpret the statute under which they were made nor be read so as to broaden the scope of the power extended by the statute. As was stated in Shanahan v Scott (1956) 96 CLR 245 at 250, a dictum cited with approval by this court in Bezuidenhout v Road Accident Fund 2003 (6) SA 61 (SCA) at 65G- I, the power delegated by an enactment: ‘(D)oes not enable the authority by regulations to extend the scope or general operation of the enactment but is strictly ancillary. It will authorise the provision of subsidiary means of carrying into effect what is enacted in the Statute itself and will cover what is incidental to the execution of its specific provisions. But such a power will not support attempts to widen the purposes of the Act, to add new and different means of carrying them out or to depart from or vary the plan which the Legislature has adopted to obtain its ends.’ (My emphasis) [20] Consequently, a regulation which does not give effect to a provision in the enabling Act, or seeks to provide powers beyond those envisaged by the Act, would be ultra vires and unenforceable. But that is not here the case. Regulations 19(2), 25(4) and 25(7) are compatible with the power extended to the Tribunal under s 147(2) to make a costs award in the circumstances envisaged in that sub-section – ie in cases in which the referral was made by a complainant (not the Commission) under s 75(1)(b). That is no reason to hold that those regulations are of force and applicable in any other circumstances beyond those spelled out in s 147. To do so would be to impermissibly extend to the regulations the force of a statute: indeed in the present case, it would afford them statutory force overriding the specific limitation the legislature imposed upon the Tribunal in respect of its power to award costs. [21] The court a quo therefore made the basic error in regarding the regulations not as ancillary to s 147(2), but to operate separately and in addition to that section to broaden the powers extended thereunder. This was impermissible. It ought to have held that the cost provisions in regs 19(2), 25(4) and 25(7) were only of application in cases in which an award of costs was authorised under the CPA, and that unless the present was a matter referred to in s 147(2) – ie one referred to the Tribunal under s 75(1)(b) – then by reason of s 147(1) the parties were obliged to bear their own costs. [22] Counsel for Univision correctly conceded that if regs 19(2), 25(4) and 25(7) had to be read solely with the terms of s 147 of the NCA, the Tribunal was not authorised to make a costs award against the Commission. However, he tentatively suggested that as the withdrawal had been filed before the actual hearing started, and as s 147 envisages parties ‘participating in a hearing’ bearing their own costs, it was of no application. His lack of enthusiasm for the point was well-founded. It would be absurd to interpret the section in such a way that it only applied to costs incurred once an actual hearing has commenced, denying a party from a costs order from that stage onwards but not before. Clearly the section was intended to apply to all costs associated with a matter once a referral is made to the Tribunal. [23] The reasoning and conclusion that I set out above is in all material respects precisely the same as that adopted by the Constitutional Court in Competition Commission of South Africa v Pioneer Hi-Bred International Inc & others 2014 (2) SA 480 (CC) paras 29 – 40. In that matter, the court was called upon to deal with the effect of s 57 of the Competition Act 89 of 1998 and the regulations thereunder dealing with the Competition Tribunal, all of which are in terms similar to s 147 of the NCA and the regulations in issue in this case. On a parity of reasoning to that in this judgment, the Constitutional Court held that the Competition Tribunal was precluded from making a costs order against the Competition Commission. [24] For some inexplicable reason neither the Tribunal, nor the court a quo, nor this Court was referred to that judgment which is decisive of the issue between the parties. Be that as it may, it is clear in this case that s 147 of the NCA precluded the Tribunal from granting Univision’s application for the Commission to pay its costs when the referral was withdrawn. That being so, the Tribunal correctly refused to make an award of costs against the Commission and the court quo, in turn, erred in setting aside the Tribunal’s order. The appeal against the order of the court a quo must therefore succeed. There is no reason for costs not to follow the event. [25] The following order is made: The appeal succeeds, with costs. The order of the court a quo is set aside and substituted with the following: ‘The application to review and set aside the order of the Tribunal of 16 November 2015 is dismissed, with costs.’ ______________ L E Leach Judge of Appeal Appearances For the Appellants: A Govender Instructed by: Gildenhuys Malatji Attorneys, Pretoria Honey Attorneys, Bloemfontein For the First Respondents: H Epstein SC (with him S Cohen) Instructed by: David Feldman 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: 28 March 2018 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. The National Consumer Commission v Univision Services Association NPC & others The first to eleventh respondents are all entities who conduct business in the timeshare industry in a sector in which point-holders use their points to access accommodation at holiday resorts. Those who hold points become obliged to pay levies used to maintain and administer the various resorts. The National Consumer Commission received hundreds of complaints from consumers relating to the first to eleventh respondents’ advertising, marketing, sale of points and collection of levies. These complainants alleged that their rights had been infringed, impaired or threaten and that the activities of the respondents constituted prohibited conduct as defined in the Consumer Protection Act 68 of 2008. Their complaints were investigated and the Commission decided to refer them to the National Consumer Tribunal established under s 26 of the National Credit Act 34 of 2005. When the complaints were due to be heard by the Tribunal, a notice of withdrawal was filed by the Commission, apparently as a result of it feeling that certain procedural irregularities had taken place, and not because it viewed the complaints to be without merit. The first to eleventh respondents then asked for an order for cost against the Commission. The Tribunal decided that in the light of s 147 of the National Credit Act as read with certain of the regulations prescribed for matters before the Tribunal, it did not have the power to grant such an order. The aggrieved respondents took the matter on review to the High Court which concluded otherwise and issued an order directing that the matter be remitted to the Tribunal for it to consider the issue of costs. On appeal against the order granted by the High Court, the Supreme Court of Appeal today decided that the Tribunal had been correct and the High Court had erred. It held that the manner in which the High Court had approached the matter effectively allowed the regulations to broaden the scope of the discretion imposed upon the High Court under s 147 and that, as that section precluded a cost order being issued in the circumstances which prevailed, namely that the reference to the Tribunal had been by the Commission, the Tribunal had not had the power to award costs. The Supreme Court of Appeal therefore allowed the appeal, set aside the High Court’s order and substituted it with an order dismissing the application to review the order of the Tribunal.

3423

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 191/2019 In the matter between: MOAMOGOE, OFENTSE LOFENTSE APPELLANT and THE STATE RESPONDENT Neutral citation: Moamogoe v The State (191/2019) [2020] ZASCA 106 (18 September 2020) Coram: SALDULKER, MBHA, VAN DER MERWE and SCHIPPERS JJA and MABINDLA-BOQWANA AJA Heard: The parties agreed that the appeal may be disposed of without the hearing of oral argument in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date for hand-down is deemed to be 18 day of September 2020. Summary: Criminal law and procedure – appeal against sentence imposed in terms of a plea and sentence agreement in terms of s 105A of the Criminal Procedure Act 51 of 1977 – whether plea and sentence agreement correctly reflected what had been agreed – can in the circumstances only properly be challenged in a review application and not on appeal – appeal dismissed. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Local Division of the High Court, Johannesburg (Borchers J sitting as court of first instance): The appeal is dismissed. __________________________________________________________________ JUDGMENT ___________________________________________________________________ Saldulker JA (Mbha, Van Der Merwe and Schippers JJA and Mabindla-Boqwana AJA concurring): [1] The appellant, Mr Ofentse Lofentse Moamogoe, was indicted in the Gauteng Division of the High Court, Johannesburg (the high court) on the following charges: two counts of robbery with aggravating circumstances (counts 1 and 2), both read with s 51(2) of the Criminal Law Amendment Act 105 of 1997 (the Act); one count of murder (count 3), as read with s 51(1) of the Act; one count of unlawful possession of a firearm (count 4); and one count of unlawful possession of ammunition (count 5). [2] On 14 November 2011, the appellant entered into a comprehensive plea and sentence agreement (plea agreement) with the State in terms of s 105A(1) of the Criminal Procedure Act 51 of 1977 (the CPA).1 The plea agreement recorded, inter 1 Section 105A of the CPA provides as follows: ‘105A. Plea and sentence agreements (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; and (ii) if the accused is convicted of the offence to which he or she has agreed to plead guilty – (aa) a just sentence to be imposed by the court; or (bb) the postponement of the passing of sentence in terms of s 297(1)(a); or (cc) a just sentence to be imposed by the court, of which the operation of the whole or any part thereof is to be suspended in terms of s 297(1)(b); and . . . . (b) The prosecutor may enter into an agreement contemplated in paragraph (a) – (i) after consultation with the person charged with the investigation of the case; (ii) with due regard to at least the – alia, that the Deputy Director of Public Prosecutions of the high court (the DPP), and the appellant, who was represented by an attorney and counsel, had negotiated and entered into the plea agreement, which involved a plea of guilty to be tendered by the appellant in respect of certain offences of which he may be convicted based on the charges, as well as the just sentences for such offences to be imposed by the high court. The plea agreement was signed by the appellant, his counsel and the DPP. [3] In terms of the plea agreement, the appellant pleaded guilty on counts 2 and 3. The agreed sentence was recorded as follows: ‘22.1 Counts 2 and 3 are taken together for the purpose of sentence. The [appellant] is sentenced to 25 years’ imprisonment of which 5 years’ imprisonment is suspended for 5 years on the following conditions: 22.1.1 That the [appellant] is not found guilty of murder or robbery or any attempt to commit robbery or murder within the period of suspension; and 22.1.2 That the [appellant] testify as a state witness in the criminal matter of his co- perpetrators under case number…. 22.2 It is agreed that 10 years of the remaining 20 years’ imprisonment will run concurrently with the 10 years’ imprisonment imposed by the Regional Court, Randburg on 12 July 2011 as is provided for in Section 280(2) of the Criminal Procedure Act, 51 of 1977; 22.3 The effective sentence agreed to is therefore 10 years’ imprisonment.’ (My emphasis.) [4] The matter came before Borchers J. During the proceedings the appellant was asked to confirm the terms of the plea agreement, which he did. The transcript of the court proceedings reads as follows: ‘Court: Mr Moamogoe you have no doubt been through the document which you have just signed where there were changes is that correct? (aa) nature of and circumstances relating to the offence; (bb) personal circumstances of the accused; (cc) previous convictions of the accused, if any; and (dd) interests of the community. . . . . . . . (6) (a) After the contents of the agreement have been disclosed, the court shall question the accused to ascertain whether – (i) he or she confirms the terms of the agreement and the admissions made by him or her in the agreement; (ii) with reference to the alleged facts of the case, he or she admits the allegations in the charge to which he or she has agreed to plead guilty; and (iii) the agreement was entered into freely and voluntarily in his or her sound and sober senses and without having been unduly influenced.’ [Appellant]: Yes your lady. Court: Do you confirm the terms of this agreement and the admissions that you have made in it? [Appellant]: Yes M’Lady. Court: Do you admit the allegations to the charge that you have just had read to you and to which you pleaded guilty? [Appellant]: Yes M’Lady.’ [5] Thereafter, Borchers J convicted and sentenced the appellant in accordance with the terms of the plea agreement as follows: ‘Counts 2 and 3, are taken together for the purposes of sentence. You are sentenced to 25 years’ imprisonment, of which five years’ imprisonment is suspended for five years on the following conditions: 1. That you are not found guilty of murder or robbery or any attempt to commit murder or robbery committed within the period of suspension, namely five years; and 2. That you testify as a state witness in the criminal matters in which your co-perpetrators are to be charged. I note that it is agreed that ten years of the effective 20 years’ imprisonment will run concurrently with the ten years’ imprisonment imposed in another matter by the Regional Court Randburg on 12 July 2011, as provided for in section 280(2) of the Criminal Procedure Act, and I note further that the effective sentence of imprisonment in this case today is thus one of ten years’ imprisonment.’ (My emphasis.) [6] Subsequent to his conviction and sentence, the appellant applied for leave to appeal against sentence. In his affidavit in support of the application, the appellant exhibited a clear understanding that he had been sentenced by the high court to ten years’ imprisonment in addition to the ten year sentence imposed by the regional court. He declared that the sentence in accordance with the plea agreement was as follows: ‘Counts 2 and 3 were taken together for the purpose of sentence. I was sentenced to 25 years[’] imprisonment of which 5 years were suspended. I had been previous[ly] sentenced to 10 years on another matter. 10 years from the 20 years was ordered to run concurrently with the previous 10 year sentence. My effective sentence was therefore 10 years[’] imprisonment. (The Plea Agreement is annexed to the application).’ He continued to say that ‘the 20 years I was given was too harsh and induces a sense of shock.’ He submitted that a sentence of ten years’ imprisonment that runs concurrently with the regional court sentence would be just. [7] On 24 August 2017, Du Plessis AJ heard and dismissed the application. Aggrieved, the appellant successfully petitioned this Court for special leave to appeal against the sentence. [8] In his affidavit in support of the application for special leave to appeal to this Court, the appellant changed tack. He alleged, for the first time, that the plea agreement did not accurately reflect the verbal agreement between him and the State. Both the application and the written argument before us were limited to this point. The affidavit stated inter alia, the following: ‘Plea agreement negotiations 7.1 The [appellant] was legally represented during the 105A plea negotiations. 7.2 . . . 7.3 The Sentence was explained as follows to the [appellant] first by Legal Counsel and then in person by the Prosecution: 7.3.1 He would receive a 25 year sentence for the two counts he plead guilty to as per the plea agreement. 7.3.3 That the sentence would be structured in such a way that 15 years of the 25 years would be suspended and the 10 years remaining would run concurrently with a previous sentence of 10 years. Meaning that the [appellant’s] total direct imprisonment for the current matter and the previous matter would be 10 years imprisonment. 7.3.4 The Prosecution specifically even told him that based on the agreement he would be [eligible] for parole in 2016. What brought about this appeal? 7.1 The [appellant] laboured under the impression that he had been sentenced as was verbally explained to him during the plea negotiations. He did not understand the legal wording on the 105A plea agreement. 7.2 It was only when he inquired with the prison authorities about his parole date that he was shocked to learn that his sentence was actually 10 years direct imprisonment, plus 10 years for a previous case. Meaning that he had an effective sentence of 20 years. 7.3 This meant that what the [appellant] was specifically verbally told in the plea agreement negotiations was different from what was eventually put down on the 105A plea agreement placed before the court. Proof that the 105A plea agreement [was] an error and did not represent the oral agreement during the plea negotiations. 9.1 Firstly the [appellant] was specifically told in person by the prosecution that the effect of 105A plea agreement would be that the 10 years from this case and the 10 years from my previous case would run concurrently. Meaning that my effective total sentence would be 10 years. The prosecution further told me that I would be [eligible] for parole in 2016. This version was not contested by the Respondent during the leave to appeal application. 9.2 Secondly, during the appeal hearing the Honourable Justice Du Plessis, questioned the Prosecution. (The same prosecutor who conducted the plea negotiations and represented the State during the trial was present at the leave to appeal application). 9.2.1 The prosecution during these questions indicated that they were also under the impression that the sentences ran concurrently and that the [appellant] was to serve a total of 10 years’ direct imprisonment for both cases.’ [9] The fundamental question is whether the issue thus raised by the appellant can be dealt with in this appeal or whether the appellant should have brought a review application. In my view, for the reasons that follow, this question must be answered in the negative. [10] The terms of the plea agreement are clear and were confirmed by the appellant before Borchers J. What the appellant sought to raise in this Court, namely that the plea agreement did not correctly record what had been agreed in respect of sentence, is a matter extraneous to the record. It is trite that an appeal is decided on the record of the proceedings in the lower court. In the absence of an application to adduce further evidence on appeal, this Court is bound by the record. The only possible remedy for the appellant would have been to launch an application for review, setting out these allegations on affidavit, so that the State could have dealt with them under oath. Even though, prima facie, the belated allegations of the appellant appear to be tenuous, this Court should not deal with them on appeal.2 [11] It is, therefore, not possible for this Court to deal with the issue raised by the appellant on appeal, and for these reasons the appeal must be dismissed. [13] I accordingly make the following order: The appeal is dismissed. ___________________ H K SALDULKER JUDGE OF APPEAL 2 There is authority for the proposition that a plea and sentence agreement under s 105A of the CPA excludes an appeal. In S v De Koker 2010 (2) SACR 196 (WCC) it was held that the process under s 105A settles the lis between the State and the accused once and for all. However, a contrary view was taken in S v Armugga and Others 2005 (2) SACR 259 (N). It is however inappropriate to decide this issue without the benefit of oral argument and we refrain from doing so. APPEARANCES For appellant: W A Karam Instructed by: Legal Aid SA, Johannesburg Legal Aid SA, Bloemfontein For respondent: L Ngodwana Instructed by: Director of Public Prosecutions, Johannesburg 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 18 September 2020 STATUS Immediate Moamogoe v The State (Case no. 191/2019) [2020] ZASCA (18 September 2020) Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Today the Supreme Court of Appeal (the SCA) dismissed the appeal of the appellant against the decision of the Gauteng Division of the High Court, Johannesburg (the high court). The appellant, Mr Ofentse Lofentse Moamogoe, was indicted in the high court on the following charges: two counts of robbery with aggravating circumstances (counts 1 and 2); one count of murder (count 3); one count of unlawful possession of a firearm (count 4); and one count of unlawful possession of ammunition (count 5). The appellant entered into a plea and sentence agreement (plea agreement) with the State in terms of s 105A(1) of the Criminal Procedure Act 51 of 1977. In the plea agreement, the appellant agreed to plead guilty on counts 2 and 3. The plea agreement recorded that the appellant agreed to be sentenced to 25 years’ imprisonment of which 5 years was suspended on certain conditions. The plea agreement also recorded that 10 years of the remaining 20 years’ imprisonment would run concurrently with the 10 years’ imprisonment imposed on another sentence for which the appellant was imprisoned. It recorded that the agreed effective sentence was 10 years’ imprisonment. In the high court, the appellant confirmed the terms of the plea agreement, and was duly convicted and sentenced in accordance thereof. Subsequent to his conviction and sentence, the appellant applied for leave to appeal against his sentence in the high court, which was dismissed. The appellant successfully petitioned the SCA for special leave to appeal against sentence, and in his affidavit in support thereof, the appellant alleged, for the first time, that the plea agreement did not accurately reflect the verbal agreement between him and the State. The SCA held that the question was whether the issue raised by the appellant could be dealt with in the appeal or whether the appellant should have brought a review application. The SCA held that the terms of the plea agreement were clear and were confirmed by the appellant in the high court. It also held that the appellant’s allegation that the plea agreement did not correctly record what had been agreed in respect of sentence, was a matter extraneous to the record. It held that it was trite that an appeal is decided on the record of the proceedings in the lower court. In the absence of an application to adduce further evidence on appeal, the SCA held that it was bound by the record. The SCA held that the only possible remedy for the appellant would have been to launch an application for review setting out the allegations on affidavit, so that the State could have dealt with them under oath. It was therefore not possible for the appeal court to deal with the issue raised by the appellant on appeal. The appeal was accordingly dismissed.

3527

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 200/2020 In the matter between: NHLANHLA ARTHUR KUBHEKA FIRST APPELLANT ARMSTRONG NGIDI SECOND APPELLANT and THE STATE RESPONDENT Neutral citation: Kubheka and Another v The State (200/2020) [2021] ZASCA 25 (24 March 2021) Coram: NAVSA ADP, DLODLO and MBATHA JJA, and KGOELE and WEINER AJJA Heard: 25 February 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10:00 am on 24 March 2021. Summary: Criminal law and procedure – appeal against sentence – high court set aside sentences imposed by regional court and increased length of imprisonment – no material misdirection – no indication that trial court exercised discretion improperly – no basis for high court to interfere – appeal upheld. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Vally J and Malungana AJ sitting as court of appeal): 1. The appeals against the increased sentences imposed by the high court are upheld. 2. The order of the high court in respect of the sentence is set aside and replaced with the following order: ‘The appeals against sentence are dismissed.’ 3. The result is that the sentences imposed by the Regional Division, North Gauteng, Randburg, set out hereafter, are reinstated: ‘(a) Accused 1 is sentenced to 4 years’ imprisonment of which 2 years is suspended for 5 years on condition that the accused is not convicted of theft or any offence involving an element of dishonesty during the period of suspension. (b) Accused 2 is sentenced to 4 years’ imprisonment. (c) In terms of s 103(1) of the Firearms Control Act 60 of 2000, each accused is declared unfit to possess a firearm.’ JUDGMENT MBATHA JA (NAVSA ADP, DLODLO JA, and KGOELE and WEINER AJJA concurring) [1] On 12 October 2017, the appellants, Messrs Nhlanhla Arthur Kubheka (first appellant) and Armstrong Ngidi (second appellant) were each convicted in the Regional Division, North Gauteng, Randburg (‘the regional court’), of one count of theft of a cellular telephone and an iPod out of a motor vehicle. On 23 January 2018, the first appellant was sentenced to four years' imprisonment, of which two years were suspended for a period of five years on condition that he was not convicted of theft or any offence involving an element of dishonesty during the period of suspension. The second appellant was sentenced to four years’ imprisonment. The appellants were declared unfit to possess a firearm in terms of s 103(1) of the Firearms Control Act 60 of 2000. With leave of the trial court the appellants appealed to the Gauteng Division of the High Court, Johannesburg (the ‘high court’) in respect of both conviction and sentence. [2] On 22 May 2019, the day of the hearing of the appeal, the high court called upon the appellants to provide reasons why each of their sentences should not be increased on appeal in the event that the appeal against conviction was dismissed. The hearing was adjourned to 20 June 2019. On that day the high court entertained the appeal. [3] In its judgment the high court (Vally J, Malungana AJ concurring) restated the evidence that was adduced in the regional court. It was clear that the appellants had jammed the locking signal on the remote control of the Mercedes Benz vehicle that had been parked adjacent to their motor vehicle, a Chevrolet Aveo at the parking area of the Randburg Magistrates’ Court, and had stolen the cellular telephone and an iPod. The high court reiterated that the State’s case was advanced by the direct evidence of the security officer at the court, Ms Winnie Mutavhatsindi, who observed the appellants through CCTV monitors leaving their motor vehicle and opening the door of the Mercedes Benz. This was further supported by the uncontested evidence that the iPod belonging to Mr Anthony James Batistich, the complainant, was found in the backseat of the Chevrolet one of the appellants had hired, and in which they had travelled to the Randburg Magistrates’ Court. One of the appellants had also demonstrated to the police officers how they used the remote jammers to prevent the locking of the doors of a motor vehicle. [4] The high court concluded that the appellants’ defences were correctly rejected by the regional court as not being a true account of the circumstances underlying the finding of the iPod in their motor vehicle. Consequently, it held that the court was correct in finding that the State had proven beyond a reasonable doubt, all the elements of the offence and dismissed the appeal against conviction. It, however, set aside the sentences imposed by the regional court and substituted it with the increased sentences of five years’ and eight years’ direct imprisonment, respectively. The high court based its decision principally on the prevalence of the offence and that the offence had been carefully planned and executed. It concluded that the regional court had downplayed the interests of society and overemphasised the interests of the appellants. The appellants petitioned this Court for special leave to appeal against both conviction and sentence. They were however granted leave to appeal against sentence only. [5] Before us it was pointed out on behalf of the appellants that the State had initially not opposed the appropriateness of the sentence imposed by the regional court. It was submitted that S v De Beer [2017] ZASCA 183; 2018 (1) SACR 229 (SCA) demonstrated the same error by the High Court, Johannesburg (Vally J and Siwendu AJ), namely, an unjustified increase in sentence on appeal that was later overturned by this court. Counsel on behalf of the appellants contended that the appellants were both professionals who ought to have been considered suitable candidates for a sentence of correctional supervision, in terms of s 276 (1)(h) or (i) of the Criminal Procedure Act 51 of 1977. It was submitted on behalf of the appellants that the high court had arbitrarily doubled the sentences of the appellants on the grounds of the seriousness and prevalence of the offence and the interests of society, with the consequence that the newly imposed sentences were disproportionate to the offence committed. It was contended that the high court had disregarded the personal circumstances of the appellants and that it erred in over- emphasising the interests of society and the gravity of the offence. [6] It is trite that the power of an appellate court to interfere with a sentence imposed by a lower court is limited. In S v Bogaards1, the Constitutional Court stated as follows: ‘It can only do so where there has been an irregularity that results in a failure of justice; the court below misdirected itself to such an extent that its decision on sentence is vitiated; or the sentence is so disproportionate or shocking that no reasonable court could have imposed it.’ 1 S v Bogaards [2012] ZACC 23; 2012 BCLR 1261 (CC); 2013 (1) SACR 1 (CC) para 41. [7] It is clear that the trial court took into account all relevant factors in considering an appropriate sentence for the appellants. It took into account the appellants’ personal circumstances which were as follows: the first appellant was 44 years old when the crimes were committed; he is a B. Com and B. Sc. Engineering (cum laude) graduate who is a member of the Professional Engineers of South Africa; he is a director of his own engineering company, which is based in KwaZulu- Natal with a staff component of 21 employees; he draws a net income of R1 million per annum; he is the father and sole-provider to eight children; and he was a first offender. [8] The second appellant was 46 years old at the time when he was sentenced; he is married and a father of two children, who are dependent on him for financial support; after completing matric he acquired the relevant certificates in the hospitality industry and he runs a marketing and catering company together with his wife; his gross drawings totalled R69 000 per month; and his company employed four permanent staff members. He has two previous convictions for fraud and theft, though they had happened more than 17 years prior to the time of sentencing in the present case. [9] As aggravating circumstances, the regional court took into account the nature and seriousness of the offence, the value of the items stolen from the motor vehicle, the prevalence of the offence, and that it required a skilled person to commit the offence. The individual sentences imposed by the regional court were appropriate as they took into account the purposes of punishment, which are aimed at rehabilitation, preventative deterrence and retribution. [10] As stated above, the high court found that the sentence imposed by the regional court did not sufficiently appreciate the interests of society, the gravity of the offence, and that it was unduly and overly generous in assessing the interests of the appellants. It found that the crime was carefully planned, prevalent and was committed by sophisticated businessmen who used their technical skills to steal from the motor vehicle. Counsel for the State was hard pressed to point to any misdirection on the part of the regional court. She was reluctantly, but correctly, constrained to agree that the high court should not have interfered with the sentences imposed by the regional court. In substituting the sentences the high court failed to demonstrate that the regional court had not exercised its sentencing discretion at all or exercised it improperly or unreasonably. The high court itself was guilty of over-emphasising the seriousness of the offence and without due regard to proportionality. Counsel for the State conceded that the increased sentences were more severe than what high courts had in the past held to be appropriate in cases of this kind.2 One of course, must be cautious about comparisons with other cases. Each case must be decided on its own merits. A court of appeal may, however, not substitute a sentence simply because it prefers it and thereby usurp the discretion of the trial court.3 In the present case there was no basis to interfere with the sentences imposed by the regional court and doubling the sentences of direct imprisonment was unwarranted. [11] Having regard to what is set out above, it is clear that having regard to the prevalence and seriousness of the offence and that the appellants could not have been 2For example, in S v Smith 2002 (2) SACR 488 (C), where there was theft from a motor vehicle, a 22- year-old was sentenced to 3 years’ imprisonment, which on review was reduced to 18 months’ imprisonment, of which 9 months were suspended for five years. In S v Maritz 1994 (1) SACR 456 (T) a 35-year-old, with previous convictions, was sentenced to 6 years imprisonment, which on review was reduced to a sentence of 6 years’ imprisonment, of which 3 years were suspended for a period of 5 years. Counsel for the State informed us that regional court sentences for similar cases were in the region between 3 to 5 years’ imprisonment. 3S v Malgas [2001] ZASCA 30; [2001] 3 All SA 220 (A) para 12. motivated by need but rather by greed, there is no room for concluding as suggested on behalf of the appellants that correctional supervision was a viable sentence. The regional court can thus not be faulted for imposing direct imprisonment. [12] Accordingly, the sentences imposed by the regional court should stand, as they are proportionate to the offence committed by the appellants. In the circumstances, the order is as follows: 1. The appeals against the increased sentences imposed by the high court are upheld. 2. The order of the high court in respect of sentence is set aside and replaced with the following order: ‘The appeals against sentence are dismissed.’ 3. The result is that the sentences imposed by the Regional Division, North Gauteng, Randburg, set out hereafter, are reinstated: ‘(a) Accused 1 is sentenced to 4 years’ imprisonment of which 2 years is suspended for 5 years on condition that the accused is not convicted of theft or any offence involving an element of dishonesty during the period of suspension. (b) Accused 2 is sentenced to 4 years’ imprisonment. (c) In terms of s 103(1) of the Firearms Control Act 60 of 2000, each accused is declared unfit to possess a firearm.’ ___________________ Y T MBATHA JUDGE OF APPEAL APPEARANCES: For appellants: J C Kruger Instructed by: BDK Attorneys, Johannesburg Symington & De Kok, Bloemfontein For respondent: E H F 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: 24 MARCH 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 Kubheka and Another v The State (200/2020) [2021] ZASCA 25 (24 March 2021) Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal against the Gauteng Division of the High Court, Johannesburg (the high court). The SCA ordered that the sentences imposed by the Regional Division, North Gauteng, Randburg (the regional court) be reinstated. The issue before the SCA was whether the increased sentences imposed by the high court were appropriate. On 12 October 2017, the appellants, Messrs Nhlanhla Arthur Kubheka (first appellant) and Armstrong Ngidi (second appellant) were each convicted in the regional court on one count of theft of a cellular telephone and an iPod from a motor vehicle. On 23 January 2018, the first appellant was sentenced to four years' imprisonment, of which two years were suspended for a period of five years on condition that he was not convicted of theft or any offence involving an element of dishonesty during the period of suspension. The second appellant was sentenced to four years’ imprisonment. The appellants were declared unfit to possess a firearm in terms of s 103(1) of the Firearms Control Act 60 of 2000. With leave of the regional court, the appellants appealed to the high court in respect of both conviction and sentence. The high court set aside the sentences imposed by the regional court and substituted it with the increased sentences of five years and eight years direct imprisonment, respectively The SCA held that there was no basis to interfere with the sentences imposed by the regional court and doubling the sentences of direct imprisonment by the high court was unwarranted. Taking into account the prevalence and seriousness of the offence, and that the appellants could not have been motivated by need but rather by greed, the SCA held that there was no room for concluding, as suggested on behalf of the appellants, that correctional supervision was a viable sentence. In substituting the sentences, the high court failed to show that the regional court exercised its sentencing discretion improperly or unreasonably when it imposed the sentences. The SCA found further that in fact the high court over-emphasised the seriousness of the offence, without taking due regard to comparable sentences. The individual sentences imposed by the regional court were found to be appropriate as they took into account the purpose of punishment, the personal circumstances of the accused, the nature of the offence, and the proportionality of the sentence considering the value of the goods stolen. In that regard, the sentences imposed by the regional court were reinstated. ~~~~ends~~~~

3697

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 304/2020 In the matter between: THE TRUSTEES FOR THE TIME BEING OF THE LEGACY APPELLANT BODY CORPORATE and BAE ESTATES AND ESCAPES (PTY) LIMITED FIRST RESPONDENT PAM GOLDING PROPERTY MANAGEMENT SERVICES (PTY) LIMITED SECOND RESPONDENT Neutral citation: The Trustees for the time being of the Legacy Body Corporate v Bae Estates and Escapes (Pty) Ltd and Another (Case no 304/2020) [2021] ZASCA 157 (5 November 2021) Coram: PETSE AP, MBHA and MAKGOKA JJA and POTTERILL and PHATSHOANE AJJA Heard: 26 August 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The time and date for hand down is deemed to be 10h00 on the 5th day of November 2021. Summary: Sectional Title Scheme – whether a body corporate’s decision to prohibit an estate agency from operating within its scheme amounted to administrative action for purposes of PAJA – if PAJA not applicable, whether decision subject to judicial review in terms of the common law. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Bozalek J sitting as court of first instance): judgment reported sub nom BAE Estates and Escapes (Pty) Ltd v Trustees for the Time Being of the Legacy Body Corporate and Another 2020 (4) SA 514 (WCC). The appeal is dismissed with costs, including the costs of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Makgoka JA (Petse AP, Mbha JA and Potterill and Phatshoane concurring): [1] In May 2019 the appellant, the Trustees for the Body Corporate for The Time Being of the Legacy Body Corporate (the trustees), decided to prohibit the first respondent, Bae Estates and Escapes (Pty) Ltd (Bae Estates), from operating within a sectional title scheme (the scheme) administered by the trustees in Green Point, Cape Town. On 4 February 2020 the Western Cape Division of the High Court (the high court), at the instance of Bae Estates, set aside the trustees’ decision. It concluded that the decision was an administrative action envisaged in the Promotion of Administrative Justice Act 3 of 2000 (PAJA), and that, in any event, the decision was reviewable at common law. The appeal is with the leave of the high court. [2] The body corporate was established in terms of s 2 of the Sectional Title Schemes Management Act 8 of 2011 (the ‘Schemes Management Act’ or ‘the Act’). In terms of s 10 of the Schemes Management Act, a sectional title scheme must as from the date of the establishment of the body corporate, be regulated and managed by means of rules which must provide for the regulation, management, administration and use and enjoyment of sections and common property. In terms of s 10(2), the rules must comprise (a) management rules and (b) conduct rules. [3] The facts which gave rise to the dispute between the parties are uncontroversial. Bae Estates is an estate agency that sells and rents properties on behalf of property owners in Cape Town and the surrounding areas. In May 2018 it was engaged by a property owner in the scheme, to procure a tenant for his property on a long-term rental. Bae Estates delivered on its mandate, and a lease agreement was concluded between the tenant and the owner in July 2018. In terms of the lease agreement, among other provisions, the tenant was permitted to sub-let the property on short-term holiday lease, which the tenant himself later did without reference to Bae Estates. Subsequently, there were complaints by some property owners about the conduct of some of the sub-tenants, including excessive noise and other unruly behaviour. According to the trustees, these sub-tenants were sourced by Bae Estates, which they accused of having failed to properly vet the sub-tenants. For its part, Bae Estates denied that it had procured the sub-tenants on behalf of the owner. [4] On 14 May 2019 the trustees informed the owner that they had resolved in terms of rule 37.3 of the body corporate conduct rules, that he was no longer allowed to carry on with short-term letting for his property. Rule 37.3 reads as follows: ‘37 An owner may let or part with occupation of his section provided: . . . 37.3 that in order to retain the nature of the Scheme, short term holiday letting shall be permitted provided that such short-term holiday letting is managed through a letting agency which is considered to be reputable for such purpose in the sole discretion of the Trustees. The Trustees shall in their sole discretion have the right to restrict any short-term letting. . . .’ [5] From 15-21 May 2019 the trustees wrestled with the question asked by one of them whether, ‘[i]n light of all the events . . . there was any potential scope to prohibit [Bae Estates] from operating within the Legacy. . . ’. By 21 May 2019, the trustees had, by way of an email round-robin, voted to prohibit Bae Estates from operating within the scheme. The same day, the resolution was communicated by email almost simultaneously to both the owner and Bae Estates. The email to Bae Estates read as follows: ‘In terms of rule 37.3 of the body corporate rules, short term holiday is permitted provided that it is managed through a letting agency which is considered to be reputable in the sole discretion of the Trustees.’ After setting out the provisions of rule 37.3, the trustees concluded: ‘Due to recent incidents at Unit 107 the Trustees have resolved to restrict Bae Estates from operating within The Legacy with immediate effect’. [6] Bae Estates immediately objected to the decision and reiterated that it had nothing to do with the short-term letting of the property. Furthermore, Bae Estates stated, this had been the responsibility of the tenants, who had been permitted to do so by the owner. It accordingly requested the trustees to reverse their decision, which the trustees declined to do. [7] Consequently, Bae Estates launched an application in the high court on an urgent basis, against the trustees and the second respondent, Pam Golding Property Management Services (Pty) Ltd (Pam Golding) which is the managing agent of the scheme. Bae Estates sought an interim interdict against the trustees from implementing the decision, pending an application to review and set it aside. Despite the relief in the notice of motion being for an interim relief pending the outcome of a review application, the high court treated the application as one for the review of the trustees’ decision. Nothing turns on this aspect. No substantive order was sought against Pam Golding which, accordingly, did not oppose the application, and consequently did not participate in this appeal. [8] Bae Estates asserted that the trustees’ resolution was: (a) unlawful and passed in error as conduct rule 37.3 had no application to it since it was not engaged in any short-term holiday letting; (b) procedurally unfair as it was passed without any prior investigation into its role and without any prior notice to it; and (c) arbitrary and taken with an ulterior motive, namely, to simply prevent it from carrying on business within the scheme. Bae Estates further contended that the decision amounted to administrative action, and thus susceptible to be reviewed in terms of PAJA, alternatively, the common law read with s 33 of the Constitution. [9] In response, the trustees raised, among others, two preliminary points. First, that there was a non-joinder of the director of Bae Estates, its estate agent and the owner of the property. Secondly, that because Bae Estates had asserted that the decision of the trustees did not bind it, Bae Estates did not have standing before court to bring the application. In respect of the merits of the application, the trustees contended that in taking the decision, they were not exercising a public power nor performed a public function. Thus, it was submitted, the decision did not constitute administrative action, as also, it did not adversely affect any of Bae Estates’ rights nor did it have a direct, external legal effect. In addition, the trustees contended that the decision was reasonable and lawful in the circumstances of the case. The trustees then set out at length, the complaints which culminated in them taking the impugned decision. [10] The trustees pointed out that the decision was taken in terms of rule 37.3 of the scheme’s Conduct Rules, which, as already stated, concerns short-term holiday letting. Thus, emphasised the trustees, the decision related only to ‘short-term holiday letting’ and not any long-term letting or sales. In other words, Bae Estates was only prohibited from operating in the scheme insofar as short-term letting was concerned, and that the decision did not amount to a blanket prohibition. [11] The high court concluded that the trustees’ decision satisfied two requirements of the definition of ‘administrative action’ in PAJA, namely that of ‘public character’ and ‘a direct external legal effect’. It, accordingly, concluded that the trustees’ decision constituted administrative action envisaged in PAJA and thus reviewable. The high court also reviewed the trustees’ decision at common law ‘against the standards of lawfulness, reasonableness and procedural fairness’. It reasoned that it was entitled to do so on the basis of its inherent power to develop the common law. The high court, accordingly, reviewed and set aside the trustees’ decision, and ordered the trustees to pay Bae Estates’ costs. In this Court, the trustees challenge the correctness of the high court's decision. [12] In order for PAJA to apply, the trustees’ decision must amount to ‘an administrative action’. Administrative action is defined in s 1 of PAJA as: ‘any decision taken, or any failure to take a decision, by— (a) an organ of state, when- (i) exercising a power in terms of the Constitution or a provincial constitution; or (ii) exercising a public power or performing a public function in terms of any legislation; or (b) a natural or juristic person, other than an organ of state, when exercising a public power or performing a public function in terms of an empowering provision, which adversely affects the rights of any person and which has a direct, external effect. . . .’ Sub-sections (aa) – (ii) contain a list of powers, functions and decisions which are excluded from PAJA’s purview. [13] In Minister of Defence and Military Veterans v Motau and Others1 the Constitutional Court identified seven requirements of the definition of an administrative action: ‘there must be: (a) a decision of an administrative nature; (b) by an organ of state or a natural or juristic person; (c) exercising a public power or performing a public function; (d) in terms of any legislation or an empowering provision; (e) that adversely affects rights; (f) that has a direct, external legal effect; and (g) that does not fall under any of the listed exclusions’. [14] When regard is had to the structure of the definition of an administrative action, the requirement that the decision be of an administrative nature, is a gate-way to determining whether a particular decision constitutes administrative action. As Wallis J explained in Sokhela and Others v MEC for Agriculture and Environmental Affairs,2 this requirement demands that a detailed analysis be undertaken of the nature of the public power or public function in question, ‘to determine its true character’. Thus, the determination of what constitutes administrative action does not occur by default, and ‘[t]he court is required to make a positive decision in each case whether a particular exercise of public power or performance of a public function is of an administrative character. . . .’.3 [15] The high court did not consider whether the requirement that conduct be of an administrative nature, was met, and as such, did not engage in the analysis exercise suggested in Sokhela. To my mind, this is a structural deficiency in the judgment, amounting to a misdirection, for, if conduct is not of an administrative nature, a fortiori, 1 Minister of Defence and Military Veterans v Motau and Others 2014 (5) 69 (CC) para 33. 2 Sokhela and Others v MEC for Agriculture and Environmental Affairs (Kwazulu-Natal) and Others 2010 (5) SA 574 (KZP) para 61. See also Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1999 (1) SA 374; 1998 (12) BCLR 1458 para 26. 3 Sokhela para 61. it cannot constitute an administrative action envisaged in PAJA. With regard to whether the trustees exercised a public power or performed a public function, the high court noted that the body corporate derives its power to formulate conduct rules and to apply them, from a statutory source, namely, the Schemes Management Act. The exercise of those powers, it said, can affect a substantial number of people in important matters concerning the conditions under which they occupy the property concerned. To that extent, ‘a body corporate can be seen as exercising a public power or performing a public function’. Having regard to these considerations, the high court concluded that the trustees’ decision constitutes administrative action as defined in PAJA and was, therefore, reviewable at Bae Estate’s instance. [16] I cannot agree with the reasoning of the high court. The fact that bodies corporate derive their powers from statute, does not, without more, translate their decisions into the exercise of any public power or performance of a public function. As explained in Chirwa v Transnet Limited,4 such an approach would render the requirement that the decision be taken ‘in terms of any legislation’ meaningless, as all decisions taken by a body created by statute would meet the requirement. For example, almost all of the excluded powers and functions in sub-sections (aa) – (ii) in the definition of administrative law in PAJA are exercised in terms of statute, but decisions taken in terms thereof are not administrative decisions. And, to the extent the learned Judge seems to suggest that bodies corporates exercise public power by virtue of their power to regulate the living arrangements of property owners in their schemes and to control the common property, this is at odds with this Court’s decision in Mount Edgecombe Country Club Estate Management Association v Singh.5 [17] The sum effect of these is that the high court failed to properly engage in an analysis of the relevant requirements of the definition of administrative action. I turn to that aspect. It is prudent right from the onset, to delineate which of those requirements are in dispute. As I see it, three of those are: (a) whether the trustees’ decision is of an administrative nature; (b) whether the trustees exercised a public power or 4 Chirwa v Transnet Limited and Others [2007] ZACC 23; 2008 (4) SA 367 (CC); 2008 (3) BCLR 251 (CC) para 183.PAJA 5 Mount Edgecombe Country Club Estate Management Association II (RF) NPC v Singh and Others [2019] ZASCA 30; 2019 (4) SA 471 (SCA). The essence of the decision is that, as between home owners and a homeowners’ association, conduct rules have a contractual basis, and therefore PAJA does not find application where home owners’ association enforced rules against property owners. performed a public function; (c) whether the trustees acted in terms of any legislation or an empowering provision.6 Whether the trustees’ decision is of an administrative nature [18] In Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others7 it was pointed out that conduct of an administrative nature is generally understood as the ‘. . . 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…’ In the present case, there is nothing bureaucratic about the trustees’ decision, nor does it involve ‘application of policy’. Instead, the decision seems more commercial or managerial in nature, rather than administrative. The trustees’ decision was made in the course of running and managing the scheme. The nature of the power is thus managerial or business-related. Their decision is no different to a decision of a meeting of shareholders of a company.8 [19] I therefore conclude that the trustees’ decision was not of an administrative nature. Having failed at the first hurdle, this should be the end of the enquiry. However, given the interrelatedness of the requirements, and the far-reaching implications the judgment of the high court holds for bodies corporate generally, I will consider the other two requirements. Whether the trustees exercised a public power or performed a public function [20] The question whether private entities are capable of exercising public powers or performing public functions is vexed. In Chirwa it was held that determining whether a power or function is ’public’ has to be determined with regard to all the relevant factors including: (a) the relationship of coercion or power that the actor has in its capacity as a public institution; (b) the impact of the decision on the public; (c) the source of the power; and (d) whether there is a need for the decision to be exercised 6 The expression ‘an empowering provision’ is defined in s 1 of PAJA as ‘a law, a rule of common law, customary law, or an agreement, instrument or other document in terms of which an administrative action was purportedly taken’. 7 Greys Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] 3 All SA 33 (SCA); 2005 (6) SA 313 (SCA) para 24. 8 Compare for example, Pennington v Friedgood 2002 (1) SA 251 (C) where it was held that decisions taken at the annual meeting of a medical aid scheme were not exercises of public power. in the public interest. None of these factors will necessarily be determinative; instead, a court must exercise its discretion considering their relative weight in the context’. [21] In Calibre Clinical Consultants9 this Court at para 31 cited with approval the following remarks by Lord Bingham in YL v Birmingham City Council:10 ‘[T]he role and responsibility of the state in relation to the subject matter in question . . . the nature and extent of any statutory power or duty in relation to the function in question . . . the extent to which the state, directly or indirectly, regulates, supervises and inspects the performance of the function in question, and imposes criminal penalties on those who fall below publicly promulgated standards in performing it . . . whether the function in question is one for which, whether directly or indirectly, and whether as a matter of course or as a last resort, the state is by one means or another willing to pay. . . .’ [22] This Court went on to observe (at para 38) that ‘courts have consistently looked at the presence or absence of features of the conduct concerned that is “governmental” in nature’. Relevant considerations in this regard include: ‘[a] the extent to which the functions concerned are “woven into a system of governmental control”, or [b] “integrated into a system of statutory regulation”, or [c] [that] the government “regulates, supervises and inspects the performance of the function”, or [d] it is “a task for which the public, in the shape of the state, have assumed responsibility”, or [e] it is “linked to the functions and powers of government”, or it [f] constitutes “a privatisation of the business of government itself”, or [g] it is publicly funded, or [h] there is “potentially a governmental interest in the decision-making power in question”, or [i] the body concerned is “taking the place of central government or local authorities”. . . .’ [23] To determine in this case whether the above features are present, it suffices to refer to three sections of the Schemes Management Act, the regulations promulgated in terms thereof and the conduct rules of the scheme. Government’s involvement, through the Minister of Human Settlement, is confined to the following matters: the management of the reserve fund levels (s 3); the powers, functions and composition 9 Calibre Clinical Consultants (Pty) Ltd and Another v National Bargaining Council for the Road Freight Industry and Another [2010] ZASCA 94; 2010 (5) SA 457 (SCA); [2010] 4 All SA 561 (SCA) para 31. 10 YL (by her litigation friend the Official Solicitor) v Birmingham City Council and Others [2007] 3 All ER 957 (HL). Although the remarks are in the minority judgment, on the point made by Lord Bingham the court was unanimous. of the Advisory Council (s 18) and the power to make regulations (s 18). None of these concerns or governs the relationship between bodies corporate and estate agents. [24] Therefore, when deciding to prohibit an estate agent from operating in the scheme, the trustees did not perform 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 relationship between bodies corporates and estate agents like Bae Estates. It is not an aspect 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 no ‘potentially a governmental interest in the decision-making power in question’; the body corporate is not ‘taking the place of central government or local authorities’, and, no public money is involved. [25] What is more, the trustees’ decision does not affect the public at large. The general public does not have access to the estate. In Mount Edgecombe at para 15 this Court held that ‘[i]n this context the word “public” does not include persons who are there with the permission of the owners of property within the estate’. Thus the public must be the general public, not a special class of members of the public who have occasion for business or social purposes to go to the estate. In this case, there is no doubt that estates agents such as those representing Bae Estates, are not general members of the public, but belong to the special class of members of the public who are there for business purposes. [26] I therefore conclude that the trustees did not exercise a public power or perform a public function. Whether the trustees acted in terms of any legislation or an empowering provision [27] It is important to locate the trustees’ decision to prohibit Bae Estates from operating in the scheme, within ‘an empowering provision’. In other words, under what empowering provision did the trustees act for that decision? The high court said that they acted in terms of the Schemes Management Act. In coming to this conclusion, the high court failed to appreciate that the statutory powers conferred on the trustees by the Schemes Management Act, where relevant, regulate the relationship between the body corporate and the home-owners. This case is not about that relationship. It is about a body corporate’s relationship with a third party, an estate agent. There is no provision in the Act which empowers the trustees to prohibit an estate agent from operating in the scheme. [28] The relevant sections here are ss 3 and 4. Section 3 provides for the functions of bodies corporate. In terms thereof, a body corporate must perform the functions entrusted to it by or under the Act or the rules, and such functions include the establishment of an administrative fund; the repair, maintenance, management and administration of the common property; the establishment of a reserve fund. Section 4 provides for powers of the bodies corporate. Neither of them concerns the trustees’ power to regulate the estate agents’ right to operate in sectional titles schemes.11 [29] As to the regulations promulgated in terms of the Act,12 they deal with the following issues: minimum amounts for reserve funds; other risks to be insured against; powers of a provisional curator-ad-litem and curator-ad-litem; notifications; rules and representative nature of the Advisory Council established in terms of s 18 of 11 Section 4 reads as follows: ‘Powers of bodies corporate 4. The body corporate may exercise the powers conferred upon it by or under this Act or the rules, and such powers include the power— (a) to appoint such agents and employees as the body corporate may consider fit; (b) when essential for the proper fulfilment of its duties and upon special resolution, to purchase or otherwise acquire, take transfer of, mortgage, sell, give transfer of or hire or let units; (c) to purchase, hire or otherwise acquire movable property for the use of owners for their enjoyment or protection or in connection with the enjoyment or protection of the common property; (d) where practicable, to establish and maintain on the common property suitable lawns, gardens and recreation facilities; (e) upon special resolution, to borrow moneys required by it in the performance of its functions or the exercise of its powers; (f) to secure the repayment of moneys borrowed by it and the payment of interest thereon, by notarial bond over unpaid contributions whether levied or not, or by mortgaging any property vested in it; (g) to invest any moneys of the fund referred to in section 3(1)(a); (h) to enter into an agreement with any owner or occupier of a section for the provision of amenities or services by the body corporate to such section or to the owner or occupier thereof, including, upon special resolution, the right to let a portion of the common property to any such owner or occupier by means of a lease other than a lease contemplated in section 5(1)(a); (i) to do all things reasonably necessary for the enforcement of the rules and for the management and administration of the common property. 12 The regulations were promulgated by the Minister on 7 October 2016, the Minister made regulations in terms of the Sectional Title Schemes Management Act 8 of 2011. the Schemes Management Act. Similarly, none of the regulations concern the relationship between the bodies corporate and estate agents. [30] The scheme’s conduct rules also qualify as ‘an empowering provision’, as the latter expression is defined in s 1 of PAJA as ‘a law, a rule of common-law, customary law, or an agreement, instrument or other document in terms of which an administrative action was purportedly taken’. But even here, the scheme’s conduct rules do not have any provision empowering the trustees to prohibit an estate agent from operating in the scheme. [31] The upshot of the above is that there is no ‘empowering provision’ in terms of which the trustees were entitled to take a decision to prohibit Bae Estates from operating in the scheme. The trustees were therefore not enforcing or applying any statutory or regulatory provision. [32] To sum up. The trustees’ decision is not an administrative decision envisaged in PAJA. It was thus not reviewable in terms thereof. The high court erred in concluding to the contrary. This bring me to a consideration as to whether the decision is reviewable at common law. Reviewability under the common law [33] Before us, the trustees had an about-face. They abandoned the defence adopted in the high court. To recap, that defence was that the prohibition against Bae Estates was only applicable to short-term holiday letting, and therefore, Bae Estates was entitled to operate in the scheme for other purposes such as long-term letting or sales. Counsel for the trustees was constrained to concede that the trustees’ decision amounted to a total prohibition on Bae Estates to operate in the scheme, and that: (a) the decision was taken without affording Bae Estates any hearing; (b) Bae Estates was not responsible for the sub-letting which culminated in the complaints in respect of the property, and that Bae Estates became involved only after the problems arose. [34] Despite the above, counsel submitted that the common law does not allow for the judicial review of the trustees’ decision because there is no contractual nexus between the body corporate and Bae Estates, as a result of which, Bae Estates did not have an enforceable right against the trustees to operate in the scheme. The result, counsel submitted, was that the trustees did not owe Bae Estates a duty to act fairly towards it before they terminated Bae Estates’ ability to operate in the scheme. It was therefore submitted that Bae Estates lacked locus standi to set aside the trustees’ decision. [35] Significantly, this point was not even pleaded. In paras 8-10 above, I have set out fairly comprehensively, the points in the trustees’ answering affidavit upon which they rested their defence to the application. This was not one of them. The point was raised for the first time in the application for leave to appeal. Ordinarily, a point of lack of locus standi should have been pertinently raised in the answering affidavit to enable Bae Estates to meet it, and for the high court to pronounce on it. [36] It is so that the mere fact that a point of law is raised for the first time on appeal is not in itself a sufficient reason for refusing to consider it. If the point is covered by the pleadings, and if its consideration on appeal involves no unfairness to the other party against whom it is directed, a court may in the exercise of its discretion consider the point.13 It would be unfair to the other party if the point of law and all its ramifications were not canvassed and investigated at trial.14 In this case, the point was neither covered in the affidavits, nor was it canvassed and investigated in the high court. It is, therefore, patently unfair to Bae Estates to have to be confronted with the point for the first time on appeal. For this reason alone, the locus standi point must be dismissed. But, in any event, as I show below, there is no merit to the point. [37] At common law, a person who approached a court for relief was required to have an interest in the sense of being personally adversely affected by the wrong alleged.15 In Jacobs v Waks16 this Court set out the following requirements to determine whether an applicant has the necessary locus standi to challenge an 13 Alexkor Ltd and Another v The Richtersveld Community and Others 2004 (5) SA 460 (CC); 2003 (12) BCLR 1301 (CC) para 44; Cole v Government of the Union of SA 1910 AD 263 at 273; Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA 16 (A) at 24-5; and Bank of Lisbon and South Africa Ltd v The Master and Others 1987 (1) SA 276 (A) at 290. 14 Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA); [2000] 3 All SA 181 (A) para 30; Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC) para 39. 15 See for example, Cabinet of the Transitional Government for the Territory of South West Africa v Eins 1988 (3) SA 369 (A) at 389I. 16 Jacobs and Another v Waks and Others 1992 (1) SA 521 (A) at 534A-E. impugned decision:(a) the applicant for relief must have an adequate interest in the subject-matter of the litigation, in other words, a direct interest in the relief sought; (b) such interest must (i) not be too far removed; (ii) be actual, not abstract or academic; (iii) be current, and not a hypothetical one. The Court further pointed out that issues of locus standi should be dealt with in a flexible and pragmatic manner, rather than a formalistic or technical one. [38] It brooks no debate that Bae Estates has a substantial and direct interest in the decision of the trustees, the subject-matter of this litigation, and that such interest is real and current. Bae Estates, accordingly, fulfils all of the above requirements. It was sufficiently and directly affected in its rights and legal interests by the trustees’ decision. Also, since the advent of the constitutional order, the issue of locus standi is regulated by s 38 of the Constitution,17 in terms of which the class of persons who may approach a court include ‘anyone acting in their own interest.’ Thus, at both common law and in terms of the Constitution, Bae Estates has thus established the required locus standi to challenge the validity of the decision. A contrary conclusion would be tantamount to the adoption of a ‘formalistic or technical’ approach cautioned against in Jacobs and, contrary to s 38 of the Constitution. It follows that the trustees’ contention that Bae Estates lacks locus standi, does not withstand scrutiny. Bae Estates has established an enforceable right against the trustees, and thus, the necessary standing to review the trustees’ decision at common law. [39] Bae Estates’ alleged lack of standing was the only defence proffered by the trustees on the reviewability of their decision under common law. Having found no merit in that point, it remains to decide whether the trustees’ decision is in fact, reviewable at common law. Decisions of private bodies are not immune from judicial review. The principles in this regard have mostly evolved from the so-called ‘Jockey 17 Section 38 of the Constitution states: ‘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.’ Club’ cases, where voluntary associations are required to afford their members a fair and impartial hearing before their domestic tribunals.18 Counsel for the trustees sought to distinguish these cases from the present case on two bases: first, that the trustees did not act in their capacity as a domestic tribunal. Secondly, that as members of such associations, they were persons affected by the finding of a domestic tribunal which was invalid for want of observance of the rules of natural justice. As Bae Estates was not a member of the body corporate, so it was submitted, the trustees were not obliged to observe the rules of natural justice. [40] In my view, there is no merit to either of the two propositions. As to the first, it is mechanical, and amounts to placing form over substance. It is reminiscent of, and akin to, the former classification of administrative powers and functions as ‘purely administrative’ or ‘quasi- judicial’, that was discredited and discarded in our administrative law even pre-constitutional order. The identity or form of the decision- maker is immaterial. What is important is the effect of its decision and its implications on the subject to whom it is directed. It is therefore irrelevant whether the body entrusted with the decision is styled ‘tribunal’, ‘committee’, ‘task team’, ‘board of trustees’, etc. As to the second, it is common cause that Bae Estates was directly and materially affected by the trustees’ decision. There is no rational and justifiable basis, why the rules of natural justice should not apply to the trustees’ decision. This is particularly so in circumstances where Bae Estates had, to the knowledge of the trustees, been freely operating within the scheme for at least a year. [41] I turn now to consider the grounds on which a decision of a private body can be subjected to judicial review at common law. This would be the case where a decision- maker failed to comply with the elementary principles of justice, such as for example, where the tribunal misconceives the nature and ambit of its powers, or where it acts capriciously or mala fide, or where its findings in the circumstances are so unfair that they cannot be explained unless it is presumed that the tribunal acted capriciously or with mala fides.19 18 See for example Turner v Jockey Club of South Africa 1974 (3) SA 633 (A). 19 South African Railways v Swanepoel 1933 AD 370 at 378; Theron and Others v Ring van Wellington van die NG Sendingkerk and Others 1976 (2) SA 1 (A). [42] In Johannesburg Consolidated Investment Co v Johannesburg Town Council,20 Innes CJ observed that the grounds upon which a review may be brought under common law are ‘somewhat wider’ than those that would justify a review of judicial proceedings. It is well-established that common law review, inter alia, applies also to cases where the decision under review is taken without a hearing having taken place. And, where the duty or power is created not by statute but consensually as in relation to domestic tribunals.21 [43] It is so that ordinarily, Bae Estates does not have a right to operate in the scheme. However, once it was permitted to do so by the trustees, about which there is no dispute, Bae Estates held a well-founded belief and expectation that its continued ability to operate in the scheme and service its clients there, would not be arbitrarily terminated by the trustees. Therefore, the duty on the trustees to act fairly in accordance with the tenets of natural justice came about consensually when Bae Estates was allowed to practice its occupation or profession in the scheme for over a year without hindrance. It is common cause that the decision under review was taken without affording Bae Estates a hearing in circumstances where Bae Estates was not responsible for short-term leases in the scheme. [44] As already stated, in this Court the trustees accepted that Bae Estates was not responsible for the short-term letting in the scheme. This notwithstanding, the trustees contended that they acted perfectly within their rights in prohibiting Bae Estates from operating in the scheme despite the fact that Bae Estates was not afforded an opportunity to be heard. The trustees sought to justify their conduct purely on the grounds that Bae Estates was neither an owner nor a member in the scheme, in which event they would have been obliged to afford Bae Estates a hearing. [45] The contentions advanced by the trustees entirely overlook the fact that before their decision to bar Bae Estates from operating within the scheme the latter had in pursuit of its occupation or profession enjoyed such right for over a year without hindrance. For the trustees to now contend that they were entitled, without rhyme or 20 Johannesburg Consolidated Investment Co v Johannesburg Town Council 1903 TS 111 at 115. 21 Hira and Another v Booysen NO and Another 1992 (4) SA 69 (A) at 93A-94A. reason as it turned out, to deny Bae Estates the right to continue servicing its clients in the scheme without affording Bae Estates a hearing is manifestly untenable. [46] The trustees’ decision is admittedly: (a) procedurally unfair and unreasonable; (b) without any justifiable basis and thus irrational; (c) in breach of the principles of natural justice; and (d) most importantly, unjust. The trustees’ decision is so unfair that ‘it cannot be explained unless it is presumed that they acted capriciously or with mala fides’. This is buttressed by the conduct of one of the trustees, Mr Graham Cowburn, who is an estate agent with Dogon Group Properties. His company is thus a direct competitor of Bae Estates. [47] On 22 May 2019, a day after the decision was taken to prohibit Bae Estates from operating in the scheme, Mr Cowburn addressed an email to the property owner, in which he suggested to the owner to give the mandate to find a tenant, to his company. This is a clear conflict of interest. Mr Cowburn, having been part of the decision to prohibit Bae Estates from operating in the scheme, immediately sought to benefit his company from the latter’s ‘banning’. Earlier, on 17 May 2019, he had enthusiastically agitated for Bae Estates’ prohibition from the scheme with a curt ‘Ban them!’. [48] Should the trustees’ stance prevail in these circumstances, it would mean that the court’s hands are tied in the face of an injustice. As remarked in Barkhuizen v Napier,22 the hands of justice can never be tied under our constitutional order. That would give the trustees a license to act with impunity by arbitrarily and whimsically prohibiting estate agents from operating in the scheme. Courts must endeavour to do simple justice between parties. Maripe explains it well: ‘The ends of justice should transcend the boundaries that so often restrain the courts, and it is the courts' responsibility, to rule against abuse of power and dispense justice in deserving cases, and to lay down particular rules whose effect is to promote the exercise of power or discretion in regular fashion. Doing so in relation to decisions of private bodies would not involve a “quantum leap’’, but would rather prevent injustices in demonstrably deserving cases.’23 (Footnote omitted.) 22 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC) para 73 in a contractual context. 23 B Maripe ‘Judicial Review and the Public/Private Body Dichotomy: An Appraisal of Developing [49] The facts of this case call to mind the English case of Breen v Amalgamated Engineering Union.24 The case concerned an application to review the decision of a committee of a trade union, which admittedly was made in circumstances of utmost bad faith. But the remedy for judicial review was denied because the union was a private body and not the subject of judicial review. The majority acknowledged the injustice, but considered their hands bound. Edmund Davis LJ, writing for the majority, lamented the result in the introductory paragraph of his judgment at 194: ‘I entertain substantial doubts that the judgment I am about to deliver will serve the ends of justice. That is, to say the least, a most regrettable situation for any judge, but I see no escape from it. Its effect is to throw away empty-handed from this court an appellant who, on any view, has been grossly abused. It is therefore a judgment which gives me no satisfaction to deliver.’ [50] Fortunately, the constraints which inhibited Edmund Davis LJ from doing justice between the parties, have no place in our law. In our constitutional order, private entities are not enclaves of power, immune from the obligation to act fairly, lawfully and reasonably. In the present case, it is not necessary to develop the common law, as the high court purported to do. The common law, which now yields to the Constitution and must be viewed through the prism thereof, is adequate to meet the ends of justice. It follows, in my view, that the trustees’ decision is reviewable at common law. [51] It remains to briefly dispose of a residual argument on behalf of the trustees. It was submitted that there were other remedies available to Bae Estates, such as an interdict, and a claim for damages based on unlawful interference with contractual obligations, or remedies under the anti-competition law. That may well be so. However, none of those remedies would adequately redress the effect of a permanent prohibition against Bae Estates to service clients in the scheme. A damages claim, for example, would be retrospective and limited to any clients that Bae Estates might have had at the time of the prohibition. In addition, such a damages claim might prove difficult to quantify. For future purposes, however, the permanent prohibition would still stand, and Bae Estates would be unable to service its clients in the scheme. Trends’ (2006) University Botswana Law Journal 23 at 42. 24 Breen v Amalgamated Engineering Union and others [1971] 2 QB 175. [52] In all the circumstances I am of the view that the trustees’ decision ought to be reviewed and set aside. To hold otherwise would give an imprimatur to an injustice, totally inimical to our constitutional order and values. Accordingly, the appeal cannot succeed. [53] I therefore make the following order: The appeal is dismissed with costs, including the costs of two counsel. ____________________ T M Makgoka Judge of Appeal APPEARANCES For Appellant: I Jamie SC (with him F W Landman) Instructed by: Marlon Shevelew & Associates, Cape Town, Honey & Partners, Inc., Bloemfontein. For First Respondent: R F van Rooyen SC (with him K Felix) Instructed by: C & A Friedlander Attorneys, Cape Town, Symington & De Kok, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY: JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 5 November 2021 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. The Trustees for the time being of the Legacy Body Corporate v Bae Estates and Escapes (Pty) Ltd and Another (Case no 304/2020) [2021] ZASCA 157 (5 November 2021). Today, the Supreme Court of Appeal (the Court) dismissed an appeal against an order of the Western Cape High Court, Cape Town (the high court) which had upheld an application by the first respondent, Bae Estates and Escapes (Pty) Ltd and Another (Bae Estates) to review and set aside a decision by the appellant, the Trustees for the time being of the Legacy Body Corporate (the trustees). Bae Estates is an estate agency that sells and rents properties on behalf of property owners in Cape Town and the surrounding areas. In May 2018 it was engaged by a property owner in the Legacy scheme (the scheme), to procure a tenant for his property on a long-term rental. Bae Estates secured the tenant, and a lease agreement was concluded between the tenant and the owner in July 2018. In terms of the lease agreement, among other provisions, the tenant was permitted to sub-let the property on short-term holiday lease, which the tenant himself later did, without reference to Bae Estates. Subsequently, there were complaints by some property owners about the conduct of some of the sub-tenants, including excessive noise and other unruly behaviour. The trustees were under the impression that those sub- tenants were sourced by Bae Estates, and accused it of having failed to properly vet the sub- tenants. Bae Estates pointed out to the trustees that it had nothing to do with the procurement of the sub-tenants, and that its role was limited to the procurement of the main tenant. Despite this explanation by Bae Estates, the trustees resolved to ban Bae Estates from operating in the scheme on the basis that the unruly sub-tenants were procured by it. That decision was taken without Bae Estates being afforded an opportunity to be heard. At the instance of Bae Estates, the high court reviewed and set aside the trustees’ decision in terms the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The high court also concluded that in terms of the common law, as developed by it, the trustees’ decision was reviewable. On appeal, the trustees conceded that Bae Estates had nothing to do with the unruly sub- tenants, but maintained that because they did not have a contractual relationship with Bae Estates, they had no duty to afford Bae Estates a hearing before they resolved to ban it from operating in the scheme. As to the applicability of PAJA, the SCA concluded that the conduct of the trustees did not amount to an administrative decision as envisaged in s 1 of PAJA, as the trustees’ decision (a) was not of an administrative nature; (b) was not taken in the exercise of a public power or in performance of a public function; and (c) was not pursuant to, or in terms of, any legislation or an empowering provision. Accordingly, the Court disagreed with the high court on this aspect. The SCA then considered whether the trustees’ decision was reviewable at common. After surveying the common law, the Court concluded that the common law was adequate as a basis to review the trustees’ decision, and that it was not necessary to develop the common law, as the high court purportedly did. It accordingly upheld the decision of the high court on this aspect, albeit on a different reasoning to that of the high court. As a result, the Court dismissed the trustees’ appeal with costs of two counsel. END

3501

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1029/2019 In the matter between: ANITA JULIA GENT FIRST APPELLANT BONNOX (PTY) LIMITED SECOND APPELLANT and PETER DANIËL JACOBS DU PLESSIS RESPONDENT Neutral citation: Gent and Another v Du Plessis (1029/2019) [2020] ZASCA 184 (24 December 2020) Bench: MBHA, VAN DER MERWE and MAKGOKA JJA and WEINER and SUTHERLAND AJJA Heard: 13 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10:00 am on 24 December 2020. Summary: Civil procedure – in the absence of a cross-appeal respondent not entitled to variation of the order of the court below. Company law – section 163 of Companies Act 71 of 2008 – where no case made out under s 163(1), court not empowered to grant relief in terms of s 163(2) – oppressive or unfairly prejudicial conduct not proved. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Mavundla and Mali JJ and Botes AJ, sitting as court of appeal): judgment reported sub nom Du Plessis v Bonnox Proprietary Limited and Another [2019] ZAGPPHC 515 (a) The appeal is upheld with costs, including the costs of two counsel. (b) The order of the full court is set aside and replaced by the following order: ‘The appeal is dismissed with costs.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Mbha JA (Van der Merwe and Makgoka JJA and Weiner and Sutherland AJJA concurring) [1] This appeal concerns a decision of the Full Court of the Gauteng Division of the High Court, Pretoria (Botes AJ, Mavundla and Mali JJ concurring) (the full court). It ordered the appellant, Anita Julia Gent (Ms Gent),1 to sell her majority shareholding in Bonnox (Pty) Ltd (the company) to the respondent, Pieter Daniël Jacobs du Plessis (Mr du Plessis), notwithstanding its conclusion that the respondent had not shown the requirements of s 163(1) of the Companies Act 71 of 2008 (the Act).2 1 Although the heading to the present appeal refers to both the first appellant (Anita Julia Gent) and the second appellant (Bonnox (Pty) Ltd), it is only Ms Gent who is appealing the order of the full court. 2 Section 163 of the Act provides as follows: 'Relief from oppressive or prejudicial conduct or from abuse of separate juristic personality of company (1) A shareholder or a director of a company may apply to a court for relief if— (a) any act or omission of the company, or a related person, has had a result that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant; (b) the business of the company, or a related person, is being or has been carried on or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant; or (c) the powers of a director or prescribed officer of the company, or a person related to the company, are being or have been exercised in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant. (2) Upon considering an application in terms of subsection (1), the court may make any interim or final order it considers fit, including— (a) an order restraining the conduct complained of; (b) an order appointing a liquidator, if the company appears to be insolvent; (c) an order placing the company under supervision and commencing business rescue proceedings in terms of Chapter 6, if the court is satisfied that the circumstances set out in section 131(4)(a) apply; (d) an order to regulate the company's affairs by directing the company to amend its Memorandum of Incorporation or to create or amend a unanimous shareholder agreement; (e) an order directing an issue or exchange of shares; (f) an order— (i) appointing directors in place of or in addition to all or any of the directors then in office; or (ii) declaring any person delinquent or under probation, as contemplated in section 162; (g) an order directing the company or any other person to restore to a shareholder any part of the consideration that the shareholder paid for shares, or pay the equivalent value, with or without conditions; [2] This court granted Ms Gent special leave to appeal against the order of the full court. It, however, dismissed Mr du Plessis’ application for special leave to cross-appeal against the full court’s order refusing the winding-up of the company and directing Ms Gent to sell her shares to him. In this court, Mr du Plessis conceded from the outset that the full court had erred in making the buy-out order and made it clear that he did not support it. In my view, the concession was made fairly and properly. When the full court found that the grounds relied upon by Mr du Plessis did not fall within the ambit of s 163(1) of the Act, that should have been the end of the matter. Indeed, absent the statutory criteria being fulfilled, the full court did not have jurisdiction to order Ms Gent to purchase Mr du Plessis’ minority shareholding. An applicant is only entitled to relief under s 163(1) upon satisfying the criteria set out therein. And only then is a court empowered to grant appropriate relief in terms of s 163(2) of the Act, upon the proper exercise of its discretion. There was no 'duty' on the full court whatsoever to craft a 'clean break' between the parties, purportedly in terms of s 163(2) of the Act.3 [3] Mr du Plessis’ argument in this court was that the full court should have held that he had established oppressive or unfairly prejudicial conduct under s 163(1); (h) an order varying or setting aside a transaction or an agreement to which the company is a party and compensating the company or any other party to the transaction or agreement; (i) an order requiring the company, within a time specified by the court, to produce to the court or an interested person financial statements in a form required by this Act, or an accounting in any other form the court may determine; (j) an order to pay compensation to an aggrieved person, subject to any other law entitling that person to compensation; (k) an order directing rectification of the registers or other records of a company; or (l) an order for the trial of any issue as determined by the court. (3) If an order made under this section directs the amendment of the company's Memorandum of Incorporation— (a) the directors must promptly file a notice of amendment to give effect to that order, in accordance with section 16(4); and (b) no further amendment altering, limiting or negating the effect of the court order may be made to the Memorandum of Incorporation, until a court orders otherwise.’ 3 Du Plessis v Bonnox Proprietary Limited and Another [2019] ZAGPPHC 515 para 67. and, on that basis, should have directed Ms Gent to purchase his shares in the company. A draft order was prepared and attached to the respondent’s heads of argument, in which it was proposed that Ms Gent be directed to purchase the respondent's shares in the company at fair value, calculated pro rata to the total issued share capital of the company. After setting out the background of the matter, I shall first consider the impact of the refusal of leave to cross-appeal on this argument and thereafter whether the requirements of s 163(1) of the Act had been proved. [4] The company was established by Ms Gent’s father, Mr Volker Herman Schadewaldt (Mr Schadewaldt), in 1957 and in due course became a highly profitable company. Its business is the manufacturing of fencing. Mr Schadewaldt was for the better part of his life the majority shareholder of the company and also its managing director, until he retired in 2010. During 1994 Mr Schadewaldt transferred 15 shares in the company to Mr du Plessis. In 1998 he transferred the rest of his shares in the company as follows: 80 shares to Ms Gent; a further 45 shares to Mr du Plessis; and 10 shares to the company’s accountant, Mr Smith. As a result of her majority shareholding, Ms Gent became the company’s sole director until she resigned of her own accord on 18 January 2012. During 2012 Mr du Plessis also acquired the shares of Mr Smith. In the result, Mr du Plessis and Ms Gent became the sole shareholders in the company. Ms Gent holds 53.33 percent of the issued share capital in the company while Mr du Plessis holds the remaining 46.67 percent. Ms Gent was re-appointed as a director of the company on 18 January 2013. [5] Mr du Plessis was employed by the company from 1986, where he started as a fitter and turner. He was promoted to general manager during 2010 and, ultimately, was appointed as a director during 2012, when Ms Gent resigned as such. He was, however, removed as a director at a meeting of the shareholders on 6 March 2013. Mr du Plessis was subsequently suspended and, after being found guilty on four counts of gross misconduct (one of which involved dishonesty) at a disciplinary hearing, dismissed as an employee during August 2014. [6] The charges against Mr du Plessis arose after Ms Gent’s uncovering, upon her return to the company in 2013, of a number of irregularities committed by Mr du Plessis. These included that Mr du Plessis, who occupied a position of trust in the company at the time, conducted his own private business, ‘Blumnet’, whose business was producing a woven mesh fence similar to the one manufactured by the company, by making use of the resources of the company. In the process, Blumnet was also used by Mr du Plessis to commit a fraud against the fiscus. In this regard, Mr du Plessis engineered a simulated transaction in which an invoice, in the sum of R641 293, was issued in the books of Blumnet and addressed to the company as if to reflect an honest exchange of services for money. Significantly, Mr du Plessis admitted to this misconduct. [7] Even more serious was when, on 5 March 2013, the day before the shareholders’ meeting where a resolution for his removal as a director was to be tabled, Mr du Plessis maliciously and surreptitiously obtained an order placing the company in business rescue. This was an attempt to prevent a majority resolution to remove him as director. He abused his position of trust and manipulated two employees to bring the application for business rescue in their names. The business rescue order was subsequently set aside at the instance of Ms Gent in an urgent application on 2 April 2013, despite the application being vigorously opposed by Mr du Plessis. In rescinding the order, the court made a punitive costs order, on the attorney and own client scale, against the employees who had brought the application. As I have said, these employees were merely Mr du Plessis' proxies. Ultimately, and as a gesture of goodwill in an attempt to reconcile with Mr du Plessis, Ms Gent paid 71 percent of these costs from her own funds. Significantly, Mr du Plessis conceded that the manner in which the application for business rescue was launched, ie without Ms Gent's knowledge, as obviously an interested party, was ill-advised and ultimately fatal to that application. [8] On 30 June 2014, Mr du Plessis brought an application in the Gauteng Division of the High Court for an order that the company be wound up on the basis that it was just and equitable to do so, as envisaged in s 344(h) of the Companies Act 61 of 1973 (the old Companies Act), read together with item 9 of Schedule 5 of the Act. In the alternative, he sought an order directing Ms Gent to purchase his shareholding in the company, at a price to be determined by an independent expert. He further sought an order that certain machinery be returned to him, but this aspect was disputed and was accordingly referred to trial. However, nothing turns on this issue in the present appeal and it need not detain us further. [9] Mr du Plessis’ grounds for seeking to liquidate the company were, briefly: that it was a ‘private domestic company’ whose affairs had been conducted in a manner akin to that of a partnership; that his relationship with Ms Gent as co-shareholders of the company had broken down irretrievably; that Ms Gent had excluded him from the management of the company and from its board of directors; that a ‘deadlock’ had arisen between the shareholders of the company which was not capable of resolution; and that Ms Gent’s conduct was oppressive in nature in that it undermined his rights as the minority shareholder of the company. [10] In pursuance of the alternative relief that Ms Gent be directed to purchase his shares in the company, Mr du Plessis sought to invoke the provisions of s 163 of the Act. He alleged that Ms Gent, in her capacity as the majority shareholder and director of the company, had acted in an unfairly prejudicial and oppressive manner towards him. [11] The application came before Hughes J on 30 March 2016. The learned Judge held that although the company was akin to a partnership, it was a solvent domestic company whose substratum remained intact. Although the relationship between the two shareholders had broken down irretrievably, and was not capable of being resolved, the court a quo found that there was no deadlock that rendered it just and equitable to wind up the company. Applying the so-called 'clean hands' principle the court further found that, as Mr du Plessis had through his own conduct caused the breakdown in the shareholders’ relationship, he was not entitled to apply for the winding up of the company on the just and equitable ground.4 [12] In respect of the s 163 relief, Hughes J found that Mr du Plessis had not established the requisites for that section to be invoked. The court found, in particular, that neither Mr du Plessis’ alleged loss of confidence in the manner in which the company’s affairs were being conducted, nor his resentment at having been outvoted, fell within the purview of s 163 of the Act. The court accordingly dismissed the winding up application with costs. 4 Emphy and Another v Pacer Properties (Pty) Ltd 1979 (3) SA 363 (D) at 368E-H. [13] With the leave of this court,5 Mr du Plessis appealed to the full court which, on 18 April 2019, dismissed his appeal against the refusal of the court a quo to order the winding up of the company. It rejected the submission that the relationship between the parties resembled a partnership between shareholders. It held that it could not be said that the company was, in substance, a partnership in the guise of a private company. [14] The full court also upheld the court a quo’s finding that Mr du Plessis had failed to prove the requisites of s 163(1) of the Act. As I have indicated, the full court nevertheless went on to grant relief in terms of s 163(2) of the Act, holding that it was duty-bound to design or craft a mechanism which would result in a 'clean break' between the parties. It justified this approach on the ground that the relationship between the parties had broken down irretrievably and that it was not in their best interests to remain ‘in the same bed’.6 The full court thus directed Mr du Plessis to purchase Ms Gent’s shares at a fair and reasonable value. [15] As mentioned above, Mr du Plessis' application for special leave to cross-appeal was refused by this court. This had a significant impact on the matter. In Shatz Investments (Pty) Ltd v Kalovyrnas7 this court was confronted with the question whether, without any cross-appeal, it could correct an order of a trial court by making a prayer for interest, which that court had not granted. Trollip JA said the following: 5 Mr du Plessis’ application for leave to appeal was dismissed by the court a quo on 27 May 2016. He thereafter applied to this court for leave to appeal in terms of s 17(2)(b) of the Superior Courts Act 10 of 2013, which application was granted on 13 September 2016. 6 See Du Plessis (above fn 3) para 67. 7 Shatz Investments (Pty) Ltd v Kalovyrnas 1976 (2) SA 545 (A). ‘…The court a quo did not award it, possibly because it was not claimed in the pleadings. But, be that as it may, in the absence of any cross-appeal to correct the order of the court a quo to plaintiff’s advantage and defendant’s detriment by including an award of such interest, we cannot deal with it…’8 [16] This dictum reaffirmed trite principles. These are that a respondent in an appeal may support the order appealed against on any ground that properly appears from the record. In order to obtain a variation of the order, however, a respondent must cross-appeal with the necessary leave, save perhaps in exceptional circumstances where there is no prejudice to the appellant. [17] The application of these principles to the present matter has the following consequences. In the first instance, the option to liquidate the company is no longer available. Importantly, what Mr du Plessis seeks is that instead of him buying Ms Gent’s shares, which is what the full court ordered, she in fact be ordered to buy his shares. It is clear from the record that the purchase price would be in the range of R20 million to R35 million, an amount Ms Gent has clearly stated she could not afford. Such a variation will, without a doubt, be to her detriment. Therefore, Mr du Plessis was precluded from seeking an order that Ms Gent be directed to purchase his shares. And, as I have said, Mr du Plessis expressly disavowed reliance on the order that obliges him to purchase Ms Gent’s shares. It follows that, for this reason alone, the appeal should succeed and the order of Hughes J should be reinstated. In any event, for the reasons that follow, Mr du Plessis did not show oppressive or unfairly prejudicial conduct on the part of Ms Gent. 8 Ibid at 560G-H. [18] As stated already, Mr du Plessis relied in this court on the following grounds in support for the relief he applied for as provided in s 163 of the Act: (a) Ms Gent had excluded him from the management of the company and refused to provide him with management and financial information relating to the company; (b) Ms Gent excluded him from any decision making within the company; (c) Ms Gent removed him as a director of the company and replaced him with her husband and brother-in-law, and also unlawfully and unfairly dismissed him from employment with the company. [19] The full court upheld the finding of the court a quo that Mr du Plessis had failed to demonstrate that Ms Gent's conduct towards him was oppressive or unfairly prejudicial, or that his interests had been unfairly disregarded. It found that the grounds relied upon by Mr du Plessis did not fall within the ambit of s 163(1) of the Act. [20] In my view, this finding by the full court cannot be faulted. It is bolstered by the following objective facts: (a) Mr du Plessis was validly removed as a director of the company at a properly constituted shareholders' meeting, and as provided in s 71 of the Act. (b) As a shareholder, Mr du Plessis is at liberty and entitled to the management and financial information pertaining to the company as provided in s 26 of the Act. (c) Mr du Plessis is entitled to dispose of his shares in the company in accordance with the provisions of paragraph 11(d) of the Company's Articles of Association.9 (d) Mr du Plessis was dismissed after being found guilty of misconduct in a disciplinary hearing. Clearly, the dismissal as general manager did not constitute conduct that fell within the ambit of s 163(1). (e) In respect of the removal of Mr du Plessis as a director of the company, the starting point is that the mere exercise of majority shareholding voting rights does not amount to oppression. Counsel for Mr du Plessis fairly recognised that for the removal as director to fall under s 163(1), Mr du Plessis had to prove some agreement or understanding that he would be entitled to directorship of the company. There was no proof of such agreement or understanding. The objective facts indicated the converse. Mr du Plessis made no capital contribution that could entitle him a seat on the board of the company. Even though Mr du Plessis had received the bulk of his shares during 1998, he was only appointed a director during 2012. Ms Gent nominated him as director when she resigned as the sole director of the company. Within a year, however, Ms Gent was reappointed and proceeded to take steps to remove Mr du Plessis. Thus, he was permitted to be a director only for the period of approximately a year. 9 Paragraph 11(d) provides that a shareholder, desirous of selling his or her own shares to any person other than a member of his or her family, must: '… first offer such shares in writing to any of the other shareholders of the company at a price to be agreed upon between the shareholder desiring to sell and the other shareholder, but failing such agreement then at the same price as may be bona fide obtained elsewhere by the shareholder proposing to sell. The price so obtainable elsewhere shall be evidenced in writing by the prospective purchaser.' [21] Viewed in the light of the above considerations, the full court clearly misdirected itself in making the order that Ms Gent be ordered to sell her majority shareholding to Mr du Plessis. It ought simply to have dismissed Mr du Plessis’ appeal. It follows, accordingly, that Ms Gent’s appeal must succeed. [22] In the circumstances the following order is made: (a) The appeal is upheld with costs, including the costs of two counsel. (b) The order of the full court is set aside and substituted with the following: ‘The appeal is dismissed with costs.’ _________________ B H Mbha Judge of Appeal APPEARANCES For First Appellant: M P van der Merwe SC (with him N Komar) Instructed by: Waldick Jansen van Rensburg Inc., Centurion Symington De Kok Attorneys, Bloemfontein For Respondent: B H Swart SC (with him R Oosthuizen) Instructed by: Jarvis Jacobs Raubenheimer Inc., Pretoria Rossouw Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 24 December 2020 Status: Immediate Gent and Another v Du Plessis (1029/2019) [2020] ZASCA 184 (24 December 2020) The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against a decision of the Full Court of the Gauteng Division of the High Court, Pretoria (Botes AJ, Mavundla and Mali JJ concurring), which involved an application for the winding up of a company and, in the alternative, for relief from oppressive or prejudicial conduct under section 163 of the Companies Act 71 of 2008 (the Act). The SCA had granted the first appellant, Ms Anita Julia Gent, special leave to appeal the order of the full court; and denied the respondent, Mr Pieter Daniël Jacobs du Plessis, special leave to cross-appeal against that order. The matter concerned the shareholding of Ms Gent and Mr du Plessis in the second appellant, Bonnox (Pty) Ltd (the company). The company was established in 1957 by Ms Gent’s father (Mr Schadewaldt), who was the majority shareholder and also the managing director until his retirement in 2010. During 1994 Mr Schadewaldt transferred 15 shares in the company to Mr du Plessis. In 1998 he transferred the rest of his shares in the company as follows: 80 shares to Ms Gent; a further 45 shares to Mr du Plessis; and 10 shares to the company’s accountant, Mr Smith. As a result of her majority shareholding, Ms Gent became the company’s sole director until she resigned of her own accord on 18 January 2012. During 2012 Mr du Plessis also acquired the shares of Mr Smith. Ms Gent and Mr du Plessis thus became the sole shareholders in the company, Ms Gent holding 53.33 percent and Mr du Plessis the remaining 46.67 percent. Ms Gent was re-appointed as a director of the company on 18 January 2013. Mr du Plessis was employed by the company from 1986, where he started as a fitter and turner. He was promoted to general manager during 2010 and, ultimately, was appointed as a director during 2012, when Ms Gent resigned as such. He was, however, removed as a director at a meeting of the shareholders on 6 March 2013. Mr du Plessis was subsequently suspended and, after being found guilty on four counts of gross misconduct (one of which involved dishonesty) at a disciplinary hearing, dismissed as an employee during August 2014. Amongst other things, Ms Gent had uncovered that Mr du Plessis engineered a simulated transaction for his own benefit and to the detriment of the company; and that he maliciously and surreptitiously obtained an order placing the company in business rescue, one day before the shareholders’ meeting where a resolution for his removal as a director was to be tabled, in an attempt to avoid his imminent removal. On 30 June 2014, Mr du Plessis brought an application in the Gauteng Division of the High Court for an order that the company be wound up on the basis that it was just and equitable. In the alternative, he sought an order directing Ms Gent to purchase his shareholding in the company at a price to be determined by an independent expert. The alternative relief was sought on the basis of Mr du Plessis’ allegation that Ms Gent, in her capacity as the majority shareholder and director of the company, had acted in an unfairly prejudicial and oppressive manner towards him. The court a quo (Hughes J) dismissed the application with costs on 30 March 2016. It found that although the relationship between the two shareholders had broken down irretrievably, and was not capable of being resolved, there was no deadlock that rendered it just and equitable to wind up the company. It was Mr du Plessis’ own conduct that caused the breakdown in the shareholders’ relationship and he was thus furthermore precluded from relying on the just and equitable ground by the doctrine of unclean hands. In respect of the relief sought under section 163, Mr du Plessis had not established the requisites for that section to be invoked: neither his alleged loss of confidence in the manner in which the company’s affairs were being conducted, nor his resentment at having been outvoted, fell within the purview of s 163 of the Act. Mr du Plessis appealed to the full court which, on 18 April 2019, upheld the court a quo’s finding that Mr du Plessis had failed to prove the requisites of s 163(1) of the Act and consequently dismissed the appeal. It nevertheless went on to grant relief in terms of s 163(2) of the Act, holding that it was duty-bound to design or craft a mechanism that would result in a 'clean break' between the parties. It justified this approach on the ground that the relationship between the parties had broken down irretrievably and that it was not in their best interests to remain ‘in the same bed’. The full court accordingly directed Mr du Plessis to purchase Ms Gent’s shares at a fair and reasonable value. On appeal to the SCA it was held that, due to his application for special leave to cross-appeal having been refused, Mr du Plessis was precluded from obtaining a variation of the order of the full court. The SCA confirmed Appellate Division authority for the point that, in the absence of a cross-appeal, a respondent is not entitled to an advantageous variation of the order of the court below, save perhaps for exceptional circumstances where there is no detriment to the appellant. This was not without significant ramifications. For one, the option to liquidate the company was no longer available. Secondly, what Mr du Plessis sought was, instead of him buying Ms Gent’s shares, which is what the full court ordered, that she in fact be ordered to buy his shares. However, Ms Gent had already indicated that this was not within her means and it was clear that such a variation would undoubtedly be to her detriment. Mr du Plessis was therefore precluded from seeking an order that Ms Gent be directed to purchase his shares and, on this ground alone, the appeal was good. The SCA nevertheless found that Mr du Plessis had failed to show oppressive or unfairly prejudicial conduct on the part of Ms Gent, as the full court had found, and bolstered this finding with objective facts. The SCA concluded that the full court had clearly misdirected itself in making the order that Ms Gent be ordered to sell her majority shareholding to Mr du Plessis. In the result, the appeal was upheld with costs, including those of two counsel. The order of the full court was set aside and the order of the court a quo (Hughes J) reinstated. ________________________________________

4053

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1216/21 In the matter between: MOSSELBAAI BOEREDIENSTE (PTY) LTD t/a MOSSELBAAI TOYOTA APPLICANT and OKB MOTORS CC t/a BULTFONTEIN TOYOTA RESPONDENT Neutral citation: Mosselbaai Boeredienste (Pty) Ltd v OKB Motors CC (Case no 1216/21) [2023] ZASCA 91 (09 June 2023) Coram: MOCUMIE, SCHIPPERS, CARELSE, MEYER and GOOSEN JJA Heard: 04 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 09June 2023. Summary: Civil procedure – failure to comply with the rules of court – appeal lapsing – application for condonation and reinstatement of appeal – factors to be considered – strong prospects of success on appeal may trump unsatisfactory explanation – special leave granted – matter referred to the full court to determine the merits of the appeal. _____________________________________________________________ ORDER _____________________________________________________________ On appeal from: Free State Division of the High Court, Bloemfontein (Naidoo J and De Kock AJ, sitting as a court of appeal): Special leave to appeal is granted. The appeal (in respect of the condonation application) is upheld, with costs. The order of the high court, dismissing the application for condonation with costs, is set aside and replaced with the following order: ‘(a) Mosselbaai Boeredienste (Pty) Ltd is granted condonation for its failure to comply with the provisions of uniform rules 50(4)(a), 50(7)(a) and 7(2). (b) The appeal is reinstated.’ The matter is referred to the full court of the Free State Division of the High Court, Bloemfontein to determine the merits of the appeal. _____________________________________________________________ JUDGMENT _____________________________________________________________ Carelse JA (Mocumie, Schippers, Meyer and Goosen JJA concurring) [1] This is an application for special leave to appeal against the order of the full bench of the Free State Division of the High Court, Bloemfontein (Naidoo J and De Kock AJ), delivered on 18 November 2021 (the high court). That court dismissed the application for condonation of the late prosecution of the appeal. On further application to this Court for special leave to appeal, the application was referred for oral hearing in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. The parties were directed to be prepared, if called upon to do so, to address this Court on the merits. [2] The following facts are common cause. On 7 February 2018, the applicant, Mosselbaai Boeredienste (Pty) Ltd t/a Mosselbaai Toyota (plaintiff) and the respondent, OKB Motors CC t/a Bultfontein Toyota (defendant), both motor dealers, concluded an interdealership agreement in terms of which the respondent bought a Toyota Etios motor vehicle (the vehicle) from the plaintiff for resale. [3] On the same day, Mrs Steyn, an employee of the defendant, received an invoice from Mr Maritz, the plaintiff’s sales manager’s email address, namely sales2@mbtoyota.co.za. On 8 February 2018, the vehicle was delivered to the defendant but the plaintiff did not receive payment of the purchase price of R159 353.76. The defendant paid the purchase price into an incorrect bank account because the invoice which was emailed to it was intercepted by an unknown third party who fraudulently changed the defendant’s bank details on the plaintiff’s invoice, and obtained receipt of the money. [4] On 8 February 2018, Mrs Steyn emailed proof of payment for the vehicle which reflected the incorrect bank details, which was once again intercepted by an unknown third party who changed the incorrect bank details to the correct bank details that caused the plaintiff to believe that the defendant had correctly made payment for the vehicle. It is not disputed that the standard practice in the motor dealership industry is that a vehicle is only released upon proof of payment. [5] The plaintiff instituted an action in the magistrates’ court for payment of the amount of R159 353.76, the purchase price of the vehicle. The defendant raised a special plea of estoppel by representation. The court a quo upheld the special plea and dismissed the plaintiff’s case. Dissatisfied with the outcome, the plaintiff appealed to the high court. On 19 April 2021, the plaintiff noted its appeal timeously in terms of rule 51(3) of the Magistrates’ Court’s Rules of Court.1 [6] A party who wishes to pursue an appeal to the high court must file a notice contemplated in rule 50(4)(a)2 for the assignment of a date for the hearing of the appeal, within 40 days of the noting of the appeal. It is common cause that the plaintiff failed to do so. In the result, the appeal lapsed. The plaintiff had to lodge with the registrar two copies of the record of appeal timeously in terms of rule 50(7)(a).3 This was not done. The plaintiff also sought condonation to file a power of attorney in terms of rule 7(2),4 authorising the plaintiff’s attorney to lodge an appeal. 1 Rule 51(3) of the Magistrates’ Court’s Rules provides that ‘[a]n appeal may be noted within 20 days after the date of a judgment appealed against or within 20 days after the registrar or clerk of the court has supplied a copy of the judgment in writing to the party applying therefor, which ever period shall be the longer.’ 2 Rule 50(4)(a) of the Uniform Rules of Court provides that ‘[t]he appellant shall, within 40 days of noting the appeal, apply to the registrar in writing and with notice to all other parties for the assignment of a date for the hearing of the appeal and shall at the same time make available to the registrar in writing his full residential and postal addresses and the address of his attorney if he is represented.’ 3 Rule 50(7)(a) of the Uniform Rules of Court provides that ‘[t]he applicant shall simultaneously with the lodging of the application for a date for the hearing of the appeal referred to in subrule (4) lodge with the registrar two copies of the record: Provided that where such an appeal is to be heard by more than two judges, the applicant shall, upon the request of the registrar, lodge a further copy of the record for each additional judge.’ 4 Rule 7(2) of the Uniform Rules of Court provides that ‘the registrar shall not set down any appeal at the instance of an attorney unless such attorney has filed with the registrar a power of attorney authorising him to appeal and such power of attorney shall be filed together with the application for a date of hearing.’ [7] It is not disputed that the plaintiff failed to prosecute its appeal within 60 days of the noting thereof. The appeal lapsed on 14 July 2021. The plaintiff filed the record of appeal on 20 July 2021. A further complaint of the defendant was that the plaintiff did not file a power of attorney. On 2 August 2021, the appeal was enrolled for hearing on 15 November 2021. On 17 August 2021, the plaintiff launched an application for condonation of its non-compliance with the above-mentioned Rules of Court, and if successful, the reinstatement of the appeal. The defendant opposed the application on the basis of the tardiness of the plaintiff’s attorney and the lack of prospects of success. [8] The high court directed that the application for condonation be heard first and the appeal itself at a later stage, depending on the outcome of the condonation application. On 18 November 2021, the high court dismissed the application for condonation with costs. [9] The reasons for the delay and non-compliance with the rules have been dealt with extensively in the judgment of the high court and need not be repeated. It was not seriously contested that the delay in finalising the preparation of the record should be laid at the door of the transcribers. The record shows that there are two reasons why the high court refused the application for condonation and reinstatement of the appeal. The first is that there were no prospects of success on appeal; and the second, that the plaintiff failed to file a power of attorney in terms of rule 7(2). [10] As to the first reason, the high court indicated it would have granted the application for condonation, but for the lack of prospects of success. Regarding the second, it appears that a power of attorney is not required in order to reinstate an appeal. Thus, the main issue for determination is whether the plaintiff established reasonable prospects of success on appeal. [11] Where special leave is sought, as in this case, the existence of reasonable prospects of success is insufficient, ‘[s]omething more, by way of special circumstances is needed’.5 The principles underlying an application for condonation, in the context of a reinstatement of an appeal is that the court has a discretion which must be exercised judicially. The Constitutional Court has held that: ‘. . . the standard for considering an application for condonation is the interests of justice. Whether it is in the interests of justice to grant condonation depends on the facts and circumstances of each case. Factors that are relevant to this enquiry include but are not limited to the nature of the relief sought, the extent and cause of the delay, the effect of the delay on the administration of justice and other litigants, the reasonableness of the explanation for the delay, the importance of the issue to be raised in the intended appeal and the prospects of success.’6 It is trite that strong prospects of success can often overcome a poor explanation for any delays. Differently stated, strong prospects of success may trump an unsatisfactory explanation for the delay.7 5 Including: ‘. . . that the appeal raises a substantial point of law; or that the prospects of success are so strong that a refusal of leave would result in a manifest denial of justice; or that the matter is of very great importance to the parties or to the public.’ Cook v Morrison and Another [2019] ZASCA 8; [2019] 3 All SA 673; 2019 (5) SA 51 (SCA) para 8. 6 Van Wyk v Unitas Hospital and Another [2007] ZACC 24; 2008 (2) SA 472 (CC); 2008 (4) BCLR 442 (CC) para 20; Brummer v Gorfil Brothers Investments (Pty) Ltd and Others [2000] ZACC 3; 2000 (2) SA 837 (CC); 2000 (5) BCLR 465 (CC) para 3; PAF v SCF [2022] ZASCA 101 2022 (6) SA 162 (SCA). 7 Valor IT v Premier, North West Province and Others [2020] ZASCA 62; [2020] 3 All SA 397; 2021 (1) SA 42 (SCA) 42 (SCA) para 38. [12] There are four issues to consider in the present matter in determining whether there are prospects of success in the appeal. At the outset, it must be emphasised that this Court is not making any findings on these issues: it is only necessary to determine whether they demonstrate reasonable prospects of success. First, the defendant raised the defence of estoppel which was upheld by the court a quo. The defendant’s case is that the plaintiff had negligently misrepresented to the defendant that the banking details on its invoice were the correct banking details. It is common cause between the IT experts that the interception was on the side of the plaintiff, in other words, the plaintiff’s email system was ‘spoofed’.8 The plaintiff was aware of cybercrime in the motor industry, and failed to take measures to guard against this. As a result, the court a quo held that the plaintiff was estopped from denying that the altered bank details were not those of the plaintiff. Mr Oliver (for the defendant) testified that before he had authorised the electronic transfer of funds to the plaintiff, he had specifically asked Mrs Steyn, the sales assistant (for the defendant) whether she had verified the correctness of the plaintiff’s bank details, which she confirmed. However, when she testified, she denied this. This material contradiction was not considered by the court a quo. [13] Second, the court a quo failed to consider whether the alleged negligence was the proximate cause of the payment having been electronically transferred by the defendant into the incorrect banking account. Third, the 8 In the Oxford Learners Dictionary, ‘spoofed’ is defined as the practice of sending emails that appear to come from somebody’s email address. https://www.oxfordlearnersdictionaries.com/definition/english/spoof 2?q=spoofed. Accessed on 30 May 2023. court a quo failed to consider whether the damage or loss that was caused by the third party (the interceptor), was foreseeable. [14] Fourth, the facts in this case may be akin to the interception of cheques. It is well known that banking systems are targeted by criminals. Cheques, which were once the preferred method of payment, have become obsolete. In Eriksen Motors (Welkom) Ltd v Protea Motors, Warrenton and Another,9 the principles to be applied in cases where cheques have been intercepted in the post and misappropriated by a thief have been reaffirmed thus: when a debtor tenders payment by cheque, and the creditor accepts it, the payment remains conditional and is only finalised once the cheque is honoured. Any risk of fraudulent misappropriation should be borne by the debtor since it is the debtor’s duty to seek out its creditor. But where the creditor stipulates the mode of payment and the debtor complies with it, any inherent risk in the stipulated method is for the creditor’s account. [15] In Galactic Auto Pty Ltd v Andre Venter,10 the creditor sent the debtor an invoice via email and thereafter sent the debtor its bank details. Unfortunately, the email was intercepted and the debtor received the email with incorrect banking details into which it made an electronic transfer of the amount as per the invoice. The court relied on the decision of Mannesmann Demag (Pty) Ltd v Romatex Ltd and Another,11 and found in favour of the creditor. 9 Eriksen Motors (Welkom) Ltd v Protea Motors, Warrenton and another [1973] 4 ALL SA 116 (A). See a more recent judgment, Stabilpave (Pty) Ltd v South African Revenue Services [2013] ZASCA 128; 2014 (1) SA 350 (SCA) para 9. 10 Galactic Auto v Pty Ltd v Andre Venter [2019] ZALMPPHC 27. 11 Mannesmann Demag (Pty) Ltd v Romatex Ltd and Another [1988] 2 ALL SA 353 (D). [16] The question that arises in this case is whether the same legal principles should find application, namely where the debtor remains liable until payment has been credited to the creditor’s bank account. The question concerning the interception of a creditor’s banking details sent by electronic means has yet not been decided by this Court. [17] A further reason for granting special leave to appeal, is that there are conflicting high court judgments on the question as to who should bear the loss where a payment is electronically made to a creditor, which is fraudulently intercepted by a third party. This Court was referred to some of those conflicting judgments. In Andre Kock en Seun Vrystaat (Pty) Ltd v Snyman N.O,12 the high court held that the debtor is responsible for verifying the creditor’s banking details. In Hawarden v Edward Nathan Sonnenbergs Inc ,13 the high court held that the defendant had a general duty of care to the plaintiff, the purchaser of immovable property, and concluded that the purchaser could not be held liable for the electronic transfer of funds into a banking account where the bank details had been fraudulently changed. In Gerber v PSG Wealth Financial Planning (Pty) Ltd,14 the high court held that ‘[t]he proximate cause of the loss was not the hacking, it was the failure to employ the necessary and contractually prescribed vigilance when monies held in trust were paid into a different account’.15 In Hartog v Daly,16 the high court held that the electronic transfer of funds into the incorrect account did not absolve the debtor from payment. 12 Andre Kock en Seun Vrystaat (Pty) Ltd v Willem Stephanus Snyman N.O and Another [2022] ZAFSHC 161 para 9. 13 Hawarden v Edward Nathan Sonnenbergs Inc [2023] ZAGPJHC 14; [2023] 1 All SA 675 (GJ) para 122. 14 Gerber v PSG Wealth Financial Planning (Pty) Ltd [2023] ZAGPJHC 270. 15 Ibid para 90. 16 Hartog v Daly [2023] ZAGPJHC 40; [2023] 2 All SA 156 (GJ). [18] The applicant thus established reasonable prospects of success on appeal. It is appropriate that the matter be referred to a full court of the Free State Division of the High Court, Bloemfontein to determine the merits of the appeal. [19] In the result, the following order is made: Special leave to appeal is granted. The appeal (in respect of the condonation application) is upheld, with costs. The order of the high court, dismissing the application for condonation with costs, is set aside and replaced with the following order: ‘(a) Mosselbaai Boeredienste (Pty) Ltd is granted condonation for its failure to comply with the provisions of uniform rules 50(4)(a), 50(7)(a) and 7(2). (b) The appeal is reinstated.’ The matter is referred to the full court of the Free State Division of the High Court, Bloemfontein to determine the merits of the appeal. ________________________ Z CARELSE JA JUDGE OF APPEAL Appearances For appellant: C D Pienaar Instructed by: Oosthuizen Marais & Pretorius Inc, Mosselbaai Phatshoane Henney, Bloemfontein For respondent: A P Berry Pieter Badenhorst Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 9 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 Mosselbaai Boeredienste (Pty) Ltd v OKB Motors CC (Case no 1216/21) [2023] ZASCA 91 (09 June 2023) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Free State Division of the High Court, Bloemfontein (high court). The order of the high court was replaced with one granting condonation for failure to comply with the provisions of the Uniform Rules of Court (rules) and reinstated the appeal. The matter was referred back to the high court for determination of the merits. The appeal revolved around an interdealership agreement between the applicant and respondent (plaintiff and defendant in the court a quo) for the purchase of a motor vehicle. The motor vehicle was purchased and delivered, and the purchase price transferred. However, the purchase price was never received as the provided invoice was intercepted and altered by a third party who ultimately obtained receipt of the money. The proof of payment sent by the defendant was again intercepted by the same third party who altered the fraudulent payment details to the correct details, causing the defendant to believe that the payment was correctly made. Proceedings commenced in the magistrates’ court (court a quo), which dismissed the matter. It proceeded upon appeal to the high court. However, a party who wished to pursue an appeal to the high court should have, inter alia, complied with the rules regulating appeal proceedings. Having considered the matter, the high court dismissed the application for condonation and reinstatement of the appeal on the grounds that there were no reasonable prospects of success. The plaintiff proceeded to apply for special leave to appeal to the SCA. Principally, the SCA maintained that where special leave is sought, the existence of reasonable prospects of success is insufficient – something more, by way of special circumstances was required. The principles underlying an application for condonation, in the context of a reinstatement of an appeal, has always been that the court had a discretion which should have been exercised judicially. As such, the appeal hinged on four considerations. The first was that the respondent, in the court a quo, raised the defence of estoppel with regards to the negligent misrepresentation of the banking details. A material contradiction relevant to this consideration was not considered by the court a quo. Second, the court a quo failed to consider whether the alleged negligence was the proximate cause of the payment having been electronically transferred by the defendant into the incorrect banking account. Third, the court a quo failed to consider whether the damage or loss that was caused by the third party was reasonably foreseeable and fourth, it was unclear whether the debtor ought to have remained liable for payment until such payment had been credited to the creditors account. After examining authority on the considerations at hand, the SCA determined that the plaintiff established reasonable prospects of success on appeal and that the matter should be heard by a full court on appeal. In the result, the order of the high court was replaced with one granting condonation for failure to comply with the provisions of the rules and reinstated the appeal. ~~~~ends~~~~

2870

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 425/2012 Reportable In the matter between: IVAN MYERS APPELLANT and THE NATIONAL COMMISSIONER OF THE SOUTH AFRICAN POLICE SERVICE FIRST RESPONDENT THE SAFETY AND SECURITY SECTORAL BARGAINING COUNCIL SECOND RESPONDENT ADVOCATE COEN de KOCK (N.O) THIRD RESPONDENT Neutral citation: Myers v National Commissioner of the SAPS (425/2012) [2012] ZASCA 185 (29 November 2012) Coram: Mthiyane DP, Mhlantla and Pillay JJA and Plasket and Swain AJJA Heard: 5 November 2012 Delivered: 29 November 2012 Summary: Policeman ─ holding rank of Superintendent ─ with 28 years unbroken service with the South African Police Service ─ dismissed from employ for misconduct relating to issuing a media statement in breach of a Standing Order ─ whether dismissal reasonable in the circumstances. _____________________________________________________________________ ORDER On appeal from: Labour Appeal Court, (Waglay DJP, Molemela and Zondi AJJA sitting as court of appeal): 1. The appeal succeeds with costs. 2. The order of the Labour Appeal Court is set aside and replaced with the following: ‘(i) The first respondent’s dismissal is declared to have been substantively unfair; (ii) The appellant is ordered to reinstate the first respondent to the position he held before the first respondent’s dismissal; (iii) The order in (ii) above is to operate with retrospective effect to the date of dismissal; (iv) The first respondent is given a final written warning valid for a period of 12 (twelve) months from the date of this order; (v) No order is made as to costs.’ 3. The order referred to in (iv) above shall come into effect on the date of this order. 4. Each party is ordered to pay its own costs in the Labour Appeal Court. ___________________________________________________________ JUDGMENT MTHIYANE DP (MHLANTLA, PILLAY JJA, PLASKET AND SWAIN AJJA CONCURRING): [1] The appellant, Ivan Myers was a superintendent in the South African Police Service (SAPS) and the Unit Commander of Maitland Dog Unit with 28 years unbroken service in the SAPS before his dismissal. On 18 June 2007 he was charged with misconduct following a media communication he made to ‘Die Burger’ newspaper concerning the condition of police dogs in his unit, without having first obtained authorisation from his commander or media liaison official. Consequently he stood accused of having contravened the standing orders and regulations of the SAPS. It was alleged that the communication prejudiced the administration, discipline and efficiency of the SAPS as contemplated in regulations 20(f) and (i) of the Regulations for the South African Police Service.1 At a subsequent disciplinary hearing presided over by Commissioner Strydom the appellant was found guilty of misconduct as charged and dismissed from his employment with the SAPS with effect from 13 July 2007. He was also ordered to pay a fine of R500. The referral of the dismissal to the second respondent, the Safety and Security Sectoral Bargaining Council, for arbitration did not yield a different result. [2] The appellant then referred the dispute to the Labour Court to review and set aside the decision dismissing him from his employment and ordering him to pay a fine of R500. He sought retrospective reinstatement in his employment as Unit Commander: Maitland Dog Unit with the full benefits that he would have received had he not been dismissed on 12 July 2007. The matter came before Ngalwana AJ who granted the application and made an order (a) reviewing and setting aside the appellant’s dismissal; but (b) remitted the matter to the second respondent for a de novo hearing on an urgent basis before a commissioner other than the third respondent. The Labour Court found that the commissioner had misdirected himself in a number of respects 1 Published in GN R643, GG 28985, 3 July 2006. during the disciplinary proceedings. Amongst others the chairperson had relied on ‘insolence . . . impudence, cheekiness, disrespect and rudeness’ even though the appellant had not been charged with contravening regulation 20(s) which deals with insolence and disrespect. [3] The first respondent appealed to the Labour Appeal Court with leave granted by that Court, against the judgment and order of the Labour Court reviewing and setting aside the arbitration award. In terms of the arbitration award the third respondent had found that the appellant’s dismissal was substantively fair and dismissed the referral. Procedural fairness of the dismissal was not in dispute. [4] The background facts leading up to the proceedings in both the Labour Court and the Labour Appeal Court are the following. As already stated the appellant was a Superintendent and Commander of the Dog Unit in Maitland with 28 years unbroken service in the SAPS and was only six years away from becoming eligible for early retirement when he was dismissed on 12 July 2007. [5] During February 2007, the South African Police Union (SAPU) raised the issue of malnutrition of police dogs at Maitland Dog Unit with the SAPS management. While the appellant was on leave the daily rations for the police dogs in his unit were reduced from 700 grams of food to 500 grams on the instructions of the police management. The dogs noticeably lost weight and SAPU strongly believed that a change in the dogs’ weight, which became evident immediately after the implementation of the instruction, was as a result of the reduction in their daily rations. [6] Thereafter SAPU invited the appellant to a meeting at its offices since he was the Commander of the Unit. A journalist of ‘Die Burger’ newspaper who was also present at the meeting approached the appellant as the Unit Commander and invited him to explain the reasons for the situation at the Dog Unit. The appellant refused to comment before establishing if the issue raised by SAPU during his absence had been addressed by the police management. [7] The appellant was concerned about the unfavourable media attention that the issue of dog malnutrition was attracting. He raised his concern with the Provincial Commander, Senior Superintendent Visser, and asked him to take immediate steps to prevent the story from making headlines in the media. The next day the story made headlines. It was inter alia reported that the situation was so bad that the police dogs were eating their own excrement. Members of the public reacted with shock and anger to the news of the condition of the dogs, both in print and electronic media. [8] As Commander of the Unit concerned the appellant felt obliged to do something about the situation. On 21 February 2007, he interrupted his leave and returned to work. On his arrival he found the chief veterinarian of the SAPS and other senior police officers. The chief veterinarian told the appellant that they were about to hold a meeting concerning the dogs issue. The appellant asked to be part of the meeting but his request was turned down. He then left. [9] Two days later, on 23 February 2007, he sent an e-mail to ‘Die Burger’ newspaper seeking to address the dogs issue and to point out steps he had taken to resolve the problem. His article appeared in ‘Die Burger’ newspaper under the following headline: ‘Maitland: Bevelvoerder Verbreek Swye: Rompslomp laat honde ly’ (loosely translated the headline meant: ‘Maitland: Commander Breaks Silence. Redtape allows dogs to suffer’). [10] The SAPS management did not take kindly to the article. The appellant was charged with contravening regulation 20(f) of the regulations in that he had by issuing the media statement, prejudiced the administration, discipline and efficiency of the SAPS. [11] In the alternative, he was charged with contravening regulation 20(i) in that he had failed to carry out a lawful order or routine instruction without just or reasonable cause. Paragraph 4(4) of the relevant Standing Order 156 forbids communication with the media without the prior authorisation of a member’s commander or a media liaison official in the SAPS. It reads thus: ‘(4) No member may, on his or her own initiative or that of another member, approach or entertain any media for purpose of media coverage without the prior authorization of his or her commander.’ [12] Despite the appellant’s plea of not guilty on both the main and the alternative charge, he was convicted on the main charge in that he had failed to follow the right channels when he issued the media statement. He was, however, acquitted on the alternative charge. The sanction imposed was one of dismissal with effect from 13 July 2007 and payment of a fine of R500. [13] The appellant then approached the Labour Court to review and set aside his conviction and dismissal. The application was partially successful. As already indicated the Labour Court found that the arbitrator had committed ‘a number of fundamental misdirections’. Amongst others it found that the arbitrator had conflated the main and the alternative charge. The judge found that the two charges under regulations 20(f) and (i) were not ‘very much intertwined’ as found by the arbitrator. The judge also found that the arbitrator had in the determination of the matter had regard to the appellant’s conduct during the hearing, which the arbitrator described as evincing ‘insolence . . . impudence, cheekiness, disrespect and rudeness’. The judge noted, correctly in my view, that the appellant had not been charged with contravention of regulation 20(s) which deals with insolence and disrespect. [14] In the light of the above misdirections, amongst others, the judge considered himself at large to review and set aside the arbitration award and replace it with what he considered to be an appropriate order. Accordingly he made an order (a) reviewing and setting aside the arbitration award; (b) remitting the matter to the second respondent, the Safety and Security Sectorial Bargaining Council, and (c) directing the first respondent to pay costs. [15] The first respondent successfully appealed to the Labour Appeal Court. By a majority (Waglay DJP with Molemela AJA concurring and Zondi AJA dissenting), the appeal was upheld with costs and the order of the Labour Court (Ngalwana AJ) was set aside and replaced with an order dismissing the appellant’s application for review and setting aside of the arbitration award. The appellant’s cross-appeal was dismissed with no order as to costs. [16] In a minority judgment, Zondi AJA found that the arbitrator was correct in finding the appellant guilty of misconduct in contravention of regulations 20(f) and (i) (with which the majority agreed) but that the sanction of dismissal was unfair and fell to be set aside (with which the majority disagreed). He held that the Labour Court’s decision to review and set aside the award on the ground that it was not clear on which of the two charges the appellant was found guilty was wrong. In the result, he proposed the following order: ‘1. The appeal succeeds and the judgment and orders of the Court a quo are set aside and replaced with the following: 1.1 the first respondent’s [the appellant’s] dismissal is declared to have been substantively unfair; 1.2 the appellant [the first respondent] is ordered to reinstate the first respondent [the appellant] to the position he held in its employment before the first respondent’s [the appellant’s] dismissal; 1.3 the order in 1.2 above is to operate with retrospective effect to the date of dismissal; 1.4 the first respondent [the appellant] is given a final written warning valid for a period of 12 (twelve) months from the date of this order; 1.5 no order is made as to costs. 2. Each party is ordered to pay its own costs.’ [17] The appeal to this court, with leave granted by this court, in essence raises two issues. The first is whether the appellant was correctly convicted of misconduct. The second is whether the dismissal was fair. The two issues will be dealt with in turn. [18] As pointed out, the Labour Appeal Court upheld the finding of the third respondent that the appellant had contravened the provisions of regulations 20(f) and (i). Regulation 20(f) provides that an employee will be guilty of misconduct if he or she: ‘(f) prejudices the administration discipline or efficiency of a department, office or institution of the State.’ [19] The Labour Appeal Court found that the appellant had been correctly convicted of contravening regulation 20(f) because ‘it was unreasonable for Myers to send to the media for publication a statement which created an impression that he was deliberately being silenced when there was no evidence to this effect and which in turn could only have the effect of undermining the SAPS and thereby prejudicing its administration and discipline’. As regards regulation 20(i) the Labour Appeal Court found that ‘Myers, by releasing his statement for publication in the media without having first consulted with the relevant media liaison official, clearly breached regulation 29(i) and as such he was properly found to have committed misconduct of contravening regulation 20(i)’. [20] In my view, both the majority and the minority judgments in the Labour Appeal Court were, for these reasons, correct in their conclusion that both charges were proved. The appellant’s excuse that he was not aware of the relevant standing order requiring that he obtain prior approval before making his statement in the newspaper, is far from convincing. [21] I turn to consider the question of the dismissal. In dealing with the question of the appropriate sanction the majority in the court a quo found that the misconduct of which the appellant was convicted was serious. It correctly found that a media statement by an employee that undermines his or her employer cannot go unpunished. The court continued that where the employer serves the public and is expected to maintain a high degree of discipline within its ranks, then a media statement that undermines the employer displays a lack of respect for authority. [22] The majority of the court also had regard to the fact that it was not dealing with a junior officer, but one who had been in service for 28 years and who occupied a very senior position as a commander of a unit. The court quite rightly remarked rhetorically that if persons in such positions fail to follow the rules and regulations, they cannot implement the rules and regulations and demand that their juniors respect them. [23] In mitigation the majority accepted the fact that it was the appellant’s unit that was the focus of attention and that he was probably best suited to be in the team to deal with the issues that were of public concern at the time and yet he was excluded. Having taken note of this valid observation the majority did not follow through and give recognition to it. It back tracked somewhat by stating that it was not for it to prescribe to the SAPS how it should deal with the issues that confront it. I do not agree. The majority was under a duty to have regard to this factor in mitigation of sanction just as it took into account the fact that the appellant had only had six years’ service left before he was eligible for early retirement. [24] There is also the question of absence of evidence that the relationship between the appellant and the SAPS had broken down to such an extent that continued employment was out of the question or no longer possible. In fact the majority suggested, implicitly, that the appellant was best suited to deal with the dogs issue because it was his unit that was the focus of public attention. [25] In aggravation the majority noted that although the appellant was aware that the SAPS management was addressing the concerns raised about the diet of the dogs, and despite being told that he could not be involved with the management in addressing the problem, he sought to challenge their authority without any regard for the rules that regulate his conduct at the workplace. The majority concluded that in this regard it could not accept that the arbitrator’s decision fell outside the band of decisions to which reasonable decision makers could come. It concluded that while the dismissal was a harsh sentence it was not so unreasonable that it stood to be reviewed and set aside. [26] In the minority judgment Zondi AJA took a different view. He held that the sanction of dismissal was too harsh and therefore unfair. The learned judge accepted that the appellant had contravened regulations 20(f) and (i), by submitting his statement for publication by the media without first consulting with the relevant media liaison police official. He accepted that the appellant’s conduct remained serious but found that it was not of such gravity that it made a continued employment relationship between him and his employer or superiors intolerable. He concluded that in the circumstances the dismissal should be set aside and be replaced with an appropriate sanction. [27] In my view there is a lot to be said for the approach adopted by Zondi AJA. The fairness of the decision of the SAPS dismissing the appellant from his employment must be tested against the review standard laid down by the Constitutional Court in Sidumo & another v Rustenburg Platinum Mines Ltd & others 2008 (2) SA 24 (CC) para 110. The test was formulated as follows: ‘(I)s the decision reached by the commissioner one that a reasonable decision-maker could not reach?’ Explaining the standard, the court said applying it would ‘give effect not only to the constitutional right to fair labour practices, but also to the right to administrative action which is lawful, reasonable and procedurally fair’. [28] It must therefore follow that to survive scrutiny the decision to dismiss must be ‘reasonable’ and reasonableness must be tested in the light of the facts and circumstances of a given case. In its judgment the majority in the Labour Appeal Court correctly recognised (in para 103) that the test for dismissal was the one set out in Sidumo. In my view, however, it erred in its application of the test to the facts in the present matter. In para 104 the majority accepted that the sanction imposed on the appellant was ‘a harsh sanction’ but then added that ‘it is not so unreasonable that it stands to be reviewed and set aside’. The majority of the Labour Appeal Court, appears to have accepted that the decision was unreasonable, but not sufficiently unreasonable to warrant interference. This seems to be an application of the ‘gross unreasonableness’ test of the pre-1994 era. By adopting such a standard the court inadvertently imported a higher standard than that contemplated in Sidumo. Were this to be the test, it would mean that a dismissed employee seeking to set aside a dismissal would have to show not only that the decision-maker’s decision is unreasonable but that it is ‘so unreasonable’ that it falls to be reviewed and set aside. That cannot be the test. [29] Turning to the arbitration award I have already indicated that the application of the test requires one to look at the decision and how the decision-maker came to the conclusion to which he or she did. Of course it is important to bear in mind at all times that one is not dealing with an appeal but a review. One is concerned with how the decision was arrived at rather than the conclusion. [30] In imposing the sanction that he did during the disciplinary hearing Commissioner Strydom had little or no regard to the mitigating factors. As observed by Ngalwana AJ in the Labour Court, he regarded as an aggravating factor what he described as an element of ‘insolence . . . impudence, cheekiness, disrespect and rudeness’, which was an irrelevant consideration in that the appellant was not even charged with contravening regulation 20(s) which deals with insolence. Significantly the majority in the Labour Appeal Court does not even refer to this misdirection in its judgment, which was pivotal to the imposition of the sanction of dismissal, because the Commissioner stated unequivocally that he regarded it as an aggravating factor. [31] While the Commissioner had regard to the appellant’s unbroken service of 28 years in the SAPS as proof that he knew the rules he violated, he omitted to make reference to this factor as equally relevant in the consideration of mitigating factors. [32] Having regard to all of the above and the test in Sidumo a reasonable decision-maker would have had regard to all of the above factors and could not have come to the conclusion that the dismissal of the appellant was the appropriate sanction. [33] In the result the following order is made: 1. The appeal succeeds with costs. 2. The order of the Labour Appeal Court is set aside and replaced with the following: ‘(i) the first respondent’s dismissal is declared to have been substantively unfair; (ii) the appellant is ordered to reinstate the first respondent to the position he held before the first respondent’s dismissal; (iii) the order in (ii) above is to operate with retrospective effect to the date of dismissal; (iv) the first respondent is given a final written warning valid for a period of 12 (twelve) months from the date of this order; (v) no order is made as to costs.’ 3. The order referred to in (iv) above shall come into effect on the date of this order. 4. Each party is ordered to pay its own costs in the Labour Appeal Court. ____________________ K K MTHIYANE DEPUTY PRESIDENT APPEARANCES For Appellant: A A Oosthuizen SC (with him J A Nortje) Instructed by: Wynand du Plessis Attorneys, Cape Town Claude Reid Attorneys, Bloemfontein For Respondent: E A de Villiers-Jansen Instructed by: The State Attorney, Cape Town The State Attorney, Bloemfontein

Supreme Court of Appeal of South Africa MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 November 2012 Status: Immediate Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. MYERS v NATIONAL COMMISSIONER OF THE SAPS (425/2012) [2012] ZASCA 185 (29 November 2012) The SCA today upheld an appeal against the judgment of the Labour Appeal Court confirming the appellant’s dismissal from his employment with the South African Police Service. The appellant, Superintendent Ivan Myers was a Commander of the Dog Unit in Maitland. He was charged with misconduct alleging a breach by Myers of Standing Order 156(4)(1) in that he had issued a media statement bemoaning the condition of the dogs in his unit without the permission of the relevant Media Liaison Officer or his Commander. After a hearing in the Disciplinary Inquiry he was dismissed from his employment with effect from 13 July 2007 and fined R500. He had sent an e-mail to ‘Die Burger’ newspaper while he was on leave, stating that the poor condition of the SAPS dogs that had lost weight was caused by the police management’s decision to reduce their food rations from 700 grams to 500 grams. The police management considered the statement to be prejudicial to the administration, discipline or efficiency of the South African Police Service ─ hence the charge of misconduct against Myers. The Labour Appeal Court agreed with the Disciplinary Hearing’s findings but disagreed with the Labour Court which had held that the sanction of dismissal was harsh and referred the matter back to the arbitration for rehearing. The SCA held that the conviction for misconduct was correct but that the sanction of dismissal was not fair given the circumstances. It found that the majority of the Labour Appeal Court had not sufficiently considered the mitigating factors and had adopted an incorrect test in approving of the sanction of dismissal. It agreed with the judgment of the minority (presided by Zondi AJA) that the sanction was unreasonable. The Labour Appeal Court had found that the dismissal was harsh but not ‘so unreasonable’ as to be set aside and which the SCA considered to be inappropriate. Myers had had unbroken service of 28 years in the SAPS and was a Commander of a Unit who was only 6 years away from retirement. There was nothing to suggest that if he was reinstated continued employment relationship on the SAPS would be intolerable. Having regard to all of the above factors the SCA considered the sanction of dismal to be unfair, and reduced it to a written warning valid for a period of 12 months from the date of this order and directed that he be reinstated.

1909

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 007/11 SOUTH AFRICAN TRANSPORT AND ALLIED WORKERS’ UNION Appellant and JACQUELINE GARVIS First Respondent THURAYA NAIDOO Second Respondent CHINATOWN (RSA) INTERNATIONAL TRADING CC Third Respondent ANEES SOEKER Fourth Respondent ANDREWS NJIOKWUEMEGI Fifth Respondent DOLORES ROSANNE REITZ Sixth Respondent MAURICE ROBERTSON Seventh Respondent HAROLD BURGER Eighth Respondent MINISTER OF SAFETY AND SECURITY Ninth Respondent _________________________________________________________________________________________________________ Neutral citation: South African Transport & Allied Workers Union v Garvis & others (007/11) [2011] ZASCA 152 (27 September 2011) CORAM: Navsa, Brand, Van Heerden, Mhlantla JJA and Plasket AJA HEARD: 5 September 2011 DELIVERED: 27 September 2011 SUMMARY: Constitutional validity of s 11(2)(b) of the Regulation of Gatherings Act 205 of 1993 ─ protest march organised by Trade Union degenerating into riot ─ damage caused to property ─ persons affected sued Trade Union in terms of s 11 of the Act ─ high court called upon to decide the separated question of the constitutional validity of s 11(2)(b) ─ Trade Union contending that right to freedom of assembly and protest entrenched in s 17 of the Constitution infringed by the creation of statutory liability without providing a viable defence ─ submitted that holding organisations that organised assemblies and marches liable would have a chilling effect ─ high court correct in concluding that s 17 of the Constitution not implicated ─ assemblies that were peaceful and in which participants were unarmed were protected ─ held that s 11(2)(b) was not internally contradictory and provided viable defences to organisers ─ organising a march preceded by many deaths and increasing animosities might in itself lead to liability ─ Evidence presented in the court below indicated that notwithstanding the existence of s 11 gatherings continuing to be a feature of South African life and that there was no chilling effect ─ warning by court about being subjected to mob rule. ______________________________________________________________________ ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Western Cape High Court (Cape Town) (Hlophe JP sitting as court of first instance): The appeal is dismissed and no order is made as to costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ NAVSA JA (Brand, Van Heerden, Mhlantla JJA and Plasket AJA concurring) [1] On Tuesday morning 16 May 2006 the appellant, the South African Transport and Allied Workers’ Union (the Union), arranged and organised a protest march, which constituted a gathering as defined in the Regulation of Gatherings Act 205 of 1993 (the Act). The march in the Cape Town City Bowl arose out of a protracted strike in the security sector by members of the Union. As the march proceeded, in the Union’s own words, it ‘descended into chaos’, with admitted extensive damage caused to vehicles and shops along the route. [2] The first to eighth respondents are individuals who claimed that they had sustained loss as a result of the riot. At least one of the respondents claims to have been assaulted. They all instituted action in the Western Cape High Court, Cape Town, against the Union in terms of s 11 of the Act, alternatively under the common law, to recover the damages they had allegedly sustained and for which they contended the Union was liable. Section 11(1) of the Act creates a statutory liability on the part of organisations under whose auspices a gathering or demonstration was held that degenerated into a riot causing damage to others.1 1 Section 11(1) provides: ‘If any riot damage occurs as a result of- [3] Section 11(2) of the Act sets out three factors that a defendant to such an action has to prove in order to escape liability. Section 11(2) reads as follows: ‘It shall be a defence to a claim against a person or organization contemplated in subsection (1) if such a person or organization proves ─ (a) that he or it did not permit or connive at the act or omission which caused the damage in question; and (b) that the act or omission in question did not fall within the scope of the objectives of the gathering or demonstration in question and was not reasonably foreseeable; and (c) that he or it took all reasonable steps within his or its power to prevent the act or omission in question: Provided that proof that he or it forbade an act of the kind in question shall not by itself be regarded as sufficient proof that he or it took all reasonable steps to prevent the act in question.’ (My emphasis.) [4] In defending the action the Union, in addition to denying liability in general terms, also contended that s 11(2)(b), particularly the part highlighted above, places too great a burden on trade unions and other organisations and individuals who intended to assemble to protest publicly. It was submitted that it has a stultifying effect on the rights set out in s 17 of the Constitution: ‘Everyone has the right, peacefully and unarmed, to assemble, to demonstrate, to picket and present petitions.’ [5] Put differently, it was contended that, faced with the onerous task of proving what is required by s 11(2)(b), unions, other organisations and individuals would be deterred from organising marches, protests and other gatherings for fear of financial ruin. Thus, it was contended that s 11(2)(b) was unconstitutional in that it offended against the right entrenched in s 17 of the Constitution in terms of which everyone has the right ‘peacefully and unarmed’, to assemble, demonstrate, picket and to present petitions. (a) a gathering, every organization on behalf of or under the auspices of which that gathering was held, or, if not so held, the convener; (b) a demonstration, every person participating in such demonstration, shall, subject to subsection (2), be jointly and severally liable for that riot damage as a joint wrongdoer contemplated in Chapter II of the Apportionment of Damages Act, 1956 (Act 34 of 1956), together with any other person who unlawfully caused or contributed to such riot damage and any other organisation or person who is liable therefor in terms of this subsection.’ [6] In the paragraphs that follow, I turn to consider the allegations by the respondents about the riot as experienced by them and the resultant damage allegedly sustained by them. The allegations in relation to the first, second and sixth respondents that appear in those paragraphs are drawn from affidavits filed by them, after an order by the court below in terms of which the issue of the constitutionality of s 11(2)(b) was, in terms of Uniform rule 33(4), to be heard prior to and separately from the other issues in the case,2 and from their particulars of claim. The assertions by the third, fourth, fifth, seventh and eight respondents are drawn from their particulars of claim. [7] The first respondent, Ms Jacqueline Garvis, alleged that at the time of the riot she was a street vendor selling items such as travel bags, school bags, wallets, etc at a location just outside Grand Central. She described how, on the morning in question, a group of marchers pushed through a gate to the market where her stall was located. One of the persons in the group used a pole with which he smashed her stall. Parts of the crowd looted her stall and robbed her of all her stock. She was struck on her body with a pole and was traumatised by the events. She alleged that the replacement value of the goods lost by her was R3 805. [8] The second respondent, Ms Thuraya Naidoo, is a flower seller who does business on the pavement alongside Adderley Street, near the intersection with Darling Street, in the centre of Cape Town. She alleges that she was aware that the Union had organised a march for the 16 May 2006. On that day she was going about her business as usual when, at approximately 11h30, a huge crowd approached and a group of marchers trampled her flowers. She was terrified as she witnessed her business and stock being destroyed. According to Ms Naidoo it took her months to pay off her debt to the person who supplies the flowers she sells in her business. She alleged that the replacement value of the flowers lost by her is R6 687.50. 2 The court below, in ordering the separation, granted leave to any party wishing to adduce evidence in relation to the constitutional point to do so by filing affidavits. [9] The sixth respondent, Ms Dolores Reitz, recalls that on that morning she was in her car at a set of traffic lights in Darling Street. At the time, she was a manager of a photographic shop in the Strand Concourse and was on the way back there from a goods supplier. Suddenly, she was surrounded by a group of marchers who smashed her car with sticks and their fists. The car was consequently badly damaged and she was terrified. In her particulars of claim she alleged that she had suffered damages in the amount of R5 584.71. [10] The fourth respondent, Mr Anees Soeker, is a carpenter who claimed that his motor vehicle was vandalised during the march, causing him to sustain damages in an amount of R17 043.53. [11] The fifth respondent, Mr Andrew Njiokwuemegi, a customs clearance officer, also alleged that his car was vandalised during the march, causing him to sustain damages in an amount of R11 458.23. [12] The seventh respondent, Mr Maurice Robertson, a businessman, claimed that he had his motor vehicle vandalised during the march and that he sustained damages in an amount of R5 864.25. [13] Finally, the eighth respondent, Mr Harold Burger, who is self-employed, stated that his motor vehicle was vandalised by marchers and that he consequently sustained damages in an amount of R18 599.15. [14] In an affidavit filed in the proceedings in the court below subsequent to the order in terms of Uniform rule 33(4), Mr B J Engelbrecht Botha, who is employed as legal advisor to the Speaker of the City of Cape Town, stated that in the riot following on the march, participants began breaking windows, damaging cars and looting stores, causing damage estimated to be in the region of R1.5 million. Most of the damage was done to motor vehicles. According to him, several people were injured and about 39 people were arrested. In this regard he referred to a newspaper report. This part of his affidavit was uncontested. [15] In opposing the action the Union also served a third party notice on the Minister of Safety and Security (the Minister), claiming in the attached annexure, that in the event of it being held liable to any or all of the respondents it was entitled to a contribution from him. The Union alleged that the losses suffered by the respondents were caused, at least in part, by the negligent conduct of members of the South African Police Service. They were said to be negligent in the following respects: (a) they failed to ensure that adequate numbers of police officers were on hand to man the Cape Town railway station at the time that the Union’s members arrived from their various departure points; (b) they failed to ensure that adequate numbers of police officers were on hand to monitor the gathering and to prevent damage being caused to third parties; (c) they failed to ensure that the police officers on duty at the gathering were adequately equipped to deal properly with the marchers who participated in the gathering; (d) they fired rubber bullets at those participating in the gathering, thereby causing the gathering to become disrupted and unmanageable by the Union’s marshals; (e) they failed to disarm persons in unlawful possession of traditional and/or dangerous weapons; (f) the armoured police vehicle at the head of the march moved unduly slowly, thereby disrupting the progress of Union members towards Parliament, thereby causing frustration; and (g) they failed to take all steps reasonably necessary to protect the property of third parties. [16] In addition to denying liability on any basis the Union, in a conditional counterclaim, sought an order declaring that s 11(2)(b) is unconstitutional and sought the excision of what it contended were the offending parts. [17] The Minister entered the litigation fray, denying that he was liable on the basis contended for on behalf of the Union. The Minister pleaded that members of the South African Police Service had taken all reasonable measures to regulate and manage the gathering. Furthermore, it was alleged on behalf of the Minister that the Police Service had consulted with the Union prior to the gathering and ascertained such facts as were necessary, including the anticipated number of participants. Based on this an operational plan was devised by the police to determine how best to regulate and monitor the gathering. The plan was put into operation and it included an adequate number of police to deal with the gathering. The Minister denied that members fired rubber bullets unreasonably or unnecessarily. He alleged that the armoured vehicles that were deployed were used to regulate and control the gathering. [18] Although it was initially indicated on behalf of the Minister that he would abide the high court’s decision he was represented during the hearing of the matter in the court below and argument was presented on his behalf. The Minister made common cause with the other respondents in contending that s 11(2)(b) was not unconstitutional. [19] The separated issue was heard by Hlophe JP and was decided against the Union with the following order being made: ‘(a) It is declared that the inclusion of the words “and was not reasonably foreseeable” in section 11(2)(b) of the Regulation of Gatherings Act 205 of 1993 is not inconsistent with section 17 of the Constitution of the Republic of South Africa. (b) No order as to costs.’ The present appeal is before us with leave to appeal having been granted by the learned Judge President. [20] In deciding the matter the court below had regard to the volatile environment in which the march was organised. This was information gleaned from the affidavit of the Union’s Provincial Secretary. According to him the strike in the security sector of industry leading up to the march in question took place in the context of heightened acrimony arising out of issues between Union members and employers and Government. By the time the march took place, approximately 50 people had already been killed in strike-related violence. It is uncontested, as recorded by the court below, that preceding the march there had been previous instances of damage caused to property belonging to the city and private persons. [21] The court below noted that the Act had come into operation on 15 November 1996. It recorded that preceding legislation had made no provision for civil liability on the part of organisers or conveners of gatherings. [22] Before focusing on the specifics of the constitutional challenge by the Union, Hlophe JP embarked on a careful examination of the procedure created by the Act for the organisation and notification of an intended gathering. The Act provides for consultations and negotiations in relation to gatherings. Section 2 states that any organisation or branch of an organisation intending to hold a gathering ‘shall appoint . . . a person to be responsible for the arrangements for that gathering and to be present thereat, to give notice in terms of section 3 and to act on its behalf at any consultations or negotiations contemplated in section 4, or in connection with any other procedure contemplated in this Act.’ Section 2 also contemplates a deputy to be appointed to the person referred to in the preceding sentence. Section 2(2)(a) provides that the Commissioner of police or a person authorised thereto by him shall authorise a suitably qualified and experienced member of the police to represent the police at consultations or negotiations contemplated in section 4. It obliges the Commissioner to notify all local authorities or any local authority concerned of every such authorisation and of the name, rank and address of such authorised member. [23] Section 2(4)(a) of the Act makes provision for a responsible officer to be appointed by the local authority with whom the organisers can liaise and whom they are obliged to notify concerning the identity and particulars of an intended gathering. Section 3 obliges the convener of a gathering to give formal notice thereof to the responsible officer of the local authority. Section 3(3) of the Act sets out the extensive information that has to be provided by the convener, including the anticipated number of participants and where possible the number and names of marshals to be appointed and how these marshals are to be distinguished from the other participants. [24] Section 4 obliges the responsible officer of the local authority concerned to consult with the authorised member of the police about the necessity for negotiations concerning any aspect of the conduct of, or any condition with regard to the proposed gathering. Section 4(2)(b) envisages a subsequent meeting involving the convener, the responsible officer and the police to reach agreement on the conduct, organisation and control of the gathering. In the event of a failure to reach agreement the Act empowers the responsible officer to impose conditions in relation to the intended gathering. Section 5 of the Act sets out circumstances in which the responsible officer of the local authority may prohibit a meeting. Section 8 of the Act determines the conduct of the convener, marshals and participants in the gathering. It includes the appointment of a number of marshals. It requires steps to be taken to ensure orderly and peaceful conduct. [25] Section 9 sets out the powers of the police in relation to a gathering, including the power to regulate vehicular and pedestrian flow. It also deals with the use of force by the police to control a gathering. [26] That background leads us to s 11 which, as set out above, forms the statutory basis for a claim against organisations or individuals who organise a gathering that turns into a riot causing damage to others, whilst at the same time setting out a basis for avoiding liability. [27] In dealing with the submissions on behalf of the Union, that s 11(2)(b) is unconstitutional, Hlophe JP had regard to the evidence presented by the Union and the common cause facts. All the material steps required to be taken in terms of the Act had been met by the Union. The Union had approximately 500 marshals in attendance and appears to have communicated to their members on an ongoing basis that they were to desist from unlawful behaviour. They had requested the local authority to clear the roads of vehicles and to erect barricades. [28] On the strength of what is set out above it was submitted that the Union had taken all reasonable steps to prevent any harm being caused to the public. It was accepted on behalf of the Union that in the extensive planning contemplated in the Act that precedes a gathering, the potential for a breakdown of order is discussed and thus inevitably, harm being foreseen enters the equation. Thus it was submitted that it was almost impossible for an organisation such as the Union to avoid liability in terms of the provisions of the Act. Put differently, the Union and like organisations as well as individuals who convened a gathering would be unable to satisfy the requirements for a valid defence in terms of s 11(2) of the Act because the foreseeability of harm in the planning stages potentially lands it with liability at source. [29] The court below rejected the submission that s 11(2)(b) offended against s 17 of the Constitution, which expressly states that one has a right to assemble, demonstrate, picket and to present petitions ‘peacefully and unarmed’. This right, the court below held does not extend to unlawful behaviour at gatherings or where persons bear weapons. It was on that basis that the submission was held to be groundless. [30] The court below went on to consider the submission on behalf of the Union about the chilling effect of s 11(2)(b), namely, that if allowed to stand, it would lead to the end of public assembly and protest. In this regard the court below found it telling that notwithstanding the provisions of the Act, with the spectre of looming liability, the Union nevertheless proceeded with the gathering. The court below also had regard to the affidavit deposed to by the local authority’s responsible officer that he frequently warns organisers of gatherings of the dangers of liability as envisaged in the Act but that his experience is that it has no deterrent effect. Hlophe JP also considered against the Union, the affidavit of Colonel Cloete, the Minister’s senior legal adviser, to similar effect. Both deponents stated the indications are to the contrary, that the right to public assembly and protest is frequently being exercised and that this is promoted by the overall scheme of the Act and not impeded by s 11(2). Importantly, there was no evidence to the contrary presented by the Union. [31] The court below dealt with the further submission on behalf of the Union that s 11(2) of the Act was internally self-destructive and therefore incoherent. It was contended that this was so because, in all relevant circumstances where the defendant discharged its duty of taking all reasonable steps within its power to prevent the act or omission in question, the act or the omission will always be reasonably foreseeable in terms of s 11(2)(b). It was submitted that it was not logically possible to take reasonable steps to prevent an act from occurring if one does not foresee the possibility of such an act occurring. Thus it was submitted that the defence contained in s 11(2) is illusory and inherently doomed to failure. Before us it is this latter argument that became the focal point of the argument on behalf of the Union. Conclusions [32] It is necessary to record at the outset that counsel on behalf of the Union accepted that, if it were held that s 11(2)(b) was intelligible, could be given content, and afforded a real defence to a statutory claim, then it would not be necessary for this court to proceed, as the court below did, to the limitation exercise provided for in s 36 of the Constitution.3 This means it was accepted that, whatever the difference between liability in terms of s 11 of the Act and liability at common law, the difference would be constitutionally valid provided that this court found s 11(2)(b) of the Act to have the qualities referred to in the preceding sentence. Put differently, counsel for the Union conceded that if s 11(2) provides a viable defence, it constitutes a reasonable and justifiable limitation in terms of s 36 of the Constitution. 3 Section 36 recognises that fundamental rights may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors including: ‘(a) the nature of the right; (b) the importance of the purpose of the limitation; (c) the nature and extent of the limitation; (d) the relation between the limitation and its purpose; and (e) less restrictive means to achieve the purpose.’ [33] At common law the test for negligence leading to liability finds its clearest statement in Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-F. Liability ensues if: ‘(a) a diligens paterfamilias in the position of the defendant ─ (i) would foresee the reasonable possibility of his conduct injuring another in his person or property and causing him patrimonial loss; and (ii) would take reasonable steps to guard against such occurrence; and (b) the defendant failed to take such steps.’ [34] In Neethling, Potgieter and Visser Law of Delict 5ed (2006) p 118 the learned authors correctly state the following: ‘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 on the particular circumstances of each case. No hard and fast basis can be laid down.’ [35] Apart from being couched in the negative, because it relates to the setting up of a defence, I have some difficulty in understanding why the provisions of s 11(2)(b), set out in para 3 above, differ radically or even significantly from the common law requirements for liability for negligence. In this regard I discount questions of whether or not an unjustifiable reverse onus has been imposed on defendants since this aspect was not pursued before us. As stated above, the appeal was limited to questioning the viability of a defence in terms of s 11(2)(b). This involves considering whether the subsection is intelligible and whether it can be applied to the advantage of potential defendants. [36] Furthermore, I fail to see why the statutory defence is illusory and why defences ordinarily available at common law are excluded by the provisions in question. A number of examples prove that point. Take the case of the gathering of thousands of trade union members with hundreds of marshals in attendance and where steps were taken to ensure that no-one was armed, there was collaboration with the police about the route of a protest march and all such eventualities as occurred to both the police and the trade union organisers were taken into account in the planning. That notwithstanding, a riot ensued because one of the policemen in attendance had not engaged the safety catch on his weapon, causing it to discharge as he moved alongside the crowd, with the consequence that participants panicked and stampeded. In those circumstances an innocent bystander seeking to hold the trade union liable for damages would probably fail at the first hurdle. That eventuality could hardly have been foreseen by the Union and if any liability attaches it would attach to the police. [37] Consider the case of a gathering, where exactly the same precautions as set out in the preceding paragraph were taken, but where the march was suddenly and unexpectedly infiltrated by a gunman unconnected to the trade union, who bore a grudge against society and who started firing indiscriminately, causing panic. Once again this would not have been an action that was reasonably foreseeable and the trade union faced with a claim for damages by a shopkeeper whose shop in the vicinity of the march was damaged would probably be able to mount a successful defence. [38] Another imagined instance is one where, despite barricades having been agreed and erected by police and despite marshals and the police taking precautions to ensure a free-flow of marchers through the streets and to prevent incursions by vehicular traffic, a motorist nonetheless breaks through those barricades and drives into the marching crowd causing panic and a riot with resultant damage to persons and property. I fail to see how in those circumstances the trade union could be held liable. [39] In all three instances it would have been clear that the actions following upon the unforeseen events did not form part of the purpose of the gathering and it would have been equally clear that the Union did not permit or connive in the actions that caused the panic that led to loss being sustained by others. Furthermore, the Union would have taken all reasonable steps to ensure that a stampede or unruly behaviour did not occur. [40] It was submitted that the conjunctive nature of the provisions of s 11(2)(b) relating to a defendant was especially pernicious, because at common law all a defendant needed to show to escape liability, when sued in a delictual action based on negligence, was that a reasonable person in his or her position would not have foreseen the reasonable possibility of his or her conduct injuring another in their person or property, causing damage to be sustained. The absence of that factor alone would usually mean that a defendant would escape liability. The plaintiff, on the other hand, would have had to meet the Kruger v Coetzee test set out in para 33 above in its entirety. [41] Even though the conjunctive nature of the defence set out in s 11(2)(b) of the Act, on the face of it, seems burdensome one can only take reasonable steps in respect of conduct that is reasonably foreseeable. It does appear that unless the act complained of ─ leading to the riot ─ was reasonably foreseeable, a defendant would probably in all of the instances set out above escape liability. One can only take steps to guard against an occurrence if one can foresee it. [42] As stated above, it was submitted on behalf of the Union that when an intended gathering takes place where there is a threat of violence, it is inevitable that the content of the discussions between the police and organisers deals with the potential for injury to persons or damage and that therefore it will always unjustifiably be contended against organisations such as unions that, because they foresaw that eventuality, they should be held liable. It was contended that it was akin to strict liability being imposed on organisations which organise gatherings. [43] In the present case, according to the testimony of the Union’s own representative, events leading up to the march had led to a volatile situation. The strike had been protracted and acrimonious and there had been many deaths. In those circumstances it is arguable that no degree of measures could be taken so as to prevent the march from degenerating into a riot. Even at common law it would appear that a defendant who persisted in organising a march in those circumstances would almost inevitably be landed with liability. Put differently, if one persists in organising an event where it is reasonably foreseeable that no measure or means could be employed to prevent it from degenerating into a riot, then when that eventuality occurs one could hardly be expected to escape liability for the harm caused to persons or property. In short, a reasonable trade union would not persist in organising and proceeding with a march in the circumstances sketched in this paragraph. [44] Furthermore, it might well be that the separated question in terms of Uniform rule 33(4) was premature in that the reasons for the gathering degenerating into a riot had not yet factually been established. Having the question of the constitutionality of s 11(2)(b) tested in a vacuum was undesirable. What, if at a trial in due course, it is established that some Union marshals were instrumental in the gathering turning into a riot? What if the evidence establishes that some Union officials made inflammatory speeches preceding the march, and that this had the effect of causing a riot? In those circumstances the provisions of the Act or the application of common law principles would almost inevitably mean the Union would be held liable for damages sustained by innocent third parties. Could it rightfully be said that in those circumstances the ensuing statutory liability offended against constitutional values and norms? I think not. It is arguable that, in the circumstances set out above, common law liability would attach to the Union and the exploration of the constitutional point would be unnecessary. What if the factor that caused the riot was wholly unconnected to the march and could not have been foreseen by any one of the actors envisaged by the Act? In those circumstances one can hardly imagine that liability could attach to the Union either statutorily or at common law. [45] The reasons for the riot ought to be properly explored by the trial court in due course. This court has repeatedly warned that piecemeal litigation is not to be encouraged. Sometimes parties consider issues to be discrete and submit that a decision on a separated issue would lead to an expeditious disposal of the litigation, but that submission and agreement on separation often turns out to be ill-advised. In this regard see Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) para 3 and Consolidated News Agencies (Pty) Ltd (in liquidation) v Mobile Telephone Networks (Pty) Ltd & another 2010 (3) SA 382 (SCA) paras 89 and 90. The Constitutional Court has commented on the undesirability of matters being referred to it where facts are in dispute.4 It has also commented on the difficulties of dealing with complex questions of law, constitutional or otherwise, and being called upon to engage in the limitation exercise, presently provided for in s 36 of the Constitution, as a court of first instance. The Constitutional Court has stated that it should not be called upon to do so in circumstances in which a decision on the constitutional issue might not be decisive for the case.5 Be that as it may, we are called upon to consider whether the court below, with the material available to it was correct in its ultimate conclusion. [46] During the pre-constitutional era public protests and demonstrations against a denial of fundamental human rights were often met by brute force with resultant loss of life. The Sharpeville massacre and the 1976 Soweto student uprising are stark examples that are etched into the national psyche. In any event, the legislature, after an extensive consultative process, and following on the brutal experiences of the Apartheid era, promulgated the Act.6 [47] Our Constitution saw South Africa making a clean break with the past. The Constitution is focused on ensuring human dignity, the achievement of equality and the advancement of human rights and freedoms. It is calculated to ensure accountability, responsiveness and openness.7 Public demonstrations and marches are a regular feature of present day South Africa. I accept that assemblies, pickets, marches and demonstrations are an essential feature of a democratic society and that they are essential instruments of dialogue in society. The Constitutional Court has recognised that the rights presently enjoyed by employees were hard-won and followed years of 4 Van der Spuy v General Council of the Bar of South Africa (Minister of Justice and Constitutional Development, Advocates for Transformation and Law Society of South Africa Intervening) 2002 (5) SA 392 (CC). 5 S v Bequinot 1997 (2) SA 887 (CC) para 15. 6 The history leading up to the promulgation of the Act, dealing in particular with the Goldstone Commission of Inquiry regarding the Prevention of Public Violence and Intimidation are set out in Woolman, Roux, Klaaren, Stein, Chaskalson and Bishop Constitutional Law of South Africa (2ed) vol 3, pp 43-4 to 43-7. Save to state that the Goldstone Commission convened a multinational panel of experts to thrash out a new approach to public assembly it is for present purposes not necessary to recount that history. From the report of the Commission it is clear that it conducted hearings with interested persons, including the South African Police, political parties and the Congress of South African Trade Unions ─ para 5.2 of the report. 7 The founding values of our Constitution are set out in ss 1, 2 and 3 of the Constitution. intense and often grim struggle by workers and their organisations.8 The struggle for workers’ rights can rightly be expected to continue. Trade unions should ensure that a noble struggle remains unsullied. The Act was designed to ensure that public protests and demonstrations are confined within legally recognised limits with due regard for the rights of others. [48] I agree with the court below that the rights set out in s 17 of the Constitution, namely, the right to assemble and demonstrate, are not implicated because persons engaging in those activities have the right to do so only if they are peaceful and unarmed. It is that kind of demonstration and assembly that is protected. Causing and participating in riots are the antithesis of constitutional values. Liability in terms of s 11 follows on the unlawful behaviour of those participating in a march. The court below rightly had regard to similar wording in the Constitution of the United States, where people are given the right to assemble peacefully. Such provisions in constitutions such as ours are deliberate. They preclude challenges to statutes that restrict unlawful behaviour in relation to gatherings and demonstrations that impinge on the rights of others.9 [49] It was submitted on behalf of the Union that damage to public property caused by a gathering that degenerated into a riot was a small price to pay to preserve and protect the precious right to public assembly and protest, which is integral to a democratic state. I agree with the court below that members of the public are entitled to protection against behaviour that militates against the rule of law and the rights of others and that, if liability is to attach to unlawful behaviour at a gathering that causes a riot, it would seem just and in accordance with constitutional values that it should attach to the organisers in the circumstances contemplated in s 11 of the Act. As stated above the Union’s legal representatives therefore rightly accepted that if s 11(2)(b) could be given content, as 8 Sidumo & another v Rustenburg Platinum Mines Ltd & others 2008 (2) SA 24 (CC) para 74. 9 See Iain Currie & Johan de Waal The Bill of Rights Handbook 5 ed (2005) p 405-407 and Woolman Roux Klaaren Stein Chaskalson Bishop Constitutional Law of South Africa (2ed) vol 3 pp 43-19 to 43-20 where German jurisprudence is discussed. See also Fourways Mall (Pty) Ltd & another v South African Commercial Catering and Allied Workers Union & another 1999 (3) SA 752 (W) where it was held that neither s 17 of the Constitution nor the Labour Relations Act 66 of 1995 countenance assaults and other forms of conduct that infringed upon the rights of the general public. described above, it would not be necessary for us to proceed to the limitation exercise contemplated in s 36 of the Constitution. For the reasons set out above I do not find the provisions of s 11(2)(b) internally contradictory and self-destructive. It appears to me to be structured in such a manner as to ensure that liability should attach where it rightly belongs. [50] The chilling effect of s 11(2)(b) described on behalf of the Union is not only unsubstantiated but is contradicted by the police and the City of Cape Town, who presented unchallenged evidence that in their extensive experience the provisions of the Act have not deterred people from public assembly and protest. If anything, the regularity of public assembly and protest in the 15 years of the existence of the Act proves the contrary. The chilling effect that the provisions of the Act should rightly have is on unlawful behaviour that threatens the fabric of civilised society and which undermines the rule of law. In the past the majority of the population was subjected to the tyranny of the state. We cannot now be subjected to the tyranny of the mob. [51] Before us it was submitted on behalf of the Union that the provisions of the Act were too wide and presented the spectre of limitless liability for organisers of gatherings. It was submitted that organisers might be liable even for conduct that strictly speaking was not unlawful. In this regard we were referred to the definition of ‘riot damage’ in the Act which: ‘. . . means any loss suffered as a result of any injury to or the death of any person, or any damage to or destruction of any property, caused directly or indirectly by, and immediately before, during or after, the holding of a gathering.’ It was contended that definition was overly wide and that liability would ensue even in the absence of fault. [52] The submission referred to in the preceding paragraph is fallacious. The definition cannot be read without considering the ordinary meaning of the word ‘riot’ which is: ‘a violent disturbance of the peace by a crowd’.10 The entire scheme of the Act, 10 Concise Oxford Dictionary 10 ed revised (2002). including s 11, is designed to prevent unlawful violent behaviour that impinges on the rights of others and to ensure that persons or organisations which organise assemblies that degenerate into riots should bear liability. [53] For all the reasons set out above, the appeal must fail. Because of the constitutional issue raised there should, like in the court below, be no order as to costs. [54] The appeal is dismissed and no order is made as to costs. _________________ M S NAVSA JUDGE OF APPEAL APPEARANCES: For Appellant: E Fagan SC S Miller Instructed by Bernadt Vukic Potash & Getz Cape Town Lovius-Block Bloemfontein For 1st - 8th Respondents: A Katz SC D Cooke Instructed by Fairbridges Cape Town McIntyre & Van Der Post Bloemfontein For 9th respondent: K Pillay Instructed by The State Attorney Cape Town The State Attorney Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 27 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 On 27 September 2011 the Supreme Court of Appeal handed down judgment in South African Transport & Allied Workers Union v Garvis & others, dismissing an appeal against an order of the Western Cape High Court, Cape Town, in terms of which it declared that s 11(2)(b) of the Regulation of Gatherings Act 205 of 1993 was not inconsistent with s 17 of the Constitution of the Republic of South Africa. Section 17 provides that everyone has the right, peacefully and unarmed, to assemble, to demonstrate, to picket and to present petitions. Section 11 of the Regulation of Gatherings Act provides that if any riot damage occurs as a result of a gathering, every organisation on behalf of or under the auspices of which that gathering was held, shall be jointly and severally liable for that riot damage, as a joint wrongdoer together with any other person who unlawfully caused or contributed to such riot damage. Section 11(2) of the Act contains the provision challenged by the appellant, the South African Transport and Allied Workers’ Union. This section provides that it shall be a defence to a claim if an organisation organising a gathering proves that it did not commit or connive at the act or omission which caused the damage, and that the act or omission did not fall within the scope of the objectives of the gathering and was not reasonably foreseeable; and that it took all reasonable steps within its power to prevent the act or omission. In defending an action brought by, amongst others, a hawker and a flower seller, eking out a living in the Cape Town city centre, for loss they sustained during a protest march by the Union as a result of violent behaviour by participants, the Union submitted that too great a burden was placed on trade unions and other organisations by s 11(2)(b) of the Act and that, faced with extensive statutory liability for riot damage, they would be deterred from organising marches, protests and other gatherings for fear of financial ruin. Put simply, it was submitted that the statutory liability, coupled with the onerous task of establishing a defence in terms of s 11(2) of the Act, would have a chilling effect on public demonstrations and that the latter subsection was consequently unconstitutional. That submission was rejected by Hlophe JP in the court below. He had regard to the evidence presented by the Union and the common cause facts and held that the right to public protest and demonstration entrenched in s 17 of the Constitution was not implicated because the right to assemble, demonstrate and picket did not protect unlawful behaviour at gatherings. The court below had regard to evidence presented on behalf of the police and the local authority that notwithstanding the provisions of s 11(2)(b), gatherings were frequently held. In short, the Act had no deterrent effect. The court below also rejected the submission that s 11(2) of the Act, and particularly s 11(2)(b), was internally self-destructive and incoherent. It had been submitted on behalf of the Union that, where a trade union or like organisation took reasonable steps to prevent acts leading to riot damage, the resultant behaviour complained of would always be reasonably foreseeable and organisations would inevitably be landed with liability. It was submitted that the defence provided for in s 11(2)(b) was illusory. The SCA agreed that the rights set out in s 17 of the Constitution were not implicated and that only peaceful demonstrations were protected. It held that causing and participating in riots are the antithesis of constitutional values. The wording of s 17 is deliberate. It precludes challenges to statutes that restrict unlawful behaviour in relation to gatherings and demonstrations that impinge on the rights of others. It was submitted on behalf of the Union that damage caused by participants in a gathering was a small price to pay to protect the precious right to public assembly and protest. The SCA accepted that assemblies, pickets, marches and demonstrations are essential instruments of dialogue in society. It held, however, that the struggle for workers’ rights should take place within legal limits and with due regard to the rights of others. This court agreed with the court below that the chilling effect of s 11(2)(b) described on behalf of the Union, was not only unsubstantiated but was contradicted by the City of Cape Town and the police. The SCA stated that in the past the majority of the population was subjected to the tyranny of the State and that historical events such as the Sharpeville massacre and the Soweto student uprising were imprinted on the national psyche. We should not now be subjected to the tyranny of the mob. This court rejected the notion that the relevant provisions of the Act raised a spectre of limitless liability for organisers of gatherings. It rejected the argument that the defence provided for in s 11(2)(b) was illusory and set out a number of examples that proved the opposite. It held that s 11(2)(b) was not inherently contradictory and self-destructive and consequently dismissed the appeal. Because of the constitutional challenge no order was made as to costs.

491

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 972/2015 Name of Ship: MV ‘NYK ISABEL’ In the matter between: NORTHERN ENDEAVOUR SHIPPING PTE LTD APPELLANT and THE OWNERS OF THE ‘NYK ISABEL’ FIRST RESPONDENT NIPPON YUSEN KABUSHIKI KAISHA (‘NYK LINE’) SECOND RESPONDENT Neutral citation: Northern Endeavour Shipping Pte Ltd v Owners of MV NYK Isabel (972/2015) 2016 ZASCA 89 (1 June 2016) Coram: LEACH, THERON, SERITI and WALLIS JJA and KATHREE-SETILOANE AJA. Heard: 25 May 2016 Delivered: 1 June 2016 Summary: Maritime law – associated ship arrest relying on deeming provision in s 3(7)(c) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) – charterer deemed to be owner of ship concerned – charterer includes a slot charterer – application for security in terms of s 5(2)(c) of the Act – requirements for – prima facie claim – reasonable and genuine need for security – factors relevant to exercise of discretion. ORDER On appeal from: KwaZulu-Natal Local Division, Durban (Mnguni J, sitting as court of first instance): 1 The order of the high court is amended in the following respects: (a) The deletion of paragraph 1 and the renumbering of the remaining paragraphs accordingly. (b) The deletion in the original paragraph 4.2.3 of the words: „the Respondent‟s in rem action will be dismissed with costs, alternatively‟ 2 Subject to those amendments the appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel. JUDGMENT Wallis JA (Leach, Theron and Seriti JJA and Kathree-Setiloane AJA concurring) [1] This appeal involves a claim for security by the second respondent, Nippon Yusen Kabushiki Kaisha trading as NYK Line (NYK), against the appellant, Northern Endeavour Shipping Pte Ltd (NES). Mnguni J sitting in the KwaZulu-Natal Local Division, Durban, exercising its admiralty jurisdiction, upheld the claim and ordered NES to provide the security demanded by NYK in an amount of nearly $10 million within ten days of the court‟s order. The penalty for it failing to do so was that the deemed arrest of the NYK Isabel, which it had obtained in order to pursue an action in rem against that vessel in respect of a claim against NYK, would fall away and become of no force and effect. In addition the order provided that the action would either lapse automatically, or that NYK could approach the court for an order dismissing the action. In practical terms the effect of the order was that NES would be unable to continue with its action. The high court granted leave to appeal to this court against that order. The circumstances in which the claim for security was made were unusual and it is necessary at the outset therefore to set out the factual background in some detail. The background facts [2] By a time charter party dated 2 November 2000, Kien Hung Shipping Co Ltd (Kien Hung) chartered the Andhika Loreto from its owners, Lady Loreto Shipping Inc. On 20 November 2001, by way of an addendum, NES assumed the rights and obligations of the owners under the charter party. At some stage, although the date is unclear, the vessel was renamed Northern Enterprise and it is by that name that I will refer to it. [3] In the latter stages of 2002 Kien Hung, NYK and another shipping line, referred to as CSAV, which played no part in these events, concluded a slot exchange agreement for the operation of a regular container service from the Far East to the East Coast of South America, via South Africa. The service was to be known as Supergex and would operate a weekly round-trip service using vessels provided by each of the participants. Each line would nominate vessels for the service and would in respect of those vessels be the ship operator. The lines, other than the ship operator in relation to each vessel, would charter slots on the vessels so nominated in agreed proportions. These charters would be governed by the terms of a standard slot charter agreement. Each line would, however, issue its own bills of lading in respect of cargo booked on a vessel and would be the principal carrier in respect of such cargo. [4] On 22 February 2003 Kien Hung nominated the Northern Endeavour to undertake this service for a voyage from Pusan, South Korea to Santos, Brazil via various ports including Singapore and Durban. At Singapore NYK loaded a number of containers on board the vessel in bay 22. When the vessel arrived in Durban there was a request, the nature of which was disputed, that these containers be re-stowed. It is alleged by NES that NYK refused that request, a dispute we do not have to address. The vessel then sailed for Brazil. Off the Cape of Good Hope it encountered a fierce storm with force 10 or 11 winds, heavy seas and waves of up to 9 metres in height. In that storm the container stack in bay 22 collapsed. Eleven containers were washed overboard and lost and the cargo in a number of other containers in that bay was damaged. [5] Cargo underwriters, acting under rights of subrogation, instituted action against NYK in Brazil to recover the losses suffered as a result of these events. They relied upon the fact that NYK had issued the bills of lading under which the cargo was carried and was the carrier of the cargo under those bills of lading. NYK joined NES to the proceedings, claiming an indemnity from it in the event of it being held liable to the cargo underwriters. The Brazilian court upheld both the cargo underwriters‟ claim and NYK‟s claim against NES for an indemnity in the same amount as it had been held liable to pay to the underwriters. An appeal against that judgment failed. There is apparently a further appeal pending before the highest court in Brazil, but the volume of cases awaiting a hearing is such that it is improbable that the appeal will be heard in the near future. [6] NES was aggrieved by this result as it holds NYK entirely liable for the losses that were suffered on this voyage. It alleged that the reason for the collapse of the containers stacked in bay 22 was the improper manner in which NYK caused them to be stowed. It levelled three complaints against NYK. The first was that it caused 24 containers to be stowed on the port side of bay 22 and another 24 on the starboard side with only a single container in the central portion of the stow, thereby depriving the outside containers of necessary support and the stow of stability. Second, it contended that the upper containers in the stow were loaded with heavier cargo than the lower containers, and this also affected the stow‟s stability. Third, it claimed that, when the vessel arrived in Durban, NYK was requested to re-stow these containers in a more satisfactory manner and that it refused to do so. It alleged that the defects in the stow were caused by this improper method of stowing the containers and pointed to the fact that, notwithstanding the magnitude of the storm that the Northern Endeavour encountered, no other containers were lost and no other cargo was damaged. [7] NES contended that any amount that it is obliged in due course to pay NYK pursuant to the Brazilian judgment will constitute damages suffered by it in consequence of NYK‟s actions in causing the improper stowage of containers in bay 22 on the Northern Endeavour. It alleged that it was entitled to recover these damages from NYK in an action in tort or delict, based on negligence. To that end it caused the NYK Isabel, a vessel owned by Mercurius Shipping Pte Ltd (Mercurius), but controlled by its parent NYK, to be arrested as an associated ship on 23 January 2013, when it called at Durban. Security was furnished on 25 January 2103 to secure the release of the vessel and there is now a deemed arrest in place in terms of s 3(10) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). [8] A writ of summons was served in the action and an appearance to defend delivered on behalf of both Mercurius and NYK. Particulars of claim were delivered as was a plea embodying a number of special pleas. There is a replication in response to the plea. The litigation over the claim threatens to be protracted unless it is forestalled by the present application. The application [9] On 26 November 2013 NYK and Mercurius brought an application against NES claiming the following relief: „1. NIPPON YUSEN KABUSHIKI KAISHA (“NYK Line”) is granted leave to be joined to these proceedings as an intervening applicant; and 2. In terms of section 5(2)(b) of the Admiralty Jurisdiction Regulation 105 of 1983 (“the Act”) the Respondent is ordered to provide security to the Intervening Applicant for its claim against the Respondent advanced in proceedings (number 1.242/04) before the Court of Santos, Brazil and which has resulted in a judgment in favour of NYK Line against the Respondent currently subject to a challenge by special appeal. 3. The Respondent is directed to provide said security: 3.1 in the sum of US$11,428,277.00; 3.2 within 10 days of the date of this order; 3.3 in a form to the satisfaction of the Applicants‟ attorneys or, failing that, to the satisfaction of the Registrar of this Court. 4. In terms of section 5(2)(c) of the Act, it is ordered that: 4.1 the deemed arrest of MV “NYK Isabel” at the instance of the Respondent (as Plaintiff) in the action under case number A7/2013 is made subject to the Respondent providing the security as set forth in paragraphs 2 and 3 of this Order; 4.2 in the event that the Respondent does not provide the security in compliance with paragraphs 2 and 3 of this Order: 4.2.1 the aforesaid deemed arrest of the MV “NYK Isabel” will fall away and be of no force or effect; 4.2.2 the letter of undertaking provided by the First Applicant to the Respondent to secure the release of the MV “NYK Isabel” from arrest (and of which a copy is annexure “SMSD1” to the founding affidavit of Mr Dwyer in this application) shall be null and void and returned for destruction; and 4.2.3 the Respondent‟s in rem action will be dismissed with costs, alternatively, the Applicants shall have leave, on the same papers supplemented in so far as may be necessary, to make application to this Court for an order that the Respondents claim in the in rem action is dismissed with costs. 5. The Respondent is ordered to pay the Applicants‟ costs of the application.‟ [10] The security sought by NYK was not security for a counter-claim in the existing in rem action. Instead it was security for the indemnity claim advanced by NYK against NES in Brazil, for which it had already been granted judgment. The high court held that it was incumbent on it to order security „in order to render the court‟s judgment effective if it finds against‟ NES. Other than a reduction in the amount of the security, the relief that the high court granted was in accordance with the prayer. [11] In the founding affidavit it was said that „arguably‟ NYK was already a party to the pending litigation, but to place matters beyond doubt it sought an order that it be granted leave to „join in the proceedings as the second intervening applicant in this application‟. There was a considerable amount of ambiguity in this to which I will need to refer in due course. Beyond that the deponent, Mr Dwyer, a senior and very experienced attorney in maritime matters, set out the history of the voyage giving rise to the dispute and the history of the litigation in Brazil. [12] In dealing with the claim for security, Mr Dwyer said that, notwithstanding the further pending appeal, the cargo underwriters were now in a position to enforce their judgment against NYK, against the provision of security in the event of the judgment being overturned on appeal. At the time he deposed to his affidavit the amount of the judgment, after taking account of the provision in Brazilian law for a monetary adjustment, presumably related to inflation, and interest, was in excess of US$ 11 million. NYK had obtained security from NES by way of a P & I Club letter of undertaking in an amount of US$ 1,8 million. He accordingly said that his client required security for its claim in an amount of some US$ 9.6 million. [13] In support of this claim, Mr Dwyer submitted that his clients had a prima facie case against NES as evidenced by the judgment it had obtained against it. As regards the need for security he said that NES had disposed of the Northern Endeavour and was now a dormant non-trading shell without assets or income. In view of the fact that, as a result of its arrest of the NYK Isabel, NES was fully secured for its claim against NYK he submitted that it would be just and equitable for NYK in its turn to be fully secured for its claim against NES. Lastly he submitted that in order to compel NES to comply with an order to provide security the order should provide that if it failed to do so within a specified time the deemed arrest would be set aside; the security provided by NYK would be declared null and void and returned; and either the action against the NYK Isabel would be dismissed, or NYK should be given leave to apply for it to be dismissed. [14] Mr Cunningham who represented NES, also a senior and experienced maritime attorney, did not seriously challenge the facts deposed to by Mr Dwyer in the opposing affidavit. He contended that NYK was not a party to the South African action and that unless it became a party it could not ask the court to order that NES provide it with security. In any event he contended that security could not be ordered for NYK‟s claim against NES under the Brazilian judgment, but only for a claim pending or contemplated before a South African court. If these legal arguments were not upheld he contended that no sufficient case had been made for security to be ordered. If all this failed he contended that the sanctions proposed by Mr Dwyer were inappropriate. The arrest of the NYK Isabel [15] The NYK Isabel was arrested as an associated ship. The basis for such an arrest was set out in the Silver Star.1 The first element of such an arrest is the identification of the owner of the ship in respect of which the claim arose (the ship concerned) at the time that claim arose. Section 3(7)(c) of the Act provides that the charterer or subcharterer of the ship concerned is deemed to be the owner of the vessel for the purposes of effecting an associated ship arrest, where the charterer or subcharterer and not the owner is liable in respect of the claim. NYK was the slot charterer of a defined number of slots on board the Northern Endeavour on this particular voyage. NES accordingly alleged that in terms of 1 MV Silver Star: Owners of the MV Silver Star v Hilane Ltd [2014] ZASCA 195; 2015 (2) SA 331 (SCA) paras 14 and 16. (Silver Star). s 3(7)(c) of the Act it was deemed to have been the owner of that vessel at the time that the claims by the cargo underwriters arose, as these were claims for which it, and not NES, was liable. That satisfied the first requirement for an associated ship arrest. At the time of the arrest of the NYK Isabel, it was owned by a company (Mercurius) controlled by NYK. That satisfied the second requirement. The NYK Isabel was accordingly an associated ship in relation to the Northern Endeavour, the ship in respect of which NES‟s claim had arisen. [16] The premise upon which this rested was that a slot charterer was a charterer for the purposes of s 3(7)(c) of the Act. If that premise was incorrect, then the arrest of the NYK Isabel should not have been effected and could have been set aside on application to the high court exercising its admiralty jurisdiction. That would have been a simple and direct way of NYK disposing of NES‟s claim and it would not have been necessary for it to invoke the complicated process of obtaining and enforcing an order for security. [17] Were that the position, it would have affected the question whether it was appropriate for the high court to order NES to provide security. NYK would have had a remedy near to hand and, if it eschewed reliance on it without good reason, that would be a strong factor weighing against the court coming to its assistance by ordering NES to provide security. Accordingly, this court called upon the parties to file written argument on this point and the issues flowing from it. Both sides filed succinct and helpful supplementary written arguments and we were provided with copies of the relevant authorities. Counsel were at one in submitting that a slot charterer fell within the concept of a charterer in terms of s 3(7)(c) of the Act. For the reasons that follow I think they were correct. [18] When the Act was first passed s 3(7)(c) read as follows: „If a charterer or subcharterer by demise, and not the owner thereof, is alleged to be liable in respect of a maritime claim, the charterer or subcharterer, as the case may be, shall for the purposes of subsection (6) and this subsection be deemed to be the owner.‟ This wording was drawn from Article 3.4 of the Arrest Convention,2 providing for sister ship arrests, the relevant portion of which reads: „When in the case of a charter by demise of a ship the charterer and not the registered owner is liable in respect of a maritime claim relating to that ship the claimant may arrest such ship or any other ship in the ownership of the charterer by demise …‟ [19] The underlying purpose of s 3(7)(c) was to enable a claimant having a claim against a demise charterer to pursue that claim by way of an action commenced by an associated ship arrest. Absent the deeming provision, it was debatable whether a debt incurred by a demise charterer could be pursued in that way.3 The effect of the presumption was to make it clear that it could, so that where the claim lay against the demise charterer and not the owner, as would probably be the case in regard to claims under bills of lading issued by the demise charterer as carrier, or claims for the price of goods supplied to the vessel at the instance of the demise charterer,4 the claim could be pursued by way of an action commenced by an associated ship arrest. [20] The existence of the deeming provision reinforced the purpose of the associated ship arrest provisions, which was to impose liability for 2 International Convention for the Arrest of Sea-Going Ships concluded in Brussels on 10 May 1952. See D J Shaw Admiralty Jurisdiction and Practice in South Africa at 40. 3 There was some authority in England to the effect that a demise charterer was to be equated with the owner of the vessel. See Shaw supra at 32-33 4 See for example the facts in Transol Bunker BV v MV Andrico Unity and Others; Grecian-Mar SRL v MV Andrico Unity and Others [1989] ZASCA 30; 1989 (4) SA 325 (A) maritime claims where it belonged by virtue of common ownership or common control of vessels.5 But its reach was restricted to the case of the demise charterer, which is a less common form of charter party than time or voyage charter parties. It also meant that, in the case of claims arising in respect of time or voyage chartered vessels, where the claim arose against the charterer and not the owner, the associated ship arrest provisions were not available to assist the claimant. Where a time or voyage charterer issued its own bills of lading as carrier or was responsible for the supply of bunkers or provisions to the vessel, creditors would not be able to arrest an associated ship to pursue their claims. Nor could the owner of the vessel subject to the charter make use of the associated ship provisions to enforce a claim against the charterer arising under the charter party. [21] These problems were addressed by way of the 1992 amendment to s 3(7)(c). The reference to demise charterer was deleted and the section now reads: „If at any time a ship was the subject of a charter-party the charterer or subcharterer, as the case may be, shall for the purposes of subsection (6) and this subsection be deemed to be the owner of the ship concerned in respect of any relevant maritime claim for which the charterer or subcharterer, and not the owner, is alleged to be liable.‟ This was a substantial extension of the scope of the associated ship arrest provisions in the Act. There can be no doubt that it extended to both time and voyage charters notwithstanding the limited power of a voyage charterer to give directions to the owner in regard to the operation of the ship. The question is whether it extended to other forms of charter party. 5 Silver Star para 5. [22] The origin of slot charter parties lies in the expansion of containerisation in international shipping. According to a special circular issued by the Baltic and International Maritime Council (BIMCO):6 „Slot charter parties, or space charter agreements, as they are also called, were first introduced in the very late 1960‟s by major container operators in consortia on the basis of exchanging slots on each other‟s vessels. Usually, each operator‟s entitlement to space on other operators‟ vessels would be in relation to the tonnage entered into the consortia by that particular vessel operator. Even though financial adjustments were made to match the number of slots being exchanged, the essence of the arrangement was exchange rather than sale. Therefore, terms and conditions reflecting this form of slot chartering were often provided in what could be referred to as a Cross Charter Party. … The main characteristic of a Cross Charter party, in particular, when used in consortia operation, is that it is rarely used as a free standing document. On the contrary it is usually attached to an operating agreement which contains the essential details of the slot charter arrangement, such as number of slots to be exchanged, financial arrangements, the specified voyages, and other operating details, leaving the Cross Charter Party primarily as the liability document.‟ [23] A slot charter party has been defined7 as: „A time or voyage charter under which the slot charterer has the right to use only a specified amount of the ship‟s container carrying capacity. In container liner trades, such charters may be reciprocal (“cross slot charters”) between operators/carriers, in order to share capacity.‟ By contrast with this, the BIMCO circular says that: „The feature of a slot charter party as a contract of carriage is unique in the sense that, whereas the slot charter party is not a time charter party nor a voyage charter party, it bears some similarity to both types of contract. As such, a slot charter party can be 6 Circular No 7, 10 November 1993. The circular explains the thinking underlying BIMCO‟s drafting of the SLOTHIRE charter party. 7 In Annex 2 (Glossary of Legal Definitions) to the Legal and Economic Analysis of Tramp Maritime Services February 2007 (EU Report COMP/2006/D2/002). said to be a „hybrid‟ type of contract. It may be mentioned that, as distinct from a time charter party when the entire vessel is being chartered, the slot charterers are only hiring space on a vessel and they are therefore not acting as operators as under a time charter party and usually have no control over the operation of the vessel.‟ To similar effect, Christopher Hancock QC expresses the view that a slot charter is a unique form of charter with some elements analogous to a time charter and some analogous to a voyage charter.8 [24] When courts have considered the status of slot charters they appear to have concluded that they are a novel form of charter party, that has evolved in response to changes in the manner in which sea transport operates and is designed to meet the commercial contingencies of new and changing circumstances. Thus in The “Tychy”9 the court was concerned with the question whether a slot charterer was a charterer for the purposes of s 21(4) of the Supreme Court Act, 1981. After a careful consideration of the authorities on the question whether this term in the Act was confined to a demise charterer, Clarke LJ held that it included both a time and a voyage charterer. He went on to consider the position of a slot charterer and held that there was in principle no difference between that and a voyage charter of part of a ship. He said: They are both in a sense charterers of space in a ship. A slot charter is simply an example of a voyage charter of part of a ship.‟ [25] Other courts seem to be similarly inclined to accept that a slot charterer is a charterer, although they have not necessarily endorsed the idea that a slot charter is a form of voyage charter. When the High Court of Australia was dealing with the meaning of the word „charterer‟ in 8 Christopher Hancock QC Containerisation, slot charters, and the law. Chapter 14 in D Rhiddian Thomas (ed) Legal Issues Relating to Time Charters (2008) 247-256. 9 The “Tychy” [1999] 2 Lloyd‟s Rep 11 (CA) at 18-22. s 19(a) of the Admiralty Act 1988 (Cth), Toohey J expressly included slot charterers in the category of charterer.10 In the United States the US District Court for the Southern District of New York said that a slot charter is a „more specific type of sub-charter‟.11 In Canada a slot charter has been described as a type of time charter,12 thereby emphasising its hybrid character. [26] In the field of limitation the right to limit under the Limitation Convention 197613 is given to a charterer of the vessel. In the MSC Napoli14 the court had to consider whether that right extended to slot charterers. The court concluded that it did. In para 17 of the judgment Teare J said: „Indeed the ordinary meaning of the word charterer is apt to include any type of charterer, whether demise, time or voyage charterer. There is no reason why it should not also include a slot charterer. Standard textbooks refer to slot charters when discussing types of charters … There is a good reason for a slot charterer to be within the definition. Were slot charterers not within the definition, slot chartering, which is an established and, to judge by its growth, an efficient way of organising the carriage of goods would or might fall into disuse. A slot charterer‟s inability to limit liability would not encourage international trade by way of sea carriage, which was the object and purpose of the convention.‟ 10 Laemthong International Lines Co Ltd v BPS Shipping [1997] HCA 55; (1997) 190 CLR 181; 149 ALR 675 at 681. 11 International Marine Underwriters v M V Patricia S 06 Civ 6273 (19 January 2007); (2007) 713 LMLN 1. 12 Canada Moon Shipping Co Ltd and Another v Companhia Siderurgica Paulista-Cosipa and Another 2012 FCA 284 para 53. 13 Convention on Limitation of Liability for Maritime Claims 1976. See also s 263(2) of the Merchant Shipping Act 57 of 1951. 14 Metvale Ltd and Others v Monsanto International SARL and Others (the “MSC Napoli”) [2009] 1 Lloyds‟ Rep 246 [QBD (Admlty Ct)]. This conclusion has been accepted in textbooks on the subject of limitation.15 [27] I do not think it desirable to approach a statute such as the Act, which is concerned with events in the dynamic field of international trade and shipping, on the basis that the meaning of expressions used in the statute are fixed in stone at a point in time, and are incapable of being adapted to accommodate new developments.16 When the Act speaks of charter parties it is concerned to refer to contracts of a type developed by and familiar to those engaged in maritime trade. It is not concerned to restrict the category of such contracts. In other words it requires a court to give a construction to the expression that is, so far as possible, consistent with the commercial understanding of its meaning. [28] Slot charters have evolved as the container revolution in maritime transport has evolved. They meet a perceived commercial need and their terms are largely adapted from the established time and voyage charters that are in daily use in maritime trade. The objection to treating them as charters appears to be based principally on the fact that the slot charterer does not charter the entire vessel, but only a part thereof. But I can perceive nothing in that fact that should operate to preclude slot charterers from being characterised as charterers. [29] A final point that seems to me relevant is the purpose of s 3(7)(c). It is to enable claims to be pursued by way of proceedings against an 15 Griggs, Williams and Farr Limitation of Liability for Maritime Claims (4 ed) at 11; Norman A Martínez Gutiérrez Limitation of Liability in International Maritime Conventions (IMLI Studies in International Maritime Law, 2011) at 25-27. 16 Malcolm v Premier, Western Cape Government [2014] ZASCA 9; 2014 (3) SA 177 (SCA) paras 10 and 11. associated ship in circumstances where no claim lies against the ship concerned and its owner. The deeming provision simply enables the first requirement for an associated ship arrest to be satisfied without affecting the commercial relationships underpinning the slot charter. If the owner of the ship concerned is liable on the claim the deeming provision cannot be invoked. A construction of the word „charterer‟ that includes a slot charterer will serve the purpose of promoting the ability of creditors to recover maritime claims. That is the underlying purpose of permitting proceedings to be instituted by the arrest of an associated ship. So that construction is consistent with the statutory purpose. [30] For all these reasons I am satisfied that NYK was a charterer of the Northern Endeavour for the purposes of the deeming provision in s 3(7)(c) of the Act. It follows that it was not open to NYK on this ground to set aside the arrest of the NYK Isabel as defective. I turn then to deal with the other issues raised by the application for security. Was NYK a party to the action? [31] The primary issue argued on behalf of NES was that NYK was not a party to the action instituted by NES against the NYK Isabel. The mere fact that it had entered an appearance to defend that action did not, so it was submitted, make it a party as such. It was submitted that in order for it to become a party it had to take a further procedural step and seek its joinder. [32] The crisp answer to this argument is that it is contrary to the provisions of rule 8(2) of the Admiralty Court Rules, which provides that: „Where summons has been issued in an action in rem, any person having an interest in the property concerned may, at any time before the expiry of 10 days from the service of the summons, give notice of intention to defend and may defend the action as a party.‟ (Emphasis added.) The rule states expressly that the person giving notice of intention to defend thereafter defends the proceedings as a party. It imposes no further obligation that must be discharged in order to become a party. And if confirmation is needed that they are a party, one need only look at rules 9 and 10. In terms of rule 9(2)(c) a party is entitled to deliver pleadings. There is no suggestion that NYK would have had to do any more from a procedural perspective to invoke this rule. In fact an examination of the plea delivered in the case shows that it was pleading specifically in relation to the claim against it. For example, it raised a defence of res judicata. But that defence is ordinarily only available to a party that was a party to the judgment relied on as constituting res judicata.17 [33] The provisions of rule 10 dispose of any residual doubt. That reads: „A defendant and any person giving notice of intention to defend in an action in rem may claim in reconvention against the plaintiff, either alone or with any other person.‟ Acceptance of the proposition that a person does not become a party to an action in rem merely as a result of giving a notice of intention to defend the action, would have the remarkable result that, albeit that they were not a party, they would be entitled to bring a claim in reconvention. Counsel sought to escape this absurdity by contending that the effect of bringing a claim in reconvention would necessarily be that the person bringing that claim would have to make themselves a party to the action. But there is nothing in the rules to suggest that any additional procedural step needs to be taken before delivering the claim in reconvention. The only sensible 17 Caesarstone Sdot-Yam Ltd v World of Marble and Granite CC & others [2013] ZASCA 129; 2013 (6) SA 499 (SCA); [2013] 4 All SA 509 (SCA) paras 3 and 4. construction of rule 8(2) is that such a person is already a party to the action. [34] Mr Mullins SC, for NYK, drew our attention to the background to rules 8(2) and 10. When they were originally promulgated these two rules were rules 6(2) and 8 respectively. There were, however, two significant differences. In rule 6(2) (now rule 8(2)) the words „as a party‟ did not appear. In rule 8 (now rule 10) the words „and any person giving notice of intention to defend in an action in rem’ were not included. [35] Those words were inserted in consequence of the judgment of Scott J in The Lady Rose.18 In that case, after delivering a notice of intention to defend an action in rem, the owner of the boat filed a plea and a claim in reconvention. An exception was taken to the claim in reconvention on the grounds that such a procedure was impermissible. The exception was dismissed and Scott J said:19 „For the present purpose, however, it is unnecessary to have to decide upon the true nature of the action in rem. Whatever that may be, it is at least clear that the action cannot be regarded as simply an action against a res without reference to the owner or person having an interest therein. This is particularly so where, as in the present case, the action is dependent upon the existence of a claim in personam against the owner (s 3(4)(b) of the Act). Even where the claim is founded upon a maritime lien, the owner, of course, remains involved to the extent that he is compelled, in the absence of payment, to defend the action or lose his ship or other maritime res. In these circumstances, to regard him, for the purpose of Admiralty Rule 8, as being someone entirely different from the defendant, viz the maritime res, and therefore unable to counterclaim, would be to adopt an approach which, in my view, is unnecessarily technical and could not have been what was intended. Indeed, to require the owner to 18 SA Boatyards CC (t/a Hout Bay Boatyard) v The Lady Rose (formerly known as the Shiza) 1991 (3) SA 711 (C). 19 At 716B-E. formally apply to be joined as a co-defendant with the res before being able to counterclaim, or to bring a separate action, it seems to me, would serve no purpose other than to increase the costs of litigation. In my judgment, therefore, the word “defendant” in Admiralty Rule 8 is to be construed as including the owner of a maritime res who appears to defend an action in rem against the res.‟ [36] There can be no doubt that the amendments effected to rules 8(2) and 10 in 1997, were directed at incorporating the conclusion by Scott J in The Lady Rose. They involved an express acceptance that the effect of entering an appearance to defend an action in rem is to make the person so doing a party to that action. [37] Counsel for NES sought to call in aid a passage from my judgment in the Alina II,20 where I dealt with the fact that in English admiralty proceedings the mode of citation is such that, if the person entering appearance to defend is personally liable under the claim, that person has been properly cited and any judgment thereafter will be enforceable as a judgment in personam against them. I went on to say: „Under the present admiralty rules in South Africa the second of these consequences would not flow from the entry of appearance to defend and the defence of the in rem action. The reason is that in terms of admiralty rule 2(4), read with form 1 to the admiralty rules, the summons in rem is not addressed to and does not cite the owner or other persons having an interest in the vessel or other res arrested in order to commence the action. In this our rules have departed from the forms that applied in England, as referred to by Lord Wright in The Cristina supra, and the forms previously applicable in South Africa, both when our courts sat as Colonial Courts of Admiralty and in the first three years of operation of the Act. One may therefore have a submission to the court's jurisdiction by a person not cited as a party. However, the problem, if it be one, is readily overcome by amending the summons to join that 20 MV Alina II (No 2): Transnet Ltd v Owner of MV Alina II [2011] ZASCA 129; 2011 (6) SA 206 (SCA) para 30. person and to reflect, as rule 22(5) contemplates, that the action will proceed as an action both in rem against the vessel and in personam against that person, with such consequential amendments as the circumstances may require. Alternatively a separate action in personam can be commenced on the basis of the submission to the court's jurisdiction. Some such procedural step seems to be necessary in this country in order that the action (and ultimately any judgment) reflects the party entering appearance as a party to the judgment.‟ [38] It was not my intention in that passage to suggest that a person entering an appearance to defend an action in rem did not thereby become a party to the action. I was concerned to deal with a different proposition. It was that, until such person was expressly cited, a judgment in rem against the vessel would not be executable against them in personam without some procedural step being taken to make it clear that the judgment lay against them personally. I postulated that the procedural step might be to cite them as a defendant by way of amendment as contemplated by rule 22(5). Alternatively a separate action in personam could be instituted and the proceedings consolidated. The sole purpose of these suggestions was to indicate how a judgment granted in rem could be pursued and executed upon in personam. These procedural mechanisms may not be exclusive. In the case of a judgment against a partnership it has been held that it is permissible, after judgment, to approach the court for an order naming the individual partners so that the judgment may be enforced against them.21 Perhaps it would be permissible for the claimant to seek an order declaring that the in rem judgment should also operate in personam. That process would bear some similarity to the procedure adopted in England in The Dictator.22 Be that as it may, that procedural problem is not germane to the present issue, which is simply whether 21 M Rauff (Pty) Ltd v Petersburg Cole Agency 1974 (1) SA 811 (T) at 812E. 22 The Dictator [1892] P 304; [1891-4] All ER Rep 360. NYK became a party to the action in rem against the NYK Isabel when it entered an appearance to defend that action. The answer to that question must be in the affirmative. [39] It follows from that conclusion that paragraph 1 of the order granted by the high court was unnecessary. It should be set aside. The next issue is whether NYK was entitled to invoke the provisions of ss 5(2)(b) and (c) of the Act in order to obtain the security it sought. Applications for security in terms of s 5(2)(b) [40] The application for security was brought in terms of ss 5(2)(b) and (c) of the Act. Those sections provide that: „A court may in the exercise of its admiralty jurisdiction – (a) … (b) order any person to give security for costs or any claim; (c) order that any arrest or attachment made or to be made or that anything done or to be done in terms of the 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.‟ [41] It is not easy to comprehend precisely what is meant by the words „in the exercise of its admiralty jurisdiction‟ in the preamble to this section. The admiralty jurisdiction of the high court is defined in s 2 of the Act as being a jurisdiction to hear and determine any maritime claim and s 1(1) of the Act contains a list of maritime claims, which includes in para (ff) „the giving or release of any security‟. But the mere fact that a claim is made for the provision of security against „any person‟ in terms of s 5(2)(b) cannot on its own vest the court with jurisdiction to deal with that claim. If the demand for security is unrelated to any maritime claim and unrelated to any matter having a connection to proceedings before the court, s 5(2)(b) could surely not be construed as empowering the court to make such an order.23 [42] Section 5 of the Act deals generally with the powers of the court in admiralty matters. It is true that some of these are powers that may be exercised without any pre-existing need for the court to be seised with a matter falling within its admiralty jurisdiction. In those instances, it is the application for the exercise of the power that gives rise to the court‟s jurisdiction. The powers in ss 5(3)(a) and, in some instances s 5(5)(a)(i), read with s 5(5)(a)(iv), fall in that category. This is not, however, the case with the powers in s 5(2), save for sub-section (dA), which was inserted in 1992 and does not fit comfortably with the remaining matters dealt with in the sub-section. Leaving aside the special instances mentioned above, it seems to me in general that s 5 is directed at conferring on courts powers to be exercised in matters where their admiralty jurisdiction has already been established by arrest, attachment, submission or otherwise. That is undoubtedly so in regard to the powers in sub-sections (a), (c), (d), (e), (f) and (g) of s 5(2). In my view the sensible construction of the words „in the exercise of its admiralty jurisdiction‟ in the context of an application under s 5(2)(b) is that they limit the application of the sub-section to circumstances in which the court is already vested with admiralty jurisdiction in relation to the person against whom such an order is sought.24 This should not hamper a litigant 23 MV Zlatni Piasatzi: Frozen Foods International Ltd v Kudu Holdings (Pty) Ltd and Others 1997 (2) SA 569 (C) at 574A-B, although the problem does not so much lie with the wide wording of the sub- section, but with the interpretation of the preamble to it. 24 In view of the point discussed earlier in this judgment that a person that has entered an appearance to defend in an action in rem thereby becomes a party to the action, the conclusion in MV Rizcun Trader (3): Manley Appledore Shipping Ltd v MV Rizcun Trader 1999 (3) SA 966 (C) at 973 B-C that an order wishing to obtain an order that security be provided in the light of the extensive powers of the court to order joinder in terms of s 5(1). [43] Differing views have been expressed in regard to the scope of the power given to the court in terms of s 5(2)(b).25 In the context of applications for security for counterclaims brought by the owners of vessels arrested in actions in rem in South Africa or arrested under s 5(3)(a), there are judgments that suggest that it should be sparingly exercised.26 These cases have also tended to view the proper approach to its exercise through the prism of the common law in regard to compelling peregrini to provide security. Others have disagreed.27 In my view the language of the section does not restrict the manner in which the power to order security is to be exercised. It is undesirable in that situation for the discretion to be unduly circumscribed.28 A better approach is that adopted by Friedman J in The Paz.29 In dealing with the similarly unqualified discretion in s 5(3) of the Act, he said: „(T)he discretion is an unfettered judicial discretion which falls to be exercised upon a consideration of all relevant facts and circumstances. To endeavour to categorise or catalogue those facts or circumstances, as has on occasions been done in the past when questions of discretion were involved, is not only undesirable but is fraught with for security could not be made against such a person because the only party to the proceedings was the ship was incorrect. 25 Gys Hofmeyr Admiralty Jurisdiction Law and Practice in South Africa (2 ed, 2012) para IV.8, p 225. 26 Sunnyface Marine Ltd v Hitoroy Ltd (Trans Orient Steel Ltd and Another Intervening); Sunnyface Marine Ltd v Great River Shipping Inc 1992 (2) SA 653 (C) at 657; The Catamaran TNT: Deans Catamarans CC v Slupinski (No 1) 1997 (2) SA 383 (C) and The MV Leresti: Afris Shipping International Corporation v MV Leresti (DMD Maritime Intervening) 1997 (2) SA 681 (D) at 689E-H. 27 The Yu Long Shan: Guangzhou Maritime Group v Dry Bulk SA 1997 (2) SA 454 (D); MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD 2000 (1) SA 286 (C) (Heavy Metal) at 298 D-H; MV Akkerman: Fullwood Shipping SA and Another v Magna Hella Shipping SA 2000 (4) SA 584 (C) at 592B-F; The Millenium Amanda SCOSA B141 at B151G-H and MV Gladiator: Samsun Corp t/a Samsun Line Corp v Silver Cape Shipping Ltd Malta 2007 (2) SA 401 (D) at 411 I-J and 413D-E. 28 Heavy Metal at 298 F-H; MV Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v Deiulemar Compagnia Di Navigazione Spa [2011] ZASCA 131; 2012 (1) SA 58 (SCA) (Pasquale Della Gatta) para 57. 29 Katagum Wholesale Commodities Co Ltd v The MV Paz 1984 (3) SA 261 (N) at 264 A-C. obvious dangers. This does not mean, however, that general guidelines as to the Court's approach to the powers conferred upon it by s 5(3) should not, if possible, be sought and stated.‟ [44] It is unhelpful to have regard to common law rules on the furnishing of security for costs in determining the scope of the power to order security under this section. These are not only restrictive, but are directed at different situations to those that arise under the Act.30 The 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 s 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 the court‟, and to s 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,31 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 Africa32 and to enable claimants to obtain security for proceedings in other jurisdictions.33 30 Devonia Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd intervening) 1994 (2) SA 363 (C) at 371 E-F. Hofmeyr, supra para IV.14, p 227. 31 At 263G-H. 32 These are commonly and compendiously referred to as associated ship arrests in terms of s 3(7) of the Act. 33 Commonly referred to as security arrests in terms of s 5(3) of the Act. [45] 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 s 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. Sections 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.34 [46] Turning then to general matters applicable to the exercise of a court‟s discretion under s 5(2)(b) two requirements are well established. The first flows from the language of the section, namely that security is to be given for costs or a claim. An applicant for security under this section must establish that they may be entitled in due course to an order for costs, or that they have a claim against the party from whom security is sought. The existence of a claim need only be established prima facie, that is by producing evidence that, if accepted, shows the existence of a cause of action.35 As the claim must be one that is enforceable it is for the applicant also to show on a prima facie basis that it will be enforceable in the forum in respect of which security is sought. The second is that the 34 Yu Long Shan at 462I-J. 35 Pasquale Della Gatta paras 19 and 20. applicant must show a genuine and reasonable need for security. After some debate at the level of the high court, this court held that to be a requirement in the Wisdom C.36 [47] NES contended that the security sought by NYK was unrelated to the subject matter of the litigation in South Africa. It is not clear to me whether it was intended by this submission to contend that it was impermissible for the court to grant the application for security.37 To the extent that this was its purpose, I disagree. The section refers to „any claim‟ and NYK has a claim for an indemnity against NES that is reinforced by the judgment in its favour granted by the Brazilian court. It would be entitled to pursue a counterclaim in the present action based on that judgment. Such a claim is a maritime claim in terms of paragraph (aa) of the definition of maritime claim. I understood counsel to accept that, if NYK had brought a counterclaim on that basis, NES could not have objected to the application for security on this ground. That concession was in my view destructive of the argument. There can be no practical difference between security for a counterclaim in South Africa based on the Brazilian judgment and security for payment of that judgment in its country of origin, if it is not set aside on appeal. [48] An alternative submission was that while NES had submitted to the jurisdiction of the South African court for the purposes of its action and matters relating thereto or arising therefrom, it had not submitted to the jurisdiction in relation to a claim for security to be provided in Brazil. 36 MV Wisdom C: United Enterprises Corp v STX Pan Ocean Co Ltd [2008] ZASCA 21; 2008 (3) SA 585 (SCA) para 26. 37 If it was, it was inconsistent with judgments such as MV Leresti: Afris Shipping International Corporation v MV Leresti (DMD Maritime intervening) 1997 (2) SA 681 (D) at 686B-H and the Pasquale Della Gatta supra. That appeared to be based upon a passage in the judgment in the Rizcun Trader (4),38 where it was said that while jurisdiction to make such an order was inevitably present when the claim was to be pursued in reconvention in the South African proceedings, that was not necessarily so in relation to a claim to be pursued in a foreign tribunal. In that case the initial arrest of the vessel as an associated ship by an entity referred to as MAS, had been for the purpose of obtaining security for arbitration proceedings in London. The owner of the arrested vessel brought an application against MAS for security for a claim for damages for wrongful arrest that it wished to pursue in South Africa. Van Reenen J dismissed the application inter alia on the footing that in bringing the initial application MAS had only submitted to the jurisdiction of the South African court in respect of matters relevant to its original claim for security and not in respect of the proposed claim for damages. [49] That conclusion was incorrect. In Mediterranean Shipping Co v Speedwell Shipping Co Ltd39 Van Heerden J said: „It was the defendants who had initially sought the assistance of this Court against the plaintiff for relief under the Act. The present claim is for loss flowing from that relief. … The plaintiff's present cause of action arose under and by virtue of the Act and within the jurisdiction of this Court. Anyone who invokes the jurisdiction of this Court for relief under the Act must be taken - and can hardly be heard to contend otherwise - to have submitted to that jurisdiction for the recovery, in terms of a remedy under the Act, of any loss or damage flowing from his very action in coming to this Court.‟ 38 MV Rizcun Trader (4): MV Rizcun Trader v Manley Appledore Shipping Ltd 2000 (3) SA 776 (C) at 803G-804E. 39 Mediterranean Shipping Co v Speedwell Shipping Co Ltd 1986 (4) SA 329 (D) at 333J-334B. [50] In this case NES has invoked the jurisdiction of the South African court with a view to nullifying the effect of the judgment granted against it and in favour of NYK in Brazil. NYK, for its part, is defending that action and, by inference, defending the Brazilian judgment insofar as it holds NES liable to indemnify it for any amount it may have to pay to underwriters under the same judgment. In invoking the jurisdiction of the South African court NES subjected itself to the exercise of the powers of that court to grant relief under the provisions of the Act. Those powers include those set out in ss 5(2)(b) and (c) of the Act. I can see no basis for the view that the scope of those powers is in some way circumscribed by the nature of the claim brought by NES. It makes no sense to say that NYK could ask for security for its claim, provided it brought a counterclaim in South Africa based on the Brazilian judgment, but not if it wanted that security for payment of the judgment in Brazil. [51] Beyond the two requirements referred to above, I do not find it helpful to try and establish further guidelines for the exercise of the court‟s discretion under ss 5(2)(b) and (c). Each situation will be different. The court should not be constrained by a formulaic approach to the exercise of its discretion.40 All relevant factors must be weighed and a conclusion reached that is in accordance with the interests of justice. How should that exercise be undertaken in this case? The exercise of the court’s discretion. [52] It is unclear on what grounds the high court exercised its discretion in favour of NYK. Having set out the facts it summarised the issues and concluded that there were five questions that needed to be addressed. The 40 Pasquale Della Gatta para 57. third of these was whether the court had jurisdiction in respect of NES to order it to furnish security for a claim advanced in Brazil and the fourth was whether the court should exercise its discretion to make such an order. It then said that the fifth issue was whether NYK had established a genuine and reasonable need for such security. That inverted the enquiry because proof of a genuine and reasonable need for security is a prerequisite for the exercise of the discretion. Proof of that need is essential.41 [53] This may explain why in the latter part of the judgment the fourth and fifth issues were dealt with together. But having set out the arguments by NYK in favour of security being ordered, the judgment digressed to deal with the quantum of security. It concluded simply: „I agree with counsel for applicants that fairness would, in the circumstances, dictate that the respondent actually pay (and secure) its liability to the intervening applicant and in that way, if the respondent is correct, it will have met its obligation in terms of the binding judgment and will have recovered that which it claims to be entitled to recover in the South African action in rem. Conversely, if the intervening applicant is correct, and the respondent‟s claim in rem is bad, the respondent will have met its obligations. Obviously in those circumstances the South African court will ultimately decide where the losses will lie.‟ The following paragraph added the conclusion that the application for „additional‟ security was genuine and reasonable. [54] It seems to me that this approach conflated the question whether NYK‟s need for security was reasonable and genuine with the exercise of the court‟s discretion and led in the end result to the court not dealing with the latter question. It falls to be emphasised that these are separate 41 Ibid. issues. Whether there is a reasonable and genuine need for security is a prior question concerned with the likelihood that the applicant for security will be paid if it is successful in obtaining an order for costs or in pursuing its claim.42 In The Paz43it was said that an applicant for a security arrest should say why it needed security; that it had not already obtained security; and that it could not obtain security in the other actual or contemplated proceedings. I would add the following glosses. If some security has been obtained there should be an explanation of the need for further security, for example, by explaining that it is insufficient or of no real value. If it would be feasible to obtain security elsewhere, or in the other or contemplated proceedings, there needs to be an explanation for invoking the jurisdiction of a South African court for that purpose. In other words, as Didcott J said in The Paz44 the applicant must explain: „no alternative and less disruptive opportunity for obtaining such has been or is likely to become available to him and, if one has already been lost, that this was not his fault or, I should rather say, not his fault to such a degree as to be fairly held against him.‟ Whether security should be ordered when a reasonable and genuine need therefor has been established will depend upon the circumstances of the particular case. [55] It will usually be convenient in considering an application for security to address these questions sequentially. Starting then with the question whether NYK demonstrated that it had a claim against NES, it is clear that it did. The claim arose under the slot exchange agreement, read with the particular slot charterparty applicable to the voyage. A court of competent jurisdiction in Brazil adjudicated upon it and it is in that court 42 MV Orient Stride: Asiatic Shipping Services Inc v Elgina Marine Co Ltd [2008] ZASCA 111; 2009 (1) SA 246 (SCA) para 7. 43 At 268B-C. 44 At 270A-B. that NYK seeks to enforce it. It was therefore prima facie established and the first requirement was satisfied. [56] Some argument was addressed to us on the basis that if NYK sought to enforce the judgment in South Africa it would need to make further allegations and establish them on a prima facie basis.45 Stress was laid on the need for a South African court to be satisfied that the foreign court had international jurisdiction or competence. The short answer to this is that NYK was not seeking to enforce its Brazilian judgment in South Africa, but in Brazil. It would only be if it were contrary to South African public policy for our court to lend its aid to the enforcement of that judgment by compelling NES to provide security, that the issue of the Brazilian court‟s exercise of its jurisdiction might arise. In this case there is no suggestion that it exercised jurisdiction on an exorbitant basis. Given the breadth of the admiralty jurisdiction vested in our courts under the Act, it would only be in extreme circumstances that our courts would refuse to recognise the admiralty jurisdiction of a foreign court on public policy grounds. [57] On the question of NYK‟s genuine and reasonable need for security its case was simple. NES has disposed of the Northern Endeavour and the company is dormant, with neither assets nor income. In the absence of security there seems little prospect of NYK obtaining payment of its claim if the judgment it has is not disturbed on appeal. It has obtained some security in Brazil in the form of a P & I Club letter of undertaking, in an amount equivalent to the package limitation applicable to the lost and damaged cargo, and it reduced its claim for security by the 45 Jones v Krok [1994] ZASCA 177; 1995 (1) SA 677 (A) at 685A-C. amount of that guarantee. It also caused a claim made by NES against ships‟ agents in South Africa to be arrested. But, if NYK succeeds in its claim against NES, it is difficult to see that any value can attach to that claim. Accordingly in my view NYK clearly established a genuine and reasonable need for security for its claim against NES. [58] The final issue is the exercise of the discretion vested in the court under s 5(2)(b). There was very little argument directed at suggesting that this should not be exercised in favour of NYK. It seems to have been accepted that once the pre-requisites for the exercise of the discretion had been established an order for security should follow. Accordingly I confine myself to the following observations that point in favour of an order for security. First, in doing so we are assisting a court in one of our close trading partners and a fellow member of the BRICS group of trading nations to enforce its judgment. So we are dealing with the judgment of a court in a friendly nation. Judicial comity points in favour of assisting in its enforcement. Second, NES invoked the jurisdiction of the South African court in order to obtain security for its claim against NYK and it cannot complain if NYK makes use of the same jurisdiction for the same purpose. Third, where the merits of a claim and counterclaim are on the face of it reasonably balanced, considerations of fairness suggest that either both parties should have security or neither. Fourth, NES did not point to any policy or equity reasons to suggest that it would be unjust for it to be required to provide such security. The present litigation is being supported by its P & I Club. Its decision to provide or withhold security will be a business decision in the light of its underwriting experience and its assessment of the value of pursuing the claim. [59] While a court will ordinarily not explore the merits of the claim for which security is sought, it would in my view be a relevant consideration in the exercise of the discretion if it appeared that it was largely speculative or had limited prospects of success. In this case the position appears to be that NYK has a strong claim and conversely NES a weak claim. I have read both the first instance and the appellate judgments of the Brazilian courts. Contrary to the allegation in papers in this court that its finding that NES should indemnify NYK flowed from a special provision of the Brazilian Commercial Code that imposed strict liability on NES, there is no mention in either judgment of reliance on such a provision. Instead it appears that NES largely ran the same defences against NYK as NYK ran against the underwriters, namely, defences of heavy weather and Act of God, as well as package limitation. In the appellate judgment it is recorded that NES argued that NYK was exclusively liable „due to the improper cargo stowage‟, but this defence was rejected. [60] The provisions of the slot exchange agreement and the slot charter party also favour NYK‟s case. Clause 5.5(a) of the former provides that: „The Ship Operator [NES] takes responsibility of the container from the time the spreader is disconnected at the port of loading until the spreader is reconnected at the port of discharge‟. While clause 8.1 makes each line responsible for the proper and careful stowing of containers, that is in turn subject to the provisions of clause 8.2 of the slot charter, which provides that: „The Charterer shall comply with the directions of the Master or other persons responsible for the stowage on behalf of the owners as to when and where containers are to be stowed.‟ It is no doubt in the light of that provision that the ship operator – in this case NES – undertook in clause 10.2 of the slot charter to be: „responsible for the proper and careful carriage, custody and care of the containers and goods whilst on board the Vessel …‟ In clause 10.4 the possibility of the slot charterer pursuing a claim for an indemnity against the owner (NES) arising out of claims made against it by cargo interests, was expressly recognised. [61] I do not say that these provisions were necessarily decisive of NES‟s liability to NYK. They do, however, furnish powerful support for the proposition that the Brazilian court‟s decision was supported by the terms of the relevant contracts. Furthermore NES does not seek in the South African proceedings to rely upon the contracts for its claim against NYK. Instead it pursues the claim in delict or tort, always a problematic course of action when the parties‟ relationship is governed by detailed contracts.46 [62] Weighing all these factors it seems to me that this is a clear case in which the overall interests of justice pointed in favour of the grant of an order that NES provide security to NYK for its claim in Brazil. It was but faintly argued that if security was not provided the penalty should be that the amount of security NES held should be reduced to correspond with the security NYK holds in Brazil under the P & I Club letter of undertaking. I can see no justification for that. Subject only to two minor amendments to the order of the high court the appeal must be dismissed with costs. The first of these is the deletion of the unnecessary order for NYK‟s admission as an applicant. The second is the inadvertent grant of 46 Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd [2005] ZASCA 109; 2006 (3) SA 138 (SCA); [2007] 1 All SA 240 para 25; Country Cloud Trading CC v MEC, Department of Infrastructure Development [2014] ZACC 28; 2015 (1) SA 1 (CC) para 64. relief in para 4.2.3 of the court‟s order of relief in the alternative. The parties were at one that the costs of two counsel were warranted. [63] I make the following order: 1 The order of the high court is amended in the following respects: (a) The deletion of paragraph 1 and the renumbering of the remaining paragraphs. (b) The deletion in the original paragraph 4.2.3 of the words: „the Respondent‟s in rem action will be dismissed with costs, alternatively‟ 2 Subject to those amendments the appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel. M J D Wallis JUDGE OF APPEAL Appearances For appellant: M Wragge SC (with him J D McKenzie) Instructed by: Bowman Gilfillan, Cape Town, Matsepes Inc, Bloemfontein. For respondent: S R Mullins SC (with him Ms S Linscott) Instructed by: Shepstone & Wylie, Durban, McIntyre & Van der Post, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 June 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. Northern Endeavour Shipping Pte Ltd v The Owners of the MV NYK Isabel The SCA today dismissed an appeal from the Durban and Coast Local Division, Durban sitting as a court of admiralty. The NYK Isabel had been arrested by Northern Endeavour Shipping (NES) in an action in rem. It claimed that cargo lost overboard and damaged on a voyage by the Northern Endeavour between Durban and Santos, Brazil, had been lost and damaged as a result of negligence on the part of NYK Lines. The action was defended and NYK Lines sought and obtained an order that NES provide it with security for its claim against NES in proceedings in Brazil in which NES had been ordered to indemnify NYK Lines in respect of the self-same loss and damage. The court upheld the arrest of the NYK Isabel as an associated ship in relation to the Northern Endeavour. It said that a slot charterer is a charterer of the ship in relation to which the claim arises for the purpose of the deeming provision in section 3(7)(c) of the Admiralty Jurisdiction Regulation Act. When NYK Lines entered appearance to defend the action it became a party to the proceedings and accordingly entitled to invoke the power of the court to order the provision of security. The SCA was satisfied that the requirements for an order to provide security had been satisfied and accordingly dismissed the appeal.

3520

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1370/2019 In the matter between: DEMOCRATIC ALLIANCE FIRST APPELLANT GLYNNIS BREYTENBACH SECOND APPELLANT WERNER HORN THIRD APPELLANT and BUSISIWE MKHWEBANE FIRST RESPONDENT THE OFFICE OF THE PUBLIC PROTECTOR SECOND RESPONDENT Neutral citation: Democratic Alliance and Others v Mkhwebane and Another (1370/2019) [2021] ZASCA 18 (11 March 2021) Coram: NAVSA ADP and DLODLO and NICHOLLS JJA and CARELSE and ROGERS AJJA Heard: 24 February 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email. It has been published on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 10h00 on 11 March 2021. Summary: Uniform Rule 35(12) – production of documents to which ‘reference is made’ in pleadings or affidavits – meaning of – includes reference in annexures – not reference to documents by inference – excludes supposition – document sought must be relevant in relation to issues that might arise – different from relevance to issues that are circumscribed after the close of pleadings or after all affidavits have been filed – onus discussed – document material to timeline in relation to defamatory statements relevant and compellable. ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Papier J sitting as court of first instance): 1 The appeal is upheld, and the respondents are to pay the costs of appeal jointly and severally, the one paying the other to be absolved, including the costs of two counsel. 2 The order of the court below is set aside and substituted as follows: ‘1. The applicants in the main application under case number 19668/17 are directed to produce for inspection and copying the first applicant’s application for the post of Analyst: Domestic Branch: DBO1 in the State Security Agency, referred to in “PPSA5” by no later than 1st April 2021. 2. The respondents in the main application are to file their answering affidavit by no later than the 16th April 2021. 3. The respondents in this application are ordered to pay the applicants’ costs, including the costs of two counsel where so employed, jointly and severally, the one paying the other to be absolved.’ JUDGMENT Navsa ADP (Dlodlo and Nicholls JJA and Carelse and Rogers AJJA concurring) Background [1] This is an appeal against an order of the Western Cape Division of the High Court, Cape Town, in terms of which an interlocutory application brought by the appellants in terms of rule 30A of the Uniform Rules, to compel the production of documents by the respondents requested under rule 35(12), was dismissed and they were ordered to pay the respondents’ costs jointly and severally, the one paying the other to be absolved. Additionally, the high court ordered the appellants to file an answering affidavit in the main case within 15 days of the order. It is against those two orders that the present appeal, with the leave of the court below, is directed. In the main case the respondents are seeking, on motion, an order directing the appellants to retract defamatory remarks concerning the first respondent made at a press conference and to apologise publicly for their utterances. The detailed background appears hereafter. [2] On 6 September 2016, the second appellant, Ms Glynnis Breytenbach, acting in her representative capacity as a member of the first appellant, the Democratic Alliance, a political party registered in terms of s 26 of the Electoral Act 73 of 1998 (the DA), conducted a press conference where she published the following media statement of and concerning the first respondent, Advocate Busisiwe Mkhwebane, the Public Protector in our country, appointed to that position in terms of s 184 of the Constitution read with s 1A of the Public Protector Act 23 of 1994: ‘Ahead of the debate on the nomination of Adv Busisiwe Mkhwebane for the Public Protector, the DA has decided to not support this nomination. This is on the grounds that her appointment would be unreasonable as she was by no means the best candidate for such a position and was illogically preferred over other qualifying candidates. Adv Mkhwebane may turn out to be a capable candidate for the position of the Public Protector and we wish her well if Parliament and the President confirm her nomination. However, we contend that her qualifications and experience make her unsuitable for this position. It is upon this basis that the DA will not support her nomination by the Ad Hoc Committee for the Appointment of a new Public Protector for the following reasons: She has little or no practical experience to justify such an appointment when compared with the experience of the other four candidates; She was employed by Home Affairs as a Director (salary level approximately R1 million annually) immediately prior to this process being initiated; She changed employment around June 2016, and went to State Security Agency (SSA) as an analyst. When asked in the interview why she had changed jobs for what is ostensibly a demotion, her reply was that she “was passionate about the Constitution”. While this is noble value to hold; it alone does not make her eligible for the position or separate her from the other more qualified candidates; and We have been advised that the time spent as an “immigration officer” in China is also suspicious, having been informed that this is simply coded language for being on the payroll of SSA. In the absence of a logical explanation for what is seen as a demotion the ineluctable conclusion is unfortunately that Adv Mkhwebane is on the payroll of the SSA. This situation is even more problematic in the current climate in the country, where the justified view is held that President Jacob Zuma is abusing State departments, the SSA in particular, to hang on to power at all costs. We hold the view that the Public Protector cannot be seen as even remotely connected to the State Security Agency. While this doesn’t make Adv Mkhwebane the worst candidate, it does not make her the best either. Further to this, the secrecy around her work at the SSA makes it almost impossible to ascertain whether or not her role and conduct are beyond reproach and befitting the office of the Public Protector who is constitutionally mandated to be “a fit and proper person to hold such office.” Additionally, Adv Mkhwebane could not confirm that she had “acquired any combination of experience … for a cumulative period of at least 10 years” as is demanded by the Constitution. Other issues that gave rise to concern and moved us to be unwilling to support her nomination are the following: Both Judge Weiner and Prof Majola were stronger candidates, in terms of experience and in terms of the quality of their interviews; Prof Majola as a candidate brings the bonus of his involvement in the Special Tribunal in Rwanda over the last seven years, he, unlike Adv Mkhwebane, has been at a certain distance from Government in South Africa. Adv Mkhwebane, on the other hand, has always been employed in and around government and has already indicated that she wants to have a more “friendly relationship with government”; Much was made of the fact that she was a senior investigator at the office of the Public Protector previously, but in our view, the fact that she served during the tenure of Lawrence Mushwana, when the office showed little to no appetite to vociferously investigate government corruption. As such, with the ever present danger of state capture by the President, and the fact that all independent institutions with an investigative capacity have already been captured leaving only the Office of the Public Protector and Judiciary relatively untouched, it is of enormous importance to ensure that the appointment of the new Public Protector is beyond any suspicion. Given the overall performance of the candidates at the interviews and a comparison of their qualifications and experience, the single-minded support for Adv Mkhwebane is unreasonable in our view. We hold the view that Judge Sharise Weiner had the best interview, but that Professor Majola is the best candidate. We would be very comfortable nominating him for the post. To replace the fearless Adv Madonsela with a candidate who hasn’t shown the necessary potential to pursue government corruption would be undermining our hard-won constitutional imperatives. The DA believes in the Rule of Law and stopping corruption. To this end we have worked tirelessly during this process to appoint the new Public Protector, to ensure that the right woman or man is appointed to serve the interests of the people instead of the narrow interests of a political cabal set on advancing their own self-interested agenda. We simply cannot risk these principles with the nomination of Adv Mkhwebane.’ (Emphasis supplied by Ms Mkhwebane in her founding affidavit.) [3] At the press conference referred to in the preceding paragraph the third appellant, Mr Werner Horn, also a member of the DA, made the following statement, which allegedly was widely disseminated, including through a national television broadcaster: ‘We were reliably informed that she indeed during her 10 years as an immigration officer in China, was already on the payroll of the State Security Agency. I think, mindful of the fact that by nature if you are indeed a spy it is of a secret nature.’ (Emphasis supplied by Ms Mkhwebane in her founding affidavit.) [4] The second respondent is the office of the Public Protector, established in terms of s 181(1)(a) of the Constitution and designated as a juristic person in terms of s 5(1) of the Public Protector Act. The respondents’ complaint is that the statements made by the appellants of and concerning Ms Mkhwebane were defamatory, impinged on her integrity and reputation, and had no foundation in fact. Ms Mkhwebane complained that the statements were intended and understood by members of the public to convey: ‘29.1 I was a spy of the State Security Agency at the time of my nomination and would remain such subsequent to my appointment at the office of the Public Protector; 29.2 That I was on the payroll of the State Security Agency while I was employed as an immigration officer in China. 29.3 I am to be treated with suspicion as I continue to be on a payroll of the State Security Agency, and not independent as I am intricately connected to the State President who is allegedly abusing the State Security Agency. 29.4 That my appointment will lead to the state capture of the office of the public protector by the State President; 29.5 That I am not honest and have no integrity in that whilst I was deployed by the Department of Home Affairs to China, I was also on the payroll of the State Security Agency. 29.6 That I have no integrity and honesty as it is expected from an Advocate and a person applying for the Public Protector’s post, as I did not fully disclose material information about my past employment by the State Security Agency while in China to the Committee, the National Assembly and the State President. 29.7 That I acted dishonestly by failing to disclose to my employer that I received remuneration from other state departments while in gainful employment of the Department of Home Affairs. 29.8 That the information that I was a “spy” comes from reliable sources and therefore it is unquestionable.’ [5] Ms Mkhwebane was adamant that she had been deployed by the Department of Home Affairs on 7 September 2009 to the Beijing Foreign Office in connection with Home Affairs related matters, which term came to an end on 31 May 2014 and was during that time not employed by nor connected to the State Security Agency (the SSA), which is a government department with overall responsibility for civilian intelligence operations, in any way. The following is a pertinent part of her founding affidavit in support of the main application: ‘. . . I confirm I was deployed by the Department of Home Affairs in Beijing, China, as Councillor: Immigration and Civic Services. I further confirm that whilst in Beijing, China, I was not on the payroll of State Security Agency nor ever being in the payroll of State Security Agency whatsoever. I attach in support hereto a confirmatory affidavit of Mr Arthur Fraser, the Director General of State Security Agency as annexure “PPSA 4”. On 11th May 2016, I was appointed by State Security Agency, as an Analyst: Domestic Branch, at P3 level. A copy of the Appointment letter is attached hereto as annexure “PPSA 5”. The P3 position and salary level occupied by me at the time of my employment in the State Security Agency was the equivalent of a Chief Director position and therefore higher than the position of Director.’ [6] It is necessary to record that in the confirmatory affidavit from the Director General of the SSA, Mr Arthur Fraser, on which the respondents relied, he stated, inter alia, that he has read the founding affidavit by Ms Mkhwebane and ‘confirm[s] the correctness of facts thereof in so far as they relate to her employment and remuneration at the State Security Agency’. He goes on to echo that she was never in the employ of the SSA ‘in any manner’ whilst deployed to the People’s Republic of China by the Department of Home Affairs and that she was subsequently appointed as a member of the SSA on 11 May 2016 until she took up appointment as the Public Protector in October 2016. [7] For present purposes it is necessary to have regard to annexure ‘PPSA5’, referred to in para 5 above. It bears the letterhead of the SSA, is addressed to Ms Mkhwebane, appears to be from the office of the General Manager, Human Resources at the SSA, and reads as follows: ‘1. I have pleasure in informing you that your application for the abovementioned post has been approved. 2. Your remuneration package is structured as follows: Occupational Band : P3 Basic Annual Salary : R601 770.00 pa Service Allowance : R 30 810.00 pa Housing Allowance : R 23 910.00 pa Annual Bonus : R 50 147.50 pa Group Assurance of 60% (State Contribution) : R21 159.95 pa VSSM : R246 342. pa Pension (State Contribution) R 96 283.20 pa Total Package : R1 082 773.27 pa Package Range R884 245.36 – R1 194. 12 57 pa 3. If the above offer is acceptable to you, you are requested to confirm this as per attached appendix A. 4. Further please note that your salary is a personal matter between yourself and the employer and is regarded as confidential. 5. If you do not accept the salary offer indicated above, please attach your current salary slip in your reply (Annexure A) so that this may be considered. 6. If your response is not received within 5 working days it would be assumed that you are no longer interested in the above-mentioned position.’ [8] Following on the defamatory statements referred to in paras 2 and 3 above being published and widely circulated in the media, Ms Mkhwebane’s legal representatives wrote to the appellants, demanding a retraction. The appellants refused to accede to the demand, asserting that the statements complained of were true, in the public interest, and constituted fair comment. In her affidavit in the main application, Ms Mkhwebane referred to a media interview Ms Breytenbach, the second appellant, had with a news outlet on 2 February 2017, during which she allegedly stated that she was not bothered in the least by the threat of legal action because the statements complained of would not have been made if the appellants did not have proof to substantiate them. [9] The appellants’ refusal to accede to the demand for the retraction led to the main application by the respondents, launched in October 2017, in which the relief referred to in para 1 above was sought. Ms Mkhwebane eschewed any claim to monetary compensation, stating that her main objective was to vindicate her right to integrity and her right to her reputation as well as to ensure confidence in the office of the Public Protector. [10] On 10 November 2017 the appellants filed a notice of intention to oppose the main application. On 1 December 2017, prior to filing their answering affidavit, the appellants filed a notice in terms of Uniform rule 35(12), seeking the production by the respondents of seven documents they considered they were, in terms of the subrule, entitled to. [11] Rule 35(12) reads as follows: ‘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 a 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.’ (My emphasis). [12] As recorded in the judgment of the court below, the respondents, although they had initially resisted providing any of the documents sought, produced five of the seven items required by the appellants. Many of the documents sought were, in any event, in the public domain. The refusal of the respondents to produce the remaining two items led to the interlocutory application in the court below during June 2018 in terms of rule 30A of the Uniform Rules1. It is those two items that were at the centre of the dispute in the court below and are the focus of this appeal. 1 Rule 30A reads as follows: ‘(1) Where a party fails to comply with these rules or with a request made or notice given pursuant thereto, any other party may notify the defaulting party that he or she intends, after the lapse of 10 days, to apply for an order that such rule, notice or request be complied with or that the claim or defence be struck out. [13] The two documents sought by the appellants are itemised in para 6 of the judgment of the court below: ‘By agreement between the parties, this application was limited to the following two documents: a. the first respondent’s application for the post of Analyst; Domestic Branch; DB01 in the State Security Agency; and b. the first respondent’s confirmation of her acceptance of the offer as per appendix A.’ [14] The application by the appellants in the court below to compel production of the two items was premised on the assertions by Ms Mkhwebane, in paras 18 and 19 of her affidavit, reproduced in para 5 above, namely, those concerning the time during which she was employed by the Department of Home Affairs in China and the date on which she was appointed to her post as analyst in the State Security Agency and her attachment of annexure ‘PPSA5’ as her letter of appointment. The annexure, in turn, alludes, in its opening line, to her application for the position and required an acceptance form to be completed and returned. It is the first respondent’s application that the appellants sought as well as an assumed completed acceptance form, presaged in the annexure. [15] The appellants submitted that the documents were indeed referred to in Ms Mkhwebane’s affidavit, within the contemplation of rule 35(12). In the court below it was accepted on behalf of the appellants that relevance was the touchstone for success in an application to compel the production of documents sought in terms of rule 35(12). They contended that the documents sought were directly relevant to the question of whether Ms Mkhwebane was a spy at the material times claimed in the statements complained of and were thus compellable. [16] The respondents, in resisting the application to compel the production of the documents, adopted the position that Ms Mkhwebane’s application for the post of Analyst at the State Security Agency was not referred to at all in her affidavit in the main application and was adamant that she had not referred to a completed letter of (2) Failing compliance within 10 days, application may on notice be made to the court and the court may make such order thereon as to it seems to meet.’ acceptance. Ms Mkhwebane insisted that the appellants were on a fishing expedition and that they were not entitled to the two items sought. The following passage of the response on her behalf to the appellants’ notice in terms of rule 35(12) is instructive: ‘The applicant did not need to refer to the documents relating to her application and the applicants do not see the necessity of the application requested as it is not in dispute that the applicant worked at SSA as an Analyst’. (Emphasis added). [17] I pause to note that it is uncontested that in heads of argument in the court below and in correspondence addressed to the appellants’ attorney, it was communicated on behalf of Ms Mkhwebane that the documents sought in the application to compel were not in her possession but were in the hands of the SSA. She did not, however, at that stage, or even belatedly before us, place an affidavit to that effect on record. It is against the background set out above that the court below was called upon to decide the application in terms of rule 30A. [18] In adjudicating the application to compel, the court below (Papier J), at the outset, held that neither of the documents sought were referred to or relied on by Ms Mkhwebane, as contemplated in rule 35(12). The court did, however, go on to state the following: ‘They were both referred to in and are ancillary to annexure “PPSA5”.’ [19] Papier J took the view that neither document was relied on in the main application and, in line with what was asserted on behalf of the respondents, he held that they need not have referred to them at all. The court had regard to Universal City Studios v Movie Time 1983 (4) SA 736 (D) at 750D, in which the following appeared: ‘An annexure to a pleading or an affidavit seems to me to be as much part of the pleading or affidavit as the body itself. Many references to documents in annexures to pleadings are probably irrelevant to the proceedings and would for that reason not have to be produced but it does not follow that the Rule does not apply to documents to which reference is made in annexures.’ Papier J considered that this dictum reaffirmed the relevance requirement, which he then proceeded to deal with. [20] In considering the production of documents referred to in annexures that may be compelled in terms of rule 30A read with rule 35(12), the court below held that the production of such documents must be ‘subject to some limitation’, without which there would be absurd results and it would encourage fishing expeditions. In this regard Papier J found support for this view in the following dictum in Gorfinkel v Gross, Hendler & Frank 1987 (3) SA 766 (C) at 773H-774I, cited with approval in Unilever plc and Another v Polagric (Pty) Ltd 2001 (2) SA 329 (C), at 337E-338D: ‘It is nevertheless to my mind necessarily implicit in Rule 35(12) that there should be some limitation on the wide language used . . . . . . With regard to relevance there must also, in my view, be some limitation read into Rule 35(12). To construe the Rule as having no limitation with regard to relevance could lead to absurdity. It would be absurd to suggest that the Rule should be so construed that reference to a document would compel its production despite the fact that the document has no relevance to any of the issues in the case. It is not difficult to conceive of examples of documents which are totally irrelevant. Booysen J in the Universal City Studios case gave one such example. What is more difficult to decide is where the line should be drawn. A document which has no relevance whatsoever to the issue between the parties would obviously by necessary implication be excluded from the operation of the Rule. . . . . . . [T]he Rule should, to my mind, be interpreted as follows: prima facie there is an obligation on a party who refers to a document in a pleading or affidavit to produce it . . . That obligation is, however, subject to certain limitations, for example, if the document is not in his possession and he cannot produce it, the Court will not compel him to do so. Similarly, a privileged document will not be subject to production. A document which is irrelevant will also not be subject to production. As it would not necessarily be within the knowledge of the person serving the notice whether the document is one which falls within the limitations which I have mentioned, the onus would be on the recipient of the notice to set up facts relieving him of the obligation to produce the document.’ (Citations omitted.) [21] Papier J also had regard to Protea Insurance Co Ltd and Another v Waverley Agencies CC and Others 1994 (3) SA 247 (C), at 248G, where a litigant had referred to and placed reliance on tape recordings, without describing them as such by name. In that case the court held that they had been ‘referred to’ within the meaning of the rule 35(12). The court below also referred to the decision in Penta Communication Services (Pty) Ltd v King and Another 2007 (3) SA 471 (C), at 476, where it was held, at para 18, that where there was a reference by a litigant to a bank account ‘without more’, it does not follow that it constituted a reference, for the purposes of rule 35(12), to documentation relating to such bank account. [22] After an examination of the authorities referred to above the court below concluded as follows: ‘[44] The answers to these questions are self-evident, as expressed in my views above. The respondent did not refer to the requested documents in her founding affidavit, which documents are, in my view, irrelevant to the proceedings at this stage. Even if the documents were relevant, the sanction for the respondent is encompassed in the relevant rule, and that is, the first respondent would not be able to use the documents, without leave of the court, in terms of rule 35(12). [45] In light of the authorities considered above, I am of the view that the reference made to documents in an annexure to the first respondent’s founding affidavit, did not constitute “reference” as envisaged for purposes of Rule 35(12). I am also not persuaded of the relevance of the requested documents, especially in the context of the first respondent’s claim that she does not rely on the documents referred to in an annexure to her founding affidavit, which she claimed to be irrelevant to her claim, and the applicants’ claim that such allegations would not have been made, “if they did not have evidence”, and that the publication of the statement “was true and in the public interest”. [46] To the extent that the applicants alleged that the first respondent was and is a spy, is [sic] not at all borne out by the letter of appointment. Nor can the respondent’s acceptance of the letter of appointment cast any light on the allegations allegedly made by the applicants. Both these ancillary documents are, in the context of this specific matter, and in my view, entirely irrelevant.’ The present appeal is directed against these conclusions and the resultant order. I turn to consider whether they were well-founded. [23] Rule 35(12) is part of a set of rules regulating discovery, inspection and production of documents in relation to litigation. The object of discovery is described in Durbach v Fairway Hotel 1949 (3) 1081 (SR) at 1083 as follows: ‘The whole object of discovery is to ensure that before trial both parties are made aware of all the documentary evidence that is available.’ In Erasmus Superior Court Practice2 the following, with reference to case law, is stated: ‘“Discovery has been said to rank with cross-examination as one of the mightiest engines for the exposure of the truth . . . Properly employed where its use is called for, it can be, and often is a devastating tool . . . . . . But it must not be abused or called in aid lightly in situations for which it was not designed or it will lose its edge and become debased.”’3 This case is about whether rule 35(12) has properly been called in aid by the appellants. [24] Rules 35(1), 35(2) and 35(3) read with 35(11) apply to discovery in conventional terms, namely, after the close of pleadings or the filing of affidavits. Rule 35(12) is different. It is, as the cases demonstrate, more often than not resorted to in order to compel the production of documents or tape recordings before the close of pleadings or the filing of affidavits, although its field of operation is not restricted thereto. Its provisions are set out in para 11 above, but I shall, for the sake of convenience, restate it here: ‘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 a 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.’ (My emphasis). 2 Originally by DE van Loggerenberg and E Bertelsman Erasmus Superior Court Practice Vol 2 at D1-458 (Juta electronic version, RS 13, 2020). 3 See The MV Urgup: Owners of the MV Urgup v Western Bulk Carriers (Australia) (Pty) Ltd and Others 1999 (3) SA 500 (C) at 513G-I. [25] In Erasmus v Slomowitz (2) 1938 TPD 243, at 244, the purpose of rule 35(12) was said to be that a party is entitled to the production of documents referred to in an opponent’s pleadings or affidavits to enable him to consider his position. See also Gehle v McLoughlin 1986 (4) SA 543 (W) at 546D. In Unilever at 336H-I the following, with reference to Slomowitz, appears: ‘[A] Defendant or respondent does not have to wait until the pleadings have been closed or his opposing affidavits have been delivered before exercising his rights under Rule 35 (12): he may do so at any time before the hearing of the matter. It follows that he may do so before disclosing what his defence is, or even before he knows what his defence, if any, is going to be. He is entitled to have the documents produced “for the specific purpose of considering his position”.’ See also Protea Assurance Co Ltd and Another v Waverley Agencies CC and Others 1994 (3) SA 247 (C) at 249 B-D. [26] The language of rule 35(12) is very wide.4 It does not have the requirement in rules 35(1) or 35(11), that the document or tape recording has to be one ‘relating to any matter in question’, nor the requirement in rule 35(3), that the document or tape recording must be ‘relevant to any matter in question’5. Interestingly, in Gehle, the court had regard to the Afrikaans text of rule 35(12), which it described as being different6, and which it considered to be wider in ambit than the English text, especially insofar as it related to whether associated proceedings, such as summary judgment proceedings, fell within its ambit.7 Compellability and whether and how relevance is to be tested under rule 35(12), as distinct from the other rules and compellability in relation to them, is explored further hereunder. [27] Literally, rule 35(12) appears to indicate that where there is a mere reference to a document or tape recording in an opponent’s pleadings or affidavits a defendant or respondent is entitled to call for its production and may compel compliance. That is not 4 See Gorfinkel v Gross, Hendler & Frank 1987 (3) SA 766 (C) at 773I and Unilever v plc and Another v Polagric 2001 (2) SA 329 (C) at 337B. 5 Unilever at 337B-C. 6 The relevant part of the Afrikaans text reads as follows: ‘‘n Party tot ʼn geding kan te eniger tyd voor die verhoor ʼn kennisgewing . . . aan ‘n ander party aflewer, in wie se pleitsukke of beëdigde verklarings na ‘n stuk verwys word om dit ter insae voor te lê, en om hom toe te laat om ʼn afskrif daarvan te maak.’ 7 See Gehle v McLoughlin 1986 (4) SA 543 (W) at 544I-J, 545C and 546D-E. how our courts approach an application to compel the production of documents sought in terms of rule 35(12). The first step in the adjudication process is to consider whether ‘reference’ is made to a document or tape recording. [28] In Penta Communication Services (Pty) Ltd v King and Another 2007 (3) SA 471 (C) at 475J the court referred, with approval, at para 14, to the following passage in Slomowitz at 244 where the following appears: ‘An essential is, of course, a reference by the opponent, in his pleading or affidavit, to the documents whereof production is required, but the terms of the rule do not require a detailed or descriptive reference to such documents, nor is any distinction made between documents upon which the action or other proceedings is actually founded and documents which possess merely evidentiary value.’ See also Harms Civil Procedure in the Superior Courts at B23.2.8 It appears to me to be clear that direct or indirect reference to a document will suffice, subject to what is stated later about relevance.9 What will not pass muster is where there is no direct, indirect or descriptive reference but where it is sought through a process of extended reasoning or inference to deduce that the document may or does exist.10 Supposition is not enough. [29] In Magnum Aviation Operations v Chairman, National Transport Commission 1984 (2) SA 398 (W) there had been a reference by the deponent on behalf of an applicant in the main application to its financial statements, which had not been attached. It was, however, implied that the National Transport Commission in deciding to rationalise an air transport license had erred by not having regard to it. The court, at the behest of a respondent in the main application, in an application to compel production, ordered the financial statements to be produced, to enable that respondent to consider its position, before filing an answering affidavit in the main application. The court, in doing so, said the following in relation to rule 35(12): ‘In my opinion the ordinary grammatical meaning of the words is clear: once you make reference to the document, you must produce it. Even more it is so in this case where the implication in 8 D Harms Civil Procedure in the Superior Courts (electronic version, 2020, SI-50). 9 See Penta Communication Services (Pty) Ltd v King and Another 2007 (3) SA 471 (C) para 15. 10 Ibid. paras 19.4 and 19.6 is that, if the NTC had called for and looked at the financial statements of Operations, it might well have come to a different conclusion.’11 [30] In Gorfinkel v Gross, Hendler & Frank 1987 (3) SA 766 (C), Friedman J, as did courts before him,12 recognized that rule 35(12) was cast in wide terms. He contrasted that subrule, as did prior decisions, with rule 35(1), which deals with discovery in the conventional sense, usually after the close of pleadings, in relation to an action, in terms of which a party is obliged to make discovery of documents which are or have been in his or her possession ‘relating to any matter in question’. Thus, the control for requiring discovery in terms of rule 35(1) is that the document must relate to any matter in question. That would translate into any matter in question, as circumscribed by the pleadings. So too, with rule 35(11), where during proceedings, necessarily after pleadings have closed, a court may order the production of a tape recording or document in the power or control of a party, which relates to any matter in question. Friedman J, though, at 774F, stated the following in fairly emphatic terms: ‘As Rule 35(12) can be applied at any time, ie before the close of pleadings or before affidavits in a motion have been finalised, it is not difficult to conceive of instances where the test for determining relevance for the purposes of Rule 35(1) cannot be applied to documents which a party is called upon to produce under Rule 35(12), as for example where issues have not yet become crystallised. Having regard to the wide terms in which Rule 35(12) is framed, the manifest difference in wording between this subrule and the other subrules, ie subrules (1), (3) and (11) and the fact that a notice under Rule 35(12) may be served at any time, ie not necessarily after the close of pleadings or the filing of affidavits by both sides, the Rule should, to my mind, be interpreted as follows: prima facie there is an obligation on a party who refers to a document in a pleading or affidavit to produce it for inspection if called upon to do so in terms of Rule 35(12).’13 [31] Gorfinkel had regard to Universal City Studios, which was cited and discussed by the court below. In Unilever14, as indicated above, the court took the view that the 11 Magnum Aviation Operations v Chairman, National Transport Commission 1984 (2) SA 398 (W) at 400C. 12 See Moulded Components and Rotomoulding South Africa (Pty) Ltd v Coucourakis and Another 1979 (2) SA 457 (W) at 461B-D and Gehle v McLoughlin 1986 (4) SA 543 (W) at 546D-E. 13 Subrule 3 is related to subrules 2 and 11, ie in relation to discovery in the conventional sense after the close of pleadings and the filing of affidavits. 14 See para 20 above. reference on which the request for documents or a tape recording was based had to be a reference relevant to issues between the parties. In Universal City Studios an example of how a lack of relevance would operate to control the wide language of rule 35(12) and justify a denial of an order compelling production was given by Booysen J: ‘So, for example, if a wife seeking an interdict to prevent a husband from assaulting her were to allege that he assaulted her shortly after she had read the evening newspaper, there being no relevance alleged of the paper, one could hardly imagine that her husband, the respondent, would be entitled to production of that newspaper.’ [32] In dealing with relevance in relation to rule 35(12), Friedman J, in Gorfinkel, after considering Universal City Studios and other cases referred to above, said the following at 774A-C: ‘With regard to relevance they must also, in my view, be some limitation read into Rule 35(12). To construe the Rule as having no limitation with regard to relevance could lead to absurdity. It would be absurd to suggest that the Rule should be so construed that reference to a document would compel its production despite the fact that the document has no relevance to any of the issues in the case. It is not difficult to conceive of examples of documents which are totally irrelevant. Booysen J in the Universal City Studios case gave one such example. What is more difficult to decide is where the line should be drawn. A document which has no relevance whatsoever to the issues between the parties would obviously, by necessary implication, be excluded from the operation of the Rule. But will the fact that a document is not subject to discovery under Rule 35(1) 35 (3) or 35(11) render it immune from production in terms of Rule 35(12)?’ [33] Friedman J began to answer that question as follows: ‘In my view the parameters governing discovery under Rules 35(1), 35(3) and 35(11) are not the same as those applicable to the question whether a document is irrelevant for the purposes of compliance with Rule 35(12). A party served with a notice in terms of Rule 35(1) is obliged to make discovery of documents which may directly or indirectly enable the party requiring discovery either to advance his own case or to damage that of his opponent or which may fairly lead him to a train of inquiry which may have either of these consequences. Documents which tend merely to advance the case of the party making discovery need not be disclosed.’15 15 At 774D-774E. The court in Gorfinkel went on to conclude that where there is reference by a party to a document in a pleading or affidavit there is prima facie an obligation on that party to produce it for inspection if called upon to do so, subject to certain limitations, namely if the document is not in that party’s possession and he or she cannot produce it, or where the document is privileged or where it is irrelevant. [34] Reliance on a document by the party from whom the document or tape recording is sought is a primary indicator of relevance. That appears clearly from what is set out above. Given the purpose of rule 35(12) it cannot, however, be the sole indicator. The document in question might not be relied on by the party from which it is sought but might be material in relation to the issues that might arise or to a defence that is available to the party seeking production. [35] In refusing production of the requested documents, Papier J appears to have attached some significance to the fact that the appellants, prior to the launching of the main proceedings, claimed to have evidence to substantiate their allegations against Ms Mkhwebane. To the extent that the judge held or implied that the appellants, in defending the main case, were limited to the evidence at their disposal when the impugned publication was made, he erred. A person defending a defamation claim on the grounds of truth and public benefit or fair comment is entitled, after the launching of proceedings, to gather further evidence to support those defences and to use the rules of court for that purpose, including the rules relating to the discovery and production of documents. [36] What about the compellability of documents that are not specifically mentioned in affidavits, but which are referred to in annexures to the affidavits? In Universal City Studios v Movie Time 1983 (4) 736 (D), Booysen J, in dealing with the submission that the agreements sought had not been referred to in the affidavits but mentioned in a document which had been annexed to the affidavits, said the following: ‘It seems to me that this would be giving too narrow an interpretation to Rule 35(12). An annexure to a pleading or an affidavit seems to me to be as much part of the pleading or affidavit as the body itself. Many references to documents in annexures to pleadings are probably irrelevant to the proceedings and would for that reason not have to be produced but it does not follow that the Rule does not apply to documents to which reference is made in annexures.’ See also Protea Assurance at 248J, Erasmus Superior Court Practice16, D Harms Civil Procedure in the Superior Courts17 and Herbstein and Van Winsen Civil Practice of the High Courts and the Superior Courts of South Africa 5 ed (Juta 2009) at 788. This interpretation accords with the purpose of the rule, as outlined above, and its application in this manner has for more than three decades not been called into question in any of the judgments of the high court or by commentators. I agree with the submission on behalf of the appellants that this accords with the objects of discovery and is consonant with Constitutional values of transparency and accountability. An affidavit usually states the purpose of the document that is annexed, or it can be gleaned or deduced, as could the deponent’s knowledge of documents which are referred to in the annexures. [37] Recently, however, in Contango Trading SA and Others v Central Energy Fund SOC Ltd and Others [2019] ZASCA 191; 2020 (3) SA 58 (SCA) at para 6, Cachalia JA stated that a reference has to be a reference in pleadings and affidavits and not in annexures. The statement appears near the commencement of the judgment, before the law in relation to production in terms of rule 35(12) was discussed. The statement was clearly obiter, without reference to what is stated on this aspect by the cases and commentators referred to above. The ratio of that case in respect of one set of ‘documents’ sought, the existence of which was in any event denied, is contained in para 27, where the following appears: ‘However, for a request to fall within the ambit of the sub-rule there must be a reference to a specific document, not to a general category of documents, which is in effect what Contango’s and Natixis’ request for discovery of the legal review is. An order of that kind would perforce include within its scope irrelevant documents and confidential communications that the respondents are properly entitled to withhold. In other words, it would have to include every bit of paper generated during the process. That is not what the subrule envisages. It would amount to 16 DE van Loggerenberg and E Bertelsman Erasmus Superior Court Practice Vol 2 at D1-458 (Juta electronic version, 2020). 17 D Harms Civil Procedure in the Superior Courts (electronic version, 2020, SI-50) at B23.2. early discovery and rule 35(12) is not directed at that purpose. So, despite my reservations about the manner in which the respondents dealt with the demand for the production of the legal review, I conclude that the reference to the legal review in the affidavit was not a reference to a document as contemplated in rule 35(12). The court a quo therefore correctly refused to order its production.’ See also para 35. In relation to a second set of documents, production was not ordered because the documents of Contango were privileged. [38] I now turn to deal briefly with the question of onus in relation to an application to compel the production of documents in terms of rule 35(12). In Centre for Child Law v The Governing Body of Hoërskool Fochville [2015] ZASCA 155; 2016 (2) SA 121 (SCA) this court pronounced on the provisions of rule 35(12). It dealt with the question of onus in relation to applications to compel the production of documents sought in terms thereof. First, at para 18, it had regard to the following dictum in Universal City Studios: ‘[this] being an application, I would say that the onus is to be discharged on the usual basis, ie that the applicant bears the overall onus of satisfying the Court that the respondent is obliged to produce the document . . . Where the respondent files an opposing affidavit . . . and either denies relevance or avers that he is on ground of privilege not obliged to produce a document . . . the applicant would, in order to succeed, have to satisfy the court on a balance of probabilities that the document is indeed relevant or not privileged.’18 [39] Ponnan JA in Hoërskool Fochville, at para 18, then went on to consider the opposing view in Gorfinkel (at 774G), where the following was said: ‘As it would not necessarily be within the knowledge of the person serving the notice whether the document falls within the limitations I have mentioned the onus would be on the recipient of the notice to set up facts relieving him of the obligation to produce the document.’ This approach was favoured in Unilever. [40] Hoërskool Fochville went on to say the following: ‘For my part I entertain serious reservations as to whether an application such as this should be approached on the basis of an onus. Approaching the matter on the basis of an onus may well be to misconceive the nature of the enquiry. I thus deem it unnecessary to attempt to resolve the 18 Universal at 748A. disharmony on the point. That notwithstanding, it is important to point out that the term onus is not to be confused with the burden to adduce evidence (for example, that a document is privileged or irrelevant or does not exist). In my view, the court has a general discretion in terms of which it is required to try to strike a balance between the conflicting interests of the parties to the case. Implicit in that is that it should not fetter its own discretion in any manner and particularly not by adopting a predisposition either in favour of or against granting production. And, in the exercise of that discretion, it is obvious, I think, that a court will not make an order against a party to produce a document that cannot be produced or is privileged or irrelevant.’19 I support this approach. The court will have before it the pleading or affidavit in question, the assertions by the party seeking production as to why it is required and why it falls within the ambit of the rule and the countervailing view of the party resisting production. The basis for requiring the document, at the very least, has to be provided. The court will then, based on all the material before it, exercise its discretion in the manner set out in Hoërskool Fochville, in the abovementioned paragraph. [41] To sum up: It appears to me to be clear that documents in respect of which there is a direct or indirect reference in an affidavit or its annexures that are relevant, and which are not privileged, and are in the possession of that party, must be produced. Relevance is assessed in relation to rule 35(12), not on the basis of issues that have crystallised, as they would have, had pleadings closed or all the affidavits been filed, but rather on the basis of aspects or issues that might arise in relation to what has thus far been stated in the pleadings or affidavits and possible grounds of opposition or defences that might be raised and, on the basis that they will better enable the party seeking production to assess his or her position and that they might assist in asserting such a defence or defences. In the present case we are dealing with defamatory statements and defences such as truth and public interest or fair comment that might be raised. The question to be addressed is whether the documents sought might have evidentiary value and might assist the appellants in their defence to the relief claimed in the main case. Supposition or speculation about the existence of documents or tape recordings to compel production will not suffice. In exercising its discretion, the court will approach the matter on the basis 19 Hoërskool Fochville para 18. set out in the preceding paragraph. The wording of rule 35(12) is clear in relation to its application. Where there has been reference to a document within the meaning of that expression in an affidavit, and it is relevant, it must be produced. There is thus no need to consider the submission on behalf of the respondents in relation to discovery generally, namely, that a court will only order discovery in application proceedings in exceptional circumstances. [42] In the present case it is clear that the timeline in relation to the period of employment of Ms Mkhwebane by the SSA, or her connection to it, is material to each party’s case. Precisely when she took up her employment or whether she had any connection to the SSA while employed by the Department of Home Affairs, especially when she was deployed by the latter to China, is essential in relation to the issues that suggest themselves at this stage. That much is clear from the statements complained of and her own affidavit in the main case, in terms of which she complained about the statements by the appellants and what they were intended to convey. The importance of the timeline in relation to her employment by or connection to the SSA is given impetus by what she sets out in paras 18 and 19, which appears in para 5 above. Annexure ‘PPSA5’ was clearly intended by her to show that her letter of appointment supports her denial of the statements made by the appellants and to prove that her appointment by and her connection with the SSA only commenced well after her return from China. It was material to her claim for a retraction. [43] ‘PPSA5’, in the context of paras 18 and 19 of Ms Mkhwebane’s affidavit, appears to have been intended to convey that an application for a position as Analyst at the SSA was made some time after her return from Beijing to South Africa to continue as Director: Refugee Affairs at the Department of Home Affairs. It can safely be said that Ms Mkhwebane relied on the letter of appointment and its material terms in relation to when her employment and connection to the SSA commenced. That application for the post is referred to at the commencement of ‘PPSA5’. There could hardly have been an appointment to the SSA without such an application. That annexure follows on ‘PPSA2’ and ‘PPSA3’, which are Ms Mkhwebane’s letter of acceptance of her appointment as Director Refugee Affairs within the Department of Home Affairs addressed to Mr A Fraser, the then Deputy Director-General in May 2005, and a notification by the Director Foreign Office, dated 12 May 2014, confirming her repatriation, respectively. To my mind there is, within the meaning of that expression in rule 35(12), a clear ‘reference’ to Ms Mkhwebane’s application for appointment as an Analyst in annexure ‘PPSA5’, which it will be recalled contained her occupational band, and the terms of her remuneration. Moreover, Mr Fraser, the Director-General of the SSA, who is able to speak authoritatively about when and how she was employed by the SSA in his confirmatory affidavit, states that he read her affidavit and confirms the facts insofar as they relate to her ‘employment and remuneration’ with the SSA. [44] Ms Mkhwebane’s application for appointment is relevant in that it is bound to contain details of her employment history, including those relative to the time when she was deployed to China. As stated above, the timeline is critical. In my view that document should be produced by Ms Mkhwebane. The court below erred in concluding that there was no reference to the application for appointment to the post of Analyst and that it was irrelevant. It misapplied the cases referred to. It does not behove the respondents to say that Ms Mkhwebane need not have referred to her application for the post of Analyst. She did refer to it and relied on it in the principal case. It was lost on her and her legal representatives that she appears by that statement to have admitted a reference to the document sought. [45] At this stage there is no affidavit before us informing us that she is not in possession of the document. Such an affidavit if it had been lodged may have been dispositive, in favour of the respondents. The court below rightly had no regard to the statements in the heads of argument or from the bar on this aspect. [46] I am rather less sanguine about the letter of acceptance mentioned in ‘PPSA5’. First, we do not know whether it came into being. The acceptance was in contemplation and the form yet to be completed. We are in the dark as to its completion and thus its existence. We are left to supposition. In this regard communications from the bar, either in this court or in the court below, were unhelpful and rightly not considered by the court below. I am unpersuaded that there is a reference within the meaning of rule 35(12) to the document sought to be produced. Counsel on behalf of the appellants, although persisting in seeking the production of this document, was constrained to agree that their case was stronger in relation to Ms Mkhwebane’s application for the post of Analyst at the SSA. [47] Lastly, there is the question of the order of the court below placing the appellants on terms to file their answering affidavits. Papier J had regard to submissions on behalf of the respondents that there was an inordinate delay on the part of the appellants in filing their answering affidavits. The court thus made the order referred to at the beginning of this judgment. In Potpale Investments v Mkhize 2016 (5) SA 96 (KZN) Gorven J was called upon to consider whether a notice in terms of rule 35(12) suspended the time limits in relation to the filing of further pleadings or in relation to any other rule. He had regard to Protea Assurance Society at 249B-D where the court said that a litigant cannot be told to draft and file his own pleadings or affidavits before he will be given an opportunity to inspect and copy, or transcribe, a document or tape recording referred to in his adversary’s pleadings or affidavits. He considered Unilever at 336C-I to the same effect. He also considered DE van Loggerenberg and E Bertelsman Erasmus Superior Court Practice Vol 2 at D1-478 (Juta electronic version, RS 13, 2020) where, in commenting on these cases, it was said that the time periods for the delivery of a plea or opposing affidavits are suspended. Potpale, at para 18, stated that one cannot anywhere in the rules find wording to that effect. In the view of Gorven J a party confronted with time limits within which to plead or file affidavits could plead, or file opposing affidavits, and then compel the documents and, if thereafter so advised, amend or supplement what he has already filed. Or such party could apply to court to extend the time limits pending the production of the documents sought. Papier J did not deal with this aspect and issued the order to file its answering affidavit on the basis of what he considered was an inordinate delay on the part of the appellants. [48] There is much to commend the reasoning and the approach in Potpale. However, in this case, it was accepted on behalf of the appellants that if we were to order the production of one or both of the documents sought, the order issued by the court below in relation to the filing of an answering affidavit could remain in place. It is in everyone’s interest, including that of the Office of the Public Protector, that this litigation be expedited and finalised. In light of the appellants’ acceptance as noted above, there is no need for a final word in relation to Potpale. In any event, the practice in the court below, where a respondent fails to file an answering affidavit, is that an applicant can apply through the chamber book for an order requiring the respondent to file such an affidavit within five days, failing which the applicant can set the matter down on the unopposed roll.20 If that course had been followed at the outset, the appellants in this case would have been put to a choice, namely whether to file an answering affidavit without the document sought or to seek an extension of time, pending the finalisation of an application to compel production of the document, or it could have contended that Potpale should not be followed. In light of the appellants’ acceptance that the order of the court below on this aspect remain in place there is no need to dwell on it any further. [49] Considering that the appellants ought to have succeeded in the court below in relation to at least one of the documents sought they are entitled to have costs in that court awarded in their favour. In light of the conclusions set out above the following order is made: 1 The appeal is upheld, and the respondents are to pay the costs of appeal jointly and severally, the one paying the other to be absolved, including the costs of two counsel. 2 The order of the court below is set aside and substituted as follows: ‘1. The applicants in the main application under case number 19668/17 are directed to produce for inspection and copying the first applicant’s application for the post of Analyst: Domestic Branch: DBO1 in the State Security Agency, referred to in “PPSA5” by no later than 1st April 2021. 20 Practice Note 37 of the Western Cape Consolidated Practice Notes – the practice note does not contain the five-day limit but is usually ordered. 2. The respondents in the main application are to file their answering affidavit by no later than the 16th April 2021. 3. The respondents in this application are ordered to pay the applicants’ costs, including the costs of two counsel where so employed, jointly and severally, the one paying the other to be absolved.’ __________________________ M S NAVSA ACTING DEPUTY PRESIDENT Appearances: For appellants: S Budlender SC, with him J Bleazard Instructed by: Minde Schapiro & Smith Inc, Cape Town Symington & De Kok, Bloemfontein For respondents: M Mphaga SC, with him S Jozana Instructed by: Boqwana Burns c/o Mfazi Kose Inc, Cape Town Mphafi Khang, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL Democratic Alliance and Others v Mkhwebane and Another (1370/2019) [2021] ZASCA 18 (11 March 2021) From: The Registrar, Supreme Court of Appeal Date: 11 March 2021 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Today the Supreme Court of Appeal (SCA) upheld the appeal and the respondents were ordered to pay the costs of appeal jointly and severally, the one paying the other to be absolved, including the costs of two counsel. This was an appeal against an order of the Western Cape Division of the High Court, Cape Town, in terms of which an interlocutory application brought by the appellants in terms of rule 30A of the Uniform Rules, to compel the production of documents by the respondents requested under rule 35(12), was dismissed. Additionally, the appellants were ordered to file an answering affidavit in the main case within 15 days of the order. It was against those two orders that the present appeal, with the leave of the court below, was directed. The second appellant, Ms Glynnis Breytenbach, acting in her representative capacity as a member of the first appellant, the Democratic Alliance, conducted a press conference where she published a media statement of and concerning the first respondent, Advocate Busisiwe Mkhwebane, the Public Protector. Amongst other things it was alleged that Advocate Mkhwebane was not a suitable candidate to be appointed Public Protector as she had been a government spy employed by the State Security Agency (SSA) during her deployment to the People’s Republic of China by the Department of Home Affairs. There were further similar statements made by the third appellant, also a member of the DA. The second respondent is the office of the Public Protector. The first respondent was aggrieved. Her complaint was that the statements made by the appellants of her were defamatory, impinged on her integrity and reputation, had no foundation in fact, impacted on the office of the Public Protector and demanded that the allegations be retracted. The appellants’ refusal to accede to the demand for the retraction led to the main application by the respondents, in terms of which they sought a declaration that the statements were false and defamatory and that the appellants be ordered to publish a retraction. The appellants filed a notice of intention to oppose the main application. Prior to filing their answering affidavit, the appellants filed a notice in terms of Uniform rule 35(12), seeking the production by the respondents of seven documents they considered they were entitled to. The respondents produced five of the seven items required by the appellants. The refusal of the respondents to produce the remaining two items led to the interlocutory application in the court below during June 2018 to compel the production of the two documents in terms of rule 30A of the Uniform Rules. The appellants contended that the documents sought were directly relevant to the question of whether Ms Mkhwebane was a spy at the material times claimed in the statements complained of and were thus compellable. The documents sought were Ms Mkhwebane’s application for a position as analyst at the SSA which was referred to in her letter of appointment, which she had attached to her affidavit in the main application, and a contemplated letter of acceptance also referred to therein. The respondents, in resisting the application to compel the production of the documents, adopted the position that neither of those documents had been ‘referred to’ as that term is understood in the applicable rule of court The court below took the view that neither document had been relied on in the main application or ‘referred to’ as envisaged by the rule requiring production of documents, namely rule 35(12). It also held that the documents need not have been referred to at all, echoing the stance adopted by the respondents. The SCA considered that rule 35(12) is part of a set of rules regulating discovery, inspection and production of documents in relation to litigation. It held that the production of documents referred to in annexures that may be compelled in terms of rule 30A read with rule 35(12), must be ‘subject to some limitation’, without which there would be absurd results. In deciding whether to order the production of documents a court must consider whether they were relevant to the issues between the parties and there must be a direct or indirect reference to the document sought and that supposition was not enough. The SCA held that the court below erred in concluding that there was no reference to the application for appointment to the post of Analyst and that it was irrelevant. It was noted that in refusing production of the requested documents, the court below appeared to have attached some significance to the fact that the appellants, prior to the launching of the main proceedings, claimed to have evidence to substantiate their allegations against Ms Mkhwebane. In that regard the court below erred. The question was whether the documents had evidentiary value and might assist the appellants in their defence of truth and public interest. Her application for the post of Analyst at the SSA was relevant to the time of when and how she was connected to the SSA. In relation to the envisaged letter of acceptance, the SCA was unpersuaded that there was a reference within the meaning of rule 35(12) to the document sought to be produced. There was no indication that it had been completed and that it existed. It refused to order the production of a document that may or may not exist and to which reference had not been made in terms of the rule. In terms of the question of the order placing the appellants on terms to file their answering affidavits, the SCA recorded that it had accepted on behalf of the appellants that if this Court was to order the production of one or both of the documents sought, the order issued by the court below in relation to the filing of an answering affidavit could remain in place. In this regard The SCA stated that it was in everyone’s interest, including the Office of the Public Protector that the litigation be expedited and finalised In regard to an approach to applications to compel the production of documents in terms of rule 35(12) the SCA held that there should not be an emphasis on an onus. Rather there should at the very least be a basis provided in terms of which the documents are sought. The court will then have regard to the pleadings or affidavits and exercise a discretion based on all the available materials before it. In light of the above the SCA upheld the appeal, with costs, including the costs of two counsel. It set aside the order of the court below substituting it as follows: (1) the applicants in the main application to produce for inspection and copying the first applicant’s application for the post of Analyst in the SSA by no later than 1st April 2021; (2) the respondents in the main application to file their answering affidavit by no later than the 16th April 2021 and lastly, the respondents in the interlocutory application were ordered to pay the applicants’ costs, including the costs of two counsel where so employed, jointly and severally, the one paying the other to be absolved.

3561

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1274/2019 In the matter between: OAKBAY INVESTMENTS (PTY) LTD APPLICANT and TEGETA EXPLORATION AND RESOURCES (PTY) LTD (IN BUSINESS RESCUE) FIRST RESPONDENT JOHAN LOUIS KLOPPER NO SECOND RESPONDENT KURT ROBERT KNOOP NO THIRD RESPONDENT THE COMPANIES AND INTELLECTUAL PROPERTY COMMISSION ("CIPC") FOURTH RESPONDENT Neutral citation: Oakbay Investments (Pty) Ltd v Tegeta Exploration and Resources (Pty) Ltd and Others (1274/2019) [2021] ZASCA 59 (21 May 2021) Coram: PONNAN, WALLIS and SALDULKER JJA and GOOSEN and UNTERHALTER AJJA Heard: 11 MAY 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 21 May 2021 Summary: Companies Act 71 of 2008 – business rescue practitioners (BRPs) – removal under s 139(2)(e) – scope of section – dispute over inter- company loans – whether giving rise to a conflict of interest warranting removal of BRPs ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Potterill J as court of first instance): The application for leave to appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel, where two counsel were employed, and the costs of the application to lead further evidence on appeal. JUDGMENT Wallis JA (Ponnan and Saldulker JJA and Goosen and Unterhalter AJJA concurring) [1] In February 2018, eight companies in the Oakbay Group were placed in voluntary business rescue after the four major South African banks decided to terminate their banking facilities, rendering them commercially insolvent.1 Among the companies were the first respondent, Tegeta Exploration and Resources (Pty) Ltd (Tegeta), and its three wholly-owned subsidiaries, Optimum Coal Mine (Pty) Ltd (OCM), Koornfontein Mines (Pty) Ltd (Koornfontein) and Optimum Coal Terminal (Pty) Ltd (OCT). Oakbay Investments (Pty) Ltd (Oakbay), the applicant and the company that controlled the group, was not placed in business rescue. It was represented in these proceedings, which were commenced on 16 November 2018, by Ms Ragavan, the acting Chief Executive Officer (CEO) of the Oakbay Group. She deposed to the founding and replying affidavits and sought the removal from office of Messrs Knoop and Klopper, the second and third respondents and the appointed business rescue practitioners (the 1 Murray and Others NNO v African Global Holdings (Pty) Ltd and Others [2019] ZASCA 152; 2020 (2) SA 93 (SCA). BRPs) of Tegeta. The application was dismissed by Potterill J in the Gauteng Division of the High Court, Pretoria and she refused leave to appeal. This court referred Oakbay's application for such leave for argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. Background to the issues [2] In addition to their appointment as Tegeta's BRPs, Messrs Knoop and Klopper were appointed, together with two others, as the BRPs of OCM and jointly as the BRPs of Koornfontein. Mr Knoop was appointed as the sole BRP of OCT. These appointments were said by Oakbay to give rise to a conflict of interest between their duties in relation to Tegeta and their duties, principally in relation to OCM, but generally to all three subsidiaries. It based its case for their removal on s 139(2)(e) of the Companies Act 71 of 2008 (the Act). First, however, it is necessary to outline the facts said to give rise to the conflict of interest. [3] According to Oakbay, when Tegeta purchased the shares in OCM, Koornfontein and OCT, a balance sheet annexed to the sale agreement reflected that all three subsidiaries were substantially indebted to their then holding company in respect of inter-company loans.2 As a result of the sale, Tegeta was said to have stepped into the shoes of the previous holding company as the party to whom those loans were owed. Thereafter further transactions occurred between the four companies. According to Ms Ragavan the outcome of these was accurately reflected in the audited annual financial statements for the three subsidiary companies that she annexed to the founding affidavit. These showed that all three companies had substantially reduced their liability to Tegeta and, in 2 In round figures the amounts given in the affidavit were R4,3 billion in the case of OCM; R360 million in the case of Koornfontein; and R225 million in the case of OCT. the case of Koornfontein, Tegeta had borrowed considerable sums from it by way of inter-company loans.3 [4] Ms Ragavan did not deal in any detail with the transactions that originally gave rise to the inter-company loans or those that occurred in the two years and two months that elapsed between Tegeta's acquisition of OCM, Koornfontein and OCT and the four companies entering business rescue. There was thus no explanation for the changes in the amount of these loans. She explained that the companies operated as related entities, with often common shareholders and asserted that the claims based on the inter-company loans were unassailable. She added: '… there was never any contemplation by [Oakbay] that any party could question the inter- company loans as has now been done by the BRPs.' [5] This latter statement ignored the fact that the auditors of all four companies had questioned the correctness of the accounts in relation to the inter-company loans. All of the audited annual financial statements on which Ms Ragavan relied, as well as those of Tegeta, contained a disclaimer by the auditors based on a lack of properly maintained accounting records. Whilst the disclaimers were general and extensive, in three instances4 the auditors said that they were unable to satisfy themselves of the 'Completeness, Valuation and Validity of Related Party Transactions and Balances' and in the other that they could not satisfy themselves of 'All assertions relating to Loans from Group Companies'.5 In reporting on whether the companies were going concerns, they said that there was material uncertainty about their going concern status. Tegeta had incurred a financial loss 3 The amounts in round figures were now said to be R2,6 billion for OCM; R291 million owing to Koornfontein; and R45.5 million for OCT. 4 Tegeta, OCM and Koornfontein. 5 OCT. of over R80 million for the 2017 financial year. In relation to OCM and Koornfontein they said: 'We conclude that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.' [6] Hence, even before the BRPs took office, question marks had been raised in relation to the inter-company loans. The BRPs had to investigate these loans as part of their obligation in terms of s 141(1) of the Act to determine whether there was any reasonable prospect of the businesses being rescued. When they sought access to the offices and records of the companies under business rescue, such access was denied at the instance of Ms Ragavan. Urgent proceedings had to be brought to secure access and these were finalised on 2 May 2018. Thereafter the BRPs commissioned a report from Mr Harcourt-Cooke on the flow of funds into and out of Tegeta's bank account and the inter-company loans. [7] Rather than resolving the BRPs' concerns in relation to the inter-company loans, Mr Harcourt-Cooke's report exacerbated them. It reflected transfers from OCM to Tegeta in excess of R1 billion between May 2016 and January 2018 and transfers from Koornfontein to Tegeta of more than R2.7 billion between April 2016 and February 2018. Ms Ragavan informed Mr Harcourt-Cooke that Tegeta performed a group treasury function. Whilst this is not unusual, there was no suggestion that it was being conducted in terms of a sweeping arrangement with the Oakbay group's bankers.6 The BRPs said, without rebuttal, that the funds were being moved at Ms Ragavan's discretion. That is not a conventional way in which to perform a group treasury function, nor was Ms Ragavan's justification that these cash flows were to 'pay salaries', convincing. That would require very careful and accurate records to be maintained to show the propriety of the 6 MV Fonarun Naree: Afgri Grain Marketing (Pty) Ltd v Trustees for the time being of Copenship Bulkers A/S (in liquidation) [2019] ZASCA 67; [2019] 3 All SA 321 (SCA) paras 38 and 50-58. movement of funds and the levels of inter-company indebtedness at any particular time. The auditor's qualifications to the accounts showed that this was not being done. [8] Mr Harcourt-Cooke's conclusion to his third and final report dated 20 June 2018 made it clear that the figures in respect of inter-company loans were, at the lowest, highly debatable and the legitimacy of the inter-company transfers was open to question. The summary of his findings read: 'We have been unable to verify the validity and accuracy of the inter-company balances at 20 February 2018 being the date OCM and 7 other companies were placed in Business Rescue for the following reasons:  In certain instances, the opening inter-company balances at 28 February 2017 do not agree.  A number of the loan account balances have substantial opening balances carried forward from prior years.  We are unable to place reliance on the opening balances at 28 February 2017 as a number of the audit reports in the Audited Annual Financial Statements "AFS" express a "disclaimer" of audit opinion at that date.  Jan Tolmay has not finalised the OCM books to 28 February 2018. He currently has no access to the SAP accounting system and is unable to retrieve the detailed debtors and creditors sub-ledgers at 28 February 2018.  Not all supporting documents are available and have not been provided to support payments made.  There are no documents available/provided to support journal entries passed.  Where payments were made by third parties to other companies in business rescue these transactions have not been recorded in the respective entities books.  We have noted in certain instances payment descriptions on the bank statements as "Tegeta" where in fact the funds were paid [to] "Oakbay Investments".  We have not been provided with all the loan agreements to support transactions between OCM and the other companies in business rescue, and certain loan agreements provided the agreements to not stand up to scrutiny and do not appear to be on an arm's length basis.  We have not been provided with all management agreements between Oakbay and OCM and other companies in business rescue, and those provided do not stand up to scrutiny and do not appear to be on an arm's length basis eg Oakbay charging Koornfontein R1 m per month, and TNA Media (Pty) Ltd agreement with Koornfontein signed on 2 May 2017 for a sponsorship agreement of R 24 m.’ [9] Apart from the investigation by Mr Harcourt-Cooke, the BRPs obtained copies of Tegeta's bank statements with the Bank of Baroda for the period from 1August 2016 to 28 February 2018. These showed a pattern of funds flowing in and out with bewildering frequency and for no apparent reason. The following are examples. On 25 January, a few weeks before the companies were placed in business rescue, OCM deposited R13 million in Tegeta's account, the bulk of which was used to pay Eskom. OCM deposited a further R5.5 million on the same day and this was immediately paid to a related company, Shiva Uranium (Shiva), in which the majority shareholding was held by Oakbay. On 25 January OCM deposited a further R13 million and this was immediately paid to Koornfontein. On 26 January OCM deposited R1 million and R1.5 million was paid to Koornfontein. On 29 January OCM deposited R500 000 and this was paid to Shiva. On 31 January Koornfontein deposited R50 million, of which R35 million was paid to OCM and R2 million to Shiva. On 1 February two payments of R4 million and R3.5 million were made to Koornfontein and a further R5 million to Shiva. The following day OCM paid R5 million to Tegeta and this was immediately paid to Koornfontein. On 5 February OCM paid a further R6.5 million to Tegeta, which transferred it the same day to Koornfontein. [10] The bank statements showed the same pattern of payments in and out of the Tegeta account for the entire period they covered. In dealing with a similar pattern of payments in the bank accounts of one of the other companies in business rescue, I remarked that the image of a washing machine or spin dryer sprang to mind.7 The image is equally apposite here and it was a legitimate matter of concern to the BRPs. The statement by Mr Knoop, in his answering affidavit, that 'the Oakbay companies were run with little or no regard to the separate corporate identities of the individual companies making up the group' went unanswered. In those circumstances the BRPs cannot be faulted for viewing the figures in relation to inter-company loans with circumspection, if not outright suspicion. [11] On 25 April 2018, before these investigations had been undertaken, the BRPs proposed a business rescue plan in respect of Tegeta. The basis for the plan was the disposal of the business as a going concern. It reflected an indebtedness by Tegeta to Koornfontein of nearly R306 million and lesser amounts owing to other group companies, but provided for no dividend to be paid to them whether Tegeta was under business rescue or placed in liquidation. An indebtedness of OCM to Tegeta in an amount exceeding R2.6 billion was said to be disputed and it was not reflected as an asset of Tegeta. [12] Two days earlier the BRPs of OCM had also published a business rescue plan. It proposed what was described as a 'Trade Out with a view to Sell'. This meant that the company would continue to operate in terms of an operating agreement concluded with a third party and concurrently a sales process would be held to sell the assets and business operations of the mine using a wind down process. The full plan reflecting all creditors was not before the court, but an annexure to the plan showed the Tegeta claim of some R2.6 billion as a disputed claim. 7 Knoop NO and Another v Gupta (Tayob as intervening party) [2020] ZASCA 163; 2021 (3) SA 88 (SCA); [2021] 1 All SA 726 (SCA) para 137. [13] The BRPs said that the treatment of the Tegeta claim against OCM was irrelevant, because on any basis there would be no free residue available to pay a dividend to Tegeta after paying all other OCM creditors. In dealing with the OCM plan Mr Knoop said that the loan by Tegeta was irrecoverable and that its voting interest would be nil, because in a liquidation scenario there was no prospect of its receiving a dividend. This was in accordance with the provisions of s 145(4)(b) of the Act. Given the qualifications to the annual financial statements of OCM it is not possible to accept that it was solvent at the time when business rescue commenced. [14] The BRPs drew attention to a subordination agreement entered into between Tegeta and OCM and witnessed on behalf of both companies by Ms Ragavan, but not mentioned in the founding affidavit. This agreement was concluded at the time Tegeta acquired the shares in OCM, Koornfontein and OCT, and provided that Tegeta subordinated so much of its claim against OCM for the benefit of the other creditors of OCM, both present and future, as would enable such claims to be paid in full as and when such claims fell due. The claims of such creditors were to rank preferentially to the claim of Tegeta and Tegeta undertook in any liquidation or business rescue of OCM not to prove or tender a claim, proof of which would reduce or diminish any liquidation dividend payable to other creditors. An examination of the OCM business rescue plan revealed that neither employees nor concurrent creditors were to receive a dividend of one hundred cents in the Rand. Accordingly, as matters were perceived to be at that early stage, without access to the records and accounts of either Tegeta or OCM, the provisions of the subordination agreement applied and Tegeta was precluded from proving a claim in respect of its loan to OCM, whatever the amount thereof. [15] In reply, Ms Ragavan did not attempt to justify the amount of Tegeta's claim, nor did she refute the BRPs statements or attempt to do so. Against that background I turn to deal with her grounds for seeking the removal of the BRPs and the issues to which they gave rise. Discussion of the issues [16] The application was based squarely and solely on the provisions of s 139(2)(e) of the Act, which empowers the court upon the request of an affected person, or on its own motion, to remove a BRP from office on the grounds of ‘conflict of interest or lack of independence’. The primary contention was that the appointment of the same BRPs in respect of companies in a single group was inappropriate as it had led to conflicts of interest due to the existence of inter- company loans and claims. This contention was advanced as a matter of general principle. The secondary case, if the general contention was rejected, was that the facts set out above in regard to the BRPs treatment of the Tegeta claim against OCM demonstrated that they were conflicted because they were acting on behalf of Tegeta, in which capacity they were obliged to pursue the claim with vigour, while on behalf of OCM they were required, with equal vigour, to resist the claim. The conflict was said to be both obvious and irresoluble. [17] The primary contention was not pursued in argument because this court had already rejected it in a judgment delivered last November in a case involving an attempt to remove the same two BRPs from office in two of the other companies in the Oakbay Group.8 To the exposition of the principles underlying s 139(2)(e) in that judgment,9 I would add only that I am by no means satisfied that the complaint being advanced is one falling within that section. [18] An examination of the sub-sections of s 139(2) reveals that each appears to be concerned with a personal quality or action of the BRP whose removal is 8 Knoop NO and Another v Gupta (Tayob as intervening party) ibid, paras 140 and 141. 9 Ibid, para 23. sought, namely, incompetence; failure to perform their duties; failing to exercise due care in the performance of their duties; engaging in illegal acts or conduct; no longer satisfying the requirements of s 138(1) for their appointment; conflict of interest or lack of independence; or incapacity or inability to perform their functions. The ordinary understanding of a conflict of interest as explained in the previous judgment is a situation where the private interests of the BRP conflict with their obligations to the company in respect of which they have been appointed. That is not the complaint in the present case, where the conflict is alleged to arise as between the interests of Tegeta and OCM, not between the BRPs and either company. Whether that also comes within section 139(2)(e) is perhaps debatable.10 [19] This is not to say that where such an inter-company conflict arises it may not necessitate the BRP resigning, or being removed from office, in respect of one or other company, or possibly both of them. But the reason for that would be that the conflict prevented them from performing, or resulted in their failing to perform, their duties.11 Alternatively it might render it impossible to exercise the proper degree of care owed to each company in the performance of their duties.12 The invocation of either of those provisions would involve a consideration of different issues and potentially would mean that the BRP should be removed from office in respect of both companies, and not the somewhat peculiar approach, adopted by Oakbay in this case, that they are unfit to continue as BRPs of Tegeta, but remain fit to continue in office as BRPs of OCM and the other companies. However, having made those comments, it is unnecessary to express any final conclusion in that regard, as it was not argued, save in response to some questions 10 C/f American Natural Soda Ash Corp and Another v Botswana Ash (Pty) Ltd and others [2007] ZACAC 1, a case of side shifting and Prince Jefri Bolkiah v KPMG (a firm) [1998] UKHL 52; [1999] 1 All ER 517 (HL). 11 In the case of a clear conflict, they might be unable to move forward with the business rescue in respect of either company. 12 A decision that favoured the one over the other could give rise to a contention that they had not exercised due care in relation to the disadvantaged party. from the bench, and the case can be resolved on the assumption that Oakbay's contentions can be advanced under s 138(2)(e). [20] I turn to the secondary ground advanced on behalf of Oakbay. Its complaint about the treatment of the Tegeta claim against OCM was set out in the following paragraphs of Ms Ragavan's founding affidavit: '‘2.30 What is apparent … is that the BRPs will effectively be forced to act as mediators between Tegeta and Optimum Coal Mine whilst representing both the entities simultaneously. 2.31 At present it seems they are intent on compromising Tegeta’s claim in Optimum Coal Mine for the sole purpose of extinguishing all creditors' claims in Tegeta, to the extreme detriment of the shareholders and other creditors. 2.32 Put differently, the BRPs are trying to represent the interest of Optimum Coal Mine (as a debtor of Tegeta) and those of Tegeta (as a creditor of Optimum Coal Mine) at the same time. 2.33 Irrespective as to their intentions, the BRPs cannot simultaneously act for both parties in the face of a dispute between the parties, the resolution of which can only be beneficial to the one and detrimental to the other. 2.34 I respectfully submit that from the above there can no longer only be a fear of a conflict of interest manifesting itself, but that it is unequivocally so that a conflict has arisen.’ [21] The conflict posited by Oakbay simply did not exist when the two business rescue plans were prepared and published. Both adopted precisely the same approach to the indebtedness of OCM to Tegeta, namely that it was not clear and there might be grounds upon which to challenge either its existence or its amount. Accordingly, both treated it as disputed. But that did not mean that the BRPs were constrained to adopt the hostile adversarial approach that these paragraphs were based on. Once the BRPs obtained access to the accounts of the two companies they would have the opportunity, with outside professional assistance, to reconcile them to see whether the Tegeta claim was valid and, if so, in what amount. There was no need at the time the business rescue plans were prepared and published for litigation, or some other form of dispute resolution, to resolve the issue. As matters stood it seemed likely to be an academic exercise given the financial circumstances of the two companies. [22] Counsel's submission in response to a question from the presiding judge as to the basis of his case was that there was a conflict of interest because in the business rescue plan for Tegeta the BRPs did not recognise the OCM debt, whilst in the plan for OCM they did recognise it. When it was pointed out that both plans dealt with the debt on precisely the same basis, by treating it as disputed, the argument shifted to the non-recognition of the debt. Rhetorically, counsel asked how that was explicable unless there was a conflict. The short answer is that the debt's existence and amount was uncertain and it was accordingly dealt with as disputed. [23] The misconception underlying the entire argument emerged from a submission that the heart of the difficulty lay in the fact that, when the BRPs were wearing their Tegeta hats, they had a duty to pursue the Tegeta claim on behalf of Tegeta. But this was to confuse business rescue with insolvency, where an obligation rests on the trustee or liquidator to collect the assets of the insolvent or company in liquidation, reduce them to monetary amounts and distribute them among the creditors. No such obligation rests upon a BRP. Their obligation is to investigate in order to ascertain whether there is a reasonable prospect of the company being rescued. It is established that this means more than that the company will be returned to solvent trading. It includes a situation where the company is wound down on terms that provide a better return for creditors or shareholders than on an immediate liquidation.13 The responsibility of the BRP is to investigate and ascertain whether either of these is reasonably possible. 13 See s 128(b)(iii) of the Act. [24] When dealing with a complex group of companies, all ultimately controlled by the same people, there is little point in the BRPs becoming embroiled in arguments within the group concerning inter-company indebtedness, unless a stage is reached when a question relating to such indebtedness must be resolved in order to address conflicting interests of third party creditors. That is the kind of situation that arose in the case to which we were referred arising from the liquidation of the Macmed group of companies.14 There the liquidators, for reasons of their own, recognised a claim by the holding company of the Macmed group, the effect of which was materially to prejudice the position of two banks that had lent substantial sums to a subsidiary company and who would otherwise have made a substantial recovery on their claims. There was accordingly a fundamental conflict between the claim being advanced by liquidators on behalf of the holding company and the interests and claims of the two banks.15 That was compounded by the fact that the two liquidators of the subsidiary were also liquidators of the holding company and had concluded a fee- sharing agreement with their co-liquidators in the holding company. The fee share would be affected depending on the outcome of the disputes with the two banks over their claims and the claim by the holding company. The present situation was entirely different. [25] We received some submissions that the BRPs were in default of their obligations in terms of s 145(5)(b) of the Act to appoint a suitably qualified person to appraise Tegeta's claim and value its voting interest on the basis that it was a subordinated concurrent claim. The apparent purpose of this provision, when applied in a situation such as the present, is to remove any risk of a conflict arising over the existence and value of such a claim. If anything, the existence of 14 Standard Bank of SA Limited v The Master of the High Court (Eastern Cape Division) [2010] ZASCA 4; 2010 (4) SA 405 (SCA); [2010] 3 All SA 135 (SCA) 15 The liquidators had refused to recognise either bank's claim and had engaged in protracted and unsuccessful litigation in resisting them. this independent mechanism reduces the possibility of the BRPs being conflicted as claimed. Accepting that this exercise would need to be done before any meeting could be held at which creditors would have the right to vote, there is no suggestion that this stage had been reached. All attempts to convene a meeting were faced with threats of litigation and, by the time this application was launched, the BRPs were both better informed and in the course of preparing fresh business rescue plans. Had a case of conflict of interest been made out those facts would have been relevant to the exercise of the court's discretion to remove the BRPs. It suffices for present purposes to say that the case on a conflict of interest was not advanced by reference to s 145(5)(b). Conclusion [26] I am accordingly satisfied that Oakbay's complaints was not established. Nothing more than the possibility of conflict in some unlikely circumstances in the future emerged from these papers. In those circumstances there is no reasonable possibility of an appeal succeeding and the application for leave to appeal must be dismissed. That must carry with it an order for payment of the costs, including the costs of two counsel where two counsel were employed. [27] One final matter arose from Oakbay lodging an application to lead further evidence on appeal on 3 May 2021. Counsel sought to deal with this application at the outset of the argument, but desisted after it was pointed out that the application was academic at the stage of considering the application for leave to appeal. Until leave was granted there could be no question of leading further evidence on appeal. In order to obtain leave he had to show that a case of conflict of interest justifying the removal of the BRPs appeared from the existing papers. Accordingly, the application seemed to have little purpose. If that case was established, there was no need for further evidence to establish it. If it was not, it was too late to rescue the original case and the evidence in the application to lead further evidence on appeal would only be relevant if a fresh application for the removal of the BRPs were made. In the circumstances the application was not pursued. On any basis Oakbay must pay the costs of that application. [28] In the result the following order is made: 'The application for leave to appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel, where two counsel were employed, and the costs of the application to lead further evidence on appeal.' _________________ M J D WALLIS JUDGE OF APPEAL Appearances For appellant: MR Hellens SC (with him L van Gass) Instructed by: Van der Merwe & Van der Merwe, George; Honey Attorneys, Bloemfontein For respondent: G D Wickens SC (heads of argument prepared by P Stais SC and G D Wickens SC) Instructed by: Smit Sewgoolam Attorneys, 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 21 May 2021 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Oakbay Investments (Pty) Ltd v Tegeta Exploration and Resources (Pty) Ltd and Others (1274/2019) [2021] ZASCA 59 (21 May 2021) The SCA today dismissed an application for leave to appeal against the decision of the Gauteng Division of the High Court, Pretoria in this matter. Oakbay Investments applied to the High Court for the removal of Messrs Knoop and Klopper as business rescue practitioners (BRPs) in respect of Tegeta Resources a subsidiary of Oakbay. The application was based on an alleged conflict of interest on the part of the BRPs in their treatment of an inter-company loan by Tegeta to its wholly-owned subsidiary Optimum Coal Mines (OCM). It was contended that in principle the same BRPs should not be appointed to two or more companies in the same group, at least where there were inter-company transactions that might be the subject of dispute. Alternatively, it was contended that there was a real conflict of interest in this case because the BRPs could not at one and the same time both advance the claim on behalf of Tegeta and dispute it on behalf of OCM. The court held that the argument in principle had been rejected by the SCA last November in another case involving the same BRPs and two other companies in the Oakbay Group. It was not asked to revisit that decision. As regards the secondary argument the SCA held that the BRPs had treated the claim in the same way in both Tegeta and OCM by describing it as disputed. There were facts at the disposal of the BRPs that provided a basis for this view. However, no immediate conflict had arisen and there was no reason to believe that the issue could not be resolved in due course as the business rescue of the two companies and the entire group of companies proceeded. In the circumstances there was no reasonable prospect of the decision by the high court being overturned on appeal and the application for leave to appeal was dismissed with costs.

1501

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT CASE NO: 588/2007 THE MINISTER OF SAFETY AND SECURITY Appellant and AUGUSTUS JOHN DE WITT Respondent Neutral citation: Minister of Safety and Security v De Witt (722/2007) 103 [2008] ZASCA (19 September 2008) Coram: Brand, Lewis and Ponnan JJA Heard: 11 September 2008 Delivered: 19 September 2008 Summary: Section 3(4) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 permits a court to condone a litigant’s failure to give a valid notice required by s 3(1), prior to instituting legal proceedings, if the debt has not been extinguished by prescription, good cause is shown and the debtor is not prejudiced. Application for condonation may be made by the creditor even after proceedings have been instituted if the debt has not prescribed. ORDER On appeal from High Court, Cape Town (Eastern Circuit) (Fourie J sitting as court of first instance). The appeal is dismissed with costs. JUDGMENT LEWIS JA (Brand and Ponnan JJA concurring) [1] This appeal turns on the interpretation of s 3 of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002. The Act was introduced to harmonize periods of prescription of debts owed by organs of state, and to make provision for a uniform requirement for the giving of notice in connection with the institution of legal proceedings. It repealed several statutes that had previously regulated proceedings against various state bodies such as the police and the defence force. And it came after a decision in the Constitutional Court – Mohlomi v Minister of Defence1 - in which it was held that s 113(1) of the Defence Act2 was unconstitutional since it made no allowance for failure timeously to notify the defence force of the intention to sue it, despite the circumstances. [2] The Act is meant not only to bring consistency to procedural requirements for litigating against organs of state but also, it is clear, to render them compliant with the Constitution. The way in which it seeks to achieve a 1 1997 (1) SA 124 (CC). See also Moise v Greater Germiston Transitional Local Council: Minister of Justice and Constitutional Development Intervening (Women’s Legal Centre as amicus curiae) 2001 (4) SA 491 (CC). 2 44 of 1957. procedure that is not arbitrary and that operates efficiently and fairly both for a plaintiff and an organ of state is to give a court the power to condone a plaintiff’s non-compliance with procedural requirements in certain circumstances. Thus access to courts is facilitated, while at the same time procedures against large governmental organizations that need to keep their affairs in order are regulated. [3] The purpose of having special requirements in place for the institution of action against a state body is well-recognized and was put thus by Didcott J in Mohlomi:3 ‘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. It does not follow, however, that all limitations which achieve a result so laudable are constitutionally sound for that reason. Each must nevertheless be scrutinised to see whether its own particular range and terms are compatible with the right which s 22 bestows on everyone to have his or her justiciable disputes settled by a court of law. The right is denied altogether, of course, whenever an action gets 3 Paras 11 and 12. The section in issue there provided for a shortened time period within which to sue, but the dicta are apposite also to the additional requirement of notice. barred eventually because it was not instituted within the time allowed. But the prospect of such an outcome is inherent in every case, no matter how generous or meagre the allowance may have been there, and it does not per se dispose of the point, as I view that at any rate. What counts rather, I believe, is the sufficiency or insufficiency, the adequacy or inadequacy, of the room which the limitation leaves open in the beginning for the exercise of the right. For the consistency of the limitation with the right depends upon the availability of an initial opportunity to exercise the right that amounts, in all the circumstances characterising the class of case in question, to a real and fair one. The test, thus formulated, lends itself to no hard and fast rule which shows us where to draw the line.’ [4] As I have said, the way in which the legislature has sought to avoid drawing a hard and fast rule that may cause undue hardship to a plaintiff is to make provision for time limits, and notices of intention to sue, but to enable a court to condone a failure to comply with the requirements. Section 3(4) gives the court a discretion to condone non-compliance, subject to three requirements being met. Section 3 reads: ‘3 Notice of intended legal proceedings to be given to organ of state (1) No legal proceedings for the recovery of a debt may be instituted against an organ of state unless- (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 (b) the organ of state in question has consented in writing to the institution of that legal proceedings- (i) without such notice; or (ii) upon receipt of a notice which does not comply with all the requirements set out in subsection (2). (2) A notice must- (a) within six months from the date on which the debt became due, be served on the organ of state in accordance with section 4(1); and (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. (3) For purposes of subsection (2)(a)- (a) a debt may not be regarded as being due until the creditor has knowledge of the identity of the organ of state and of the facts giving rise to the debt, but a creditor must be regarded as having acquired such knowledge as soon as he or she or it could have acquired it by exercising reasonable care, unless the organ of state wilfully prevented him or her or it from acquiring such knowledge; and (b) a debt referred to in section 2(2)(a), must be regarded as having become due on the fixed date. (4) (a) If an organ of state relies on a creditor's failure to serve a notice in terms of subsection (2)(a), the creditor may apply to a court having jurisdiction for condonation of such failure. (b) The court may grant an application referred to in paragraph (a) 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. (c) If an application is granted in terms of paragraph (b), the court may grant leave to institute the legal proceedings in question, on such conditions regarding notice to the organ of state as the court may deem appropriate. . . . .’ [5] The section has been the subject of interpretation in several cases already. In particular, the requirements of good cause and absence of prejudice to the organ of state for condonation to be granted, set out in s 3(4)(b), were discussed by this court in Madinda v Minister of Safety and Security.4 At issue in this case is a different question: where no notice is given by the creditor, or where the notice is defective in some respect, but the legal proceedings are instituted before the expiry of the prescription period, may a court condone the failure to give notice, or the giving of defective notice, after the summons or application has been served? The question takes on added significance where proceedings are served before the prescriptive period has ended, but notice is served only after that date, or where notice has been served before the prescriptive period has ended but does not comply with s 3(2). [6] The respondent, John de Witt, together with two other men, was arrested and detained by members of the South African Police Services on 29 May 2004. On 15 June 2004 he was freed on bail. Nearly two years later, on 19 April 2006, De Witt’s attorneys sent a letter to the Minister advising of his intention to sue for wrongful arrest and detention. On 29 May 2006 the National Commissioner of Police rejected the notice since it was not sent 4 (153/ 2007) [2008] ZASCA 34 (28 March 2008) 2008 (4) SA 312 (SCA). within six months of the date on which the debt became due (s 3(2)(a)). On 6 February 2007 De Witt and the two men with whom he was arrested and held issued a summons on the Minister claiming damages. The summons was served a week later, on 13 February 2007. It is not disputed that the summons was served before the debt had become prescribed under the Prescription Act 68 of 1969, being served within three years from the date of arrest and detention. [7] For some inexplicable reason the failure of one of the other two plaintifffs to give timeous notice was ‘condoned’ by the Minister. De Witt, however, met an objection to his summons, the Minister claiming in a special plea that because no timeous notice had been served before the summons was served, the claim had prescribed. He thus sought condonation of his failure to send the notice timeously, and the Cape High Court granted it, finding that it is open to a plaintiff to seek condonation for non-compliance with s 3(2) after a summons has been served. [8] We were referred to a number of decisions of the high courts in which condonation in similar circumstances was granted.5 The only case of which I am aware that has found that condonation cannot be granted after a summons has been served, and when the case is pending, is that of a full 5 Catharina Dauth & others v Minister of Safety and Security & others (per Lacock J) (case 729/2007 Northern Cape High Court, handed down on 23 May 2008); Shirley Marais v Minister van Veiligheid en ‘n ander (case 2727/2005 Free State High Court (per Van der Merwe R) (delivered on 24 October 2006); and Schlebusch v Mohokare Plaaslike Munisipalitiet (per Van Zyl R) (case 567/2005, delivered on 11 October 2007) court of the Natal High Court in Legal Aid Board & others v Singh.6 I shall return to the reasoning in that case briefly. [9] The argument for the Minister is that decisions granting condonation after summons has been served, and where no valid notice required in s 3(2) has been given, do not have regard to the peremptory nature of the wording of s 3(1). The section expressly refers to notice of intended legal proceedings, and is peremptory: no legal proceedings may7 be instituted against an organ of state unless the creditor has given notice in writing of his or her intention to sue, or unless the organ of state has consented in writing to the institution of legal proceedings without notice, or despite a defective notice. Second, s 3(2) provides that the notice must be served on the organ of state within six months from the date on which the debt became due. These peremptory words, it is argued, have the consequence that condonation cannot be granted unless a valid, timeous notice is served before a summons purporting to interrupt prescription can be effective. [10] In my view, the argument loses sight of the purpose of condonation: it is to allow the action to proceed despite the fact that the peremptory provisions of s 3(1) have not been complied with. Section 3 must be read as a whole. First, it sets out the prerequisites for the institution of action against an organ of state: either a written notice or consent by the organ of state to dispense with the notice. Second, it states the requirements that must be met in order for the notice to be valid. And third, it states what the creditor may do 6 Per Theron J, Kruger J and Radebe AJ concurring: case no 14939/05, handed down on 25 August 2008. 7 The Afrikaans text uses ‘kan’ instead of ‘mag’. should he or she have failed to comply with the requirements of subsecs (1) and (2): he or she may apply for condonation for the failure. Thus either a complete failure to send a notice, or the sending of a defective notice, entitles a creditor to make the application. Even this is qualified: it is only ‘if an organ of state relies on a creditor’s failure to serve a notice’ that the creditor may apply for condonation. If the organ of state makes no objection to the absence of a notice, or a valid notice, then no condonation is required. In fact, therefore, the objection of the organ of state is a jurisdictional fact for an application for condonation, absent which the application would not be competent. [11] It follows that where no notice at all is given by the creditor, and the organ of state relies on the failure, the creditor can nonetheless apply for condonation. A fortiori, if the notice is sent out of time, condonation may be granted. The argument that the application for condonation must precede the issue and service of summons (and that if it does not the summons is ineffective) is unpersuasive. It should also be borne in mind that where no notice is given, the organ of state’s objection will in all likelihood only be made for the first time after proceedings have been instituted. [12] The very purpose of the provision allowing condonation is to give a court a discretion to determine whether the organ of state can rely on non- compliance, whatever form that may take. If this were not so, as was pointed out by Somyalo AJ in Moise,8 the requirement of written notice as a 8 Above, para 13 precondition to the institution of legal proceedings would be in itself an absolute bar to such proceedings and would constitute a real impediment to the claimant’s access to court. Indeed, a blanket bar to the amelioration by a court of the hardship worked by an inflexible precondition to the institution of proceedings could hardly survive constitutional scrutiny. [13] The discretion may only be exercised, however, if the three criteria in s 3(4)(b) are met: that the debt has not been extinguished by prescription (at issue in this case); that good cause exists for the creditor’s failure; and that the organ of state has not been unduly prejudiced. The Minister does not rely on either of the latter two criteria in this appeal. [14] The conclusion that it is open to a creditor to apply for condonation after instituting legal proceedings is borne out also by the definition of ‘creditor’ in the Act. A ‘creditor’ means a person who ‘intends to institute legal proceedings’ or ‘who has instituted such proceedings’. The creditor who has already instituted proceedings may thus apply for condonation if the organ of state relies on the creditor’s failure to serve a valid notice before proceedings are instituted. [15] The counter argument to this conclusion is that s 3(4)(c) provides that if an application for condonation is granted the ‘court may grant leave to institute legal proceedings’. This suggests, it is argued, that condonation cannot be granted after proceedings have already been instituted. The argument carries no force, in my view. The application for condonation is just that. It does not necessarily embody also an application for leave to institute proceedings. But if it does, then clearly the court may grant such leave. If, however, proceedings have already been instituted, as in this case, then there is no need to provide that the court may grant leave. Expressly empowering a court to grant leave to sue does not impliedly mean that one cannot sue before applying for condonation. [16] Further support for the view that complete non-compliance may be condoned is to be found in the provision that the organ of state may in writing consent to non-compliance (s 3(1)(b)). It would be extraordinary if the debtor could in effect condone the creditor’s non-compliance, but not the court. [17] In Legal Aid Board9 Theron J concluded that because section 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).’10 9 Above para 10. 10 Para 9. [18] Similarly, although the court below correctly found that condonation should be granted to De Witt for his late service of notice, the court’s statement that condonation cannot be granted where no notice at all is served is incorrect. It is not consonant with the wording of s 3 or its purpose. [19] Finally, the Minister argues that condonation cannot be sought after the institution of proceedings because of the peremptory wording of s 5 of the Act. The relevant parts of section 5 read: ‘5 Service of process (1) (a) Any process by which any legal proceedings contemplated in section 3 (1) are instituted must be served in the manner prescribed by the rules of the court in question for the service of process. . . . . . (2) No process referred to in subsection (1) may be served as contemplated in that subsection before the expiry of a period of 30 days after the notice, where applicable, has been served on the organ of state in terms of section 3 (2) (a) (my emphasis). (3) If any process referred to in subsection (1) has been served as contemplated in that subsection before the expiry of the period referred to in subsection (2), such process must be regarded as having been served on the first day after the expiry of the said period.’ [20] In my view, s 5 applies only to the normal situation where notice has been given timeously: the creditor must wait for 30 days before instituting proceedings. Nothing in the section overrides the court’s power to condone the failure to give notice at all, nor the giving of defective notice. Where condonation is warranted s 5 simply does not apply. [21] In the circumstances, I consider that because De Witt’s summons was issued and served before the end of the prescriptive period, the court had a discretion to condone De Witt’s late service of notice on the Minister after the proceedings were instituted. Since it was not contended before us that De Witt had not shown good cause for his delay, nor that the Minister was unduly prejudiced, condonation was correctly granted by the court below. [22] The appeal is dismissed with costs. ______________ C H Lewis Judge of Appeal Appearances: For Appellant: R C Hiemstra SC Instructed by The State Attorney Cape Town The State Attorney Bloemfontein For Respondent: D L Van Der Merwe Instructed by Goussard Attorneys George Matsepes Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL 19 September 2008 STATUS: Immediate Minister of Safety and Security v De Witt ( [2008] ZSCA 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 This appeal concerned the interpretation of s 3 of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 . The Act was passed to make uniform the preconditions to instituting legal proceedings against state bodies such as the Police Services. Previous legislation regulating different state bodies had required notice to be given within prescribed time limits, and had, in certain cases, shortened the prescription period for debts owed by certain organs of state. Some of these provisions had been held to be unconstitutional because of their inflexibility. Section 3(1) of the Act now requires notice to be given within six months of the date on which the cause of action against the organ of state arises. But s 3(4) allows a court to condone the failure to give notice. Mr de Witt had been arrested and detained by the police in May 2004. Two years later he gave notice to the Minister of Safety and Security that he intended to sue for wrongful arrest and detention. The Minister rejected the notice since it was out of time. De Witt nonetheless instituted action against the Minister before the three-year prescriptive period had elapsed. The Minister objected to the proceedings on the basis that no notice as required had been given. De Witt applied for condonation for the late service of notice. The Cape High Court granted condonation. The Minister appealed on the basis that condonation cannot be sought after proceedings have been instituted. Today the Supreme Court of Appeal upheld the finding and dismissed the appeal. It held that a court may condone failure to give notice, or the giving of defective notice, after proceedings have been instituted against an organ of state, subject to the preconditions set out in s 3(4)(b) – that the debt has not been extinguished by prescription; that good cause for the failure to give compliant notice exists; and that the organ of state was not unreasonably prejudiced by the failure. _________

3531

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1136/19 In the matter between: THETELE JOSEPH MALATJI APPELLANT and MAPONYA LAZARUS LEDWABA NO FIRST RESPONDENT GISELA STOLS NO SECOND RESPONDENT THE MASTER OF THE HIGH COURT GAUTENG DIVISION PRETORIA THIRD RESPONDENT THE MINISTER FOR RURAL DEVELOPMENT AND LAND REFORM FOURTH RESPONDENT PROVINCIAL SHARED SERVICES CENTRE OF THE DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM LIMPOPO PROVINCE FIFTH RESPONDENT THE REGIONAL LAND CLAIMS COMMISSIONER LIMPOPO PROVINCE SIXTH RESPONDENT REFILWE IRENE LETSOALO SEVENTH RESPONDENT MOTLOKWA SUZAN MOJAPELO EIGHTH RESPONDENT ZILI MASETLA NINTH RESPONDENT PHUTIANE CURRY LETSOALO TENTH RESPONDENT MANKUROANE MODIBA ELEVENTH RESPONDENT ALI MAAKE TWELFTH RESPONDENT VERONICA SEBOLAWA MOTSWI THIRTEENTH RESPONDENT FRANS MOKOENA KUBJANA FOURTEENTH RESPONDENT JIMMY KUBJANA FIFTEENTH RESPONDENT DAVID MEHLAPE-MALATJI SIXTEENTH RESPONDENT MAITE MOSERI SEVENTEENTH RESPONDENT MARY NTOAMPE EIGHTEENTH RESPONDENT JANE MAHASHA NINETEENTH RESPONDENT MOKOPA WILLIAM MONYAMA TWENTIETH RESPONDENT Neutral citation: Malatji v Ledwaba NO and Others (Case no 1136/2019) [2021] ZASCA 29 (30 March 2021) Coram: SALDULKER, MBHA and MBATHA JJA and GORVEN and EKSTEEN AJJA Heard: 18 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 09h45 on 30 March 2021. Summary: Election of trustees by beneficiaries of community trust – interpretation of court order and trust deed – beneficiaries ‘present at such meeting’ mean physically present – beneficiaries having no common law right to vote by proxy in election – proper interpretation of the trust deed does not include proxies – waiver and estoppel must be pleaded – evidence held to be insufficient to establish either waiver or estoppel. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Limpopo Division of the High Court, Polokwane (Semenya J, sitting as court of first instance): The appeal is upheld with costs, including the costs of two counsel, where so employed. The order of the court a quo dated 8 August 2019 is set aside and replaced with the following: ‘2.1 The voting process and the general meeting of the Mamphoku Makgoba Community Trust (trust registration no IT8699/2004) (the trust) held on 12 January 2019 are declared unlawful and irregular and are set aside. 2.2 The trustees elected at the general meeting on 12 January 2019 are interdicted and restrained from acting as trustees of the trust. 2.3 The letters of authority issued by the third respondent to the elected trustees are reviewed and set aside in terms of s 23 of the Trust Property Control Act 57 of 1988 and the third respondent is directed to issue letters of authority to the first and second respondents. 2.4 The first and second respondents (the independent trustees) are directed to continue to act as the only trustees of the trust and to: (i) Convene and hold a general meeting of the trust within 60 calendar days of the date of this order for purposes of nominating and appointing a new board of trustees who are eligible to stand for election in terms of the trust deed; and (ii) Give notice of the meeting at least 14 days before the meeting in accordance with clause 15.5 of the trust deed. 2.5 The independent trustees are directed to apply the following voting procedure at the general meeting referred to in para 2.4 above: (i) Only the 603 beneficiaries/claimants whose names appear on the list of 603 beneficiaries, or who have succeeded such beneficiaries in accordance with the provisions of clause 16.1 of the trust deed (the qualifying beneficiaries) are entitled to attend and vote at the general meeting. (ii) No person shall be allowed to vote by proxy. (iii) Nominations for the new trustees must be received in writing at least 5 (five) days prior to the meeting referred to in para 2.4 above by the independent trustees, which nominations must be in writing and signed by the proposer, the seconder and the nominated trustee. (iv) Both the proposer and the seconder must be qualifying beneficiaries. (v) Six hundred and three ballot papers must be prepared, numbered consecutively, one copy of which shall be handed to each qualifying beneficiary present at the meeting who is entitled to cast a vote as provided in clauses 2.9 and 15.1.3 of the trust deed. (vi) Each qualifying beneficiary present at the meeting shall be entitled to cast one vote in respect of each vacancy which is to be filled. (vii) Any person casting more votes than the number of vacancies to be filled will be deemed to have cast a spoilt vote. 2.6 The first and second respondents are to publish the results of the election within 48 hours of it being held.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Eksteen AJA (Saldulker, Mbha and Mbatha JJA and Gorven AJA concurring) [1] On 4 December 2018 this Court ordered the first and second respondents (the independent trustees) to convene and hold a general meeting of the Mamphoku Makgoba Community Trust (the trust) for the purpose of nominating and appointing a new board of trustees for the trust (the 2018 order). A meeting was convened and held pursuant to the order and a new board of trustees was appointed. However, Mr Thetele Joseph Malatji, who was both a beneficiary and a trustee, contended that the constitution of the meeting and the elective process followed were irregular and in breach of the trust deed and the 2018 order. He applied to the High Court, Polokwane (the high court), to set aside the election. The application was opposed1 and the opposing respondents raised a number of points in limine. When the application was heard the judge a quo ordered that four points raised in limine be argued and adjudicated separately from, and before, the merits of the application. She dismissed the points in limine and there is no appeal against that finding. However, she proceeded further to dismiss the application on its merits, without affording the parties an opportunity to address her on the issue. The appeal to this court against the dismissal of the application is with leave of the high court. [2] In this Court counsel were agreed that no purpose could be served by referring the matter back to the high court to adjudicate the merits as the high 1 The third, fourth, fifth and sixth respondents did not enter an appearance. The eighth, ninth, tenth and eleventh respondents supported the application of Mr Malatji. The first, second and twelfth to twentieth respondents opposed the application. court had already dismissed the application. I agree. The entire record is before us and this Court is in as good a position to deal with the matter as the high court. [3] The material facts leading to the 2018 order and to the present dispute are as follows. Shortly after the advent of the millennium members of the Makgoba community had lodged a number of land claims with the Land Claims Commissioner in terms of the Restitution of Land Rights Act 22 of 1994, in which they laid claim to 39 farms in the Magoebaskloof area in the Limpopo Province. The trust was established in order to take transfer of the farms in due course, to hold them and to develop them for and on behalf of the beneficiaries of the trust.2 [4] The trust deed set out the identities of the initial trustees and beneficiaries. It provided for trustees to hold office for three years, after which they were required to resign.3 On 27 June 2010 an election was held and a board of trustees (the previous trustees), which included Mr Malatji, was appointed. Thereafter, disputes arose between the previous trustees and certain members of the Makgoba community who made allegations of maladministration of the trust property and dereliction of duty against the previous trustees. Amidst this disunity the previous trustees declined to vacate their office at the expiry of the three-year period and an application to the high court followed. On 24 November 2015, Mabuse J granted a declaratory order (the declarator) that their term of office had expired by effluxion of time after the lapse of three years from 27 June 2010. [5] Notwithstanding the declarator, the previous trustees failed to step down. They contended that the termination of their office could not take effect until a 2 The trust was formed in 2004. A number of land claims were subsequently successful and the first properties were transferred to the trust in approximately 2008. 3 Clause 6.4 of the Trust Deed provides: ‘Subject to paragraph 6.9 below, a trustee shall hold office for a period of no longer than 3 (THREE) years upon which he shall resign.’ In terms of clause 6.5 ‘a trustee shall be eligible for re-election for 2 (TWO) consecutive periods of 3 (THREE) years, whereafter he must stand down for a period of at least 3 (THREE) years, after which he shall be eligible for re-election’. new board of trustees was elected at a general meeting, which, they argued, had been hampered by disruption on the part of a group of individuals referred to as ‘the steering committee’. The Master of the High Court, Pretoria (the Master), intervened, and, in terms of s 20(2)(e) of the Trust Property Control Act 57 of 1988, removed all of the previous trustees from office and appointed the independent trustees as trustees. This decision by the Master prompted an application by the previous trustees to the high court, which was ultimately resolved by the 2018 order. The previous trustees raised two issues. First, they challenged their removal from office. Secondly, they tendered to hold a general meeting with the purpose of the appointment of a new board of trustees, but they sought a directive in respect of who would be entitled to attend and vote at the meeting. In respect of the first issue this court confirmed the declarator and set aside any subsequent letters of authority issued by the Master. The independent trustees were accordingly the only remaining trustees in the trust. [6] In respect of the second issue, the 2018 order stipulated: ‘3. The first and second respondents are to convene and hold a general meeting of the Trust within sixty calendar days of the date of this order for purposes of nominating and appointing a new board of trustees, which will not include the first, second and third applicants (the appellants), who are ineligible to stand for election. 4. Only those beneficiaries who appear on the list of 603 beneficiaries are entitled to attend and vote at the general meeting referred to in paragraph 3 above. 5. All the parties will use their best endeavours to advertise the general meeting referred to in paragraph 3 above to ensure that all 603 beneficiaries receive notice of the general meeting. 6. The nomination and appointment of a new Board of Trustees at the general meeting referred in paragraph 3 above will take place in accordance with the relevant provisions of the Trust Deeds. 7. The newly appointed Board of Trustees shall within 60 calendar days of the date of their appointment, after the election and receipt of letters of authority, convene a general meeting to appoint further beneficiaries, who are not part of the list of 603 beneficiaries, as contemplated in clause 5.2 of the Trust Deed,4 which general meeting shall be conducted with the oversight of the Master and the Department of Rural Development and Land Reform.’ [7] Ordinarily one might have believed that an order of such clarity would have resolved the dispute, but, alas, it was not to be. As adumbrated earlier the independent trustees did convene a general meeting and a new board of trustees was appointed. Mr Malatji, as well as the seventh to twentieth respondents, were appointed as the new board of trustees (the trustees). However, as I have said, Mr Malatji contended that the election was irregular, hence the application to the high court. He argued that the process was flawed in the following respects: (i) the independent trustees made provision in the notice convening the meeting for voting by way of ‘proxy’ where the particular beneficiary was deceased in circumstances where no provision therefor was made in the trust deed or in the 2018 order (the first issue); (ii) the independent trustees allowed absent beneficiaries to vote by way of proxy in circumstances where no provision therefor was made in the trust deed or in the 2018 order (the second issue); (iii) the proxies that were allowed by the independent trustees were not supported by a document or by an affidavit signed by the beneficiary/claimant who was entitled to vote (the third issue); and (iv) the election was not free, fair or democratic. This he contended was so because each beneficiary was allowed to cast only one vote in toto, instead of being permitted one vote in respect of each vacant post (the fourth issue). [8] The events leading up to the general meeting and the election are not seriously in dispute. On 21 December 2018 the independent trustees issued an invitation, which was widely publicised, to beneficiaries to attend the meeting. The invitation recorded: 4 Clause 5.1 of the trust deed provides that the initial beneficiaries shall be those persons listed in Annexure C to the trust deed. Clause 5.2 provides: ‘Further beneficiaries shall be appointed by the incumbent beneficiaries in a general meeting called for that purpose ….’ At the time of the 2018 order there were 603 beneficiaries. ‘INVITATION TO THE GENERAL MEETING OF THE MAMPHOKU MAKGOBA COMMUNITY TRUST (IT8699/2004) You are hereby invited as one of the beneficiaries who were enlisted on the verification list containing 603 households to attend the General Meeting for the election (nomination and appointment) of a new board of trustees, in accordance with the court order, read with the Trust Deed, which will take place on DATE: 12 JANUARY 2019 VENUE: MAGOEBASKLOOF HOTEL TIME: 10H00 Where a beneficiary is deceased, the family should pass a resolution nominating a successor to represent them as a beneficiary of the Trust and they should have this signed resolution together with a copy of the death certificate to be allowed into the elections. The resolution form is available at the independent trustees Mrs Gisela Stols and Mr Ledwaba Mpoyana Lazarus. Yours Sincerely . . .’ [9] In response to the invitation 344 persons attended the meeting. The names of approximately 100 of the attendees did not appear on the list of 603 beneficiaries, but they claimed to be entitled to represent listed beneficiaries who had passed away prior to the meeting, as recorded in the invitation, or listed beneficiaries who were unable to attend the meeting. [10] At the meeting it was evident that the attendees represented three competing factions being the previous trustees, the steering committee and the royal council.5 The steering committee and the previous trustees had had a history of animosity set out earlier and the independent trustees accordingly interacted with the various factions in an endeavour to agree to a procedure to be followed at the meeting. The engagement was protracted with the result that the eventual voting process continued into the early hours of the following day. However, prior to the commencement of the voting process the parties had agreed: (i) that 5 The royal council appeared to have played a minor role and their participation is not material to the appeal. 15 trustees would be appointed; (ii) that each faction would be entitled to nominate 15 candidates;6 (iii) that voting would be by secret ballot; (iv) that where a beneficiary whose name appeared on the list had died prior to the meeting a ‘proxy’ nominated by the family of the deceased would be entitled to exercise their voting rights; and (v) that each attendee would cast only one vote in respect of one candidate nominated. [11] The independent trustees then resolved to permit proxy votes to be cast on behalf of absent beneficiaries provided that the alleged proxy was in possession of their identity document and the identity document of the absent beneficiary. The alleged proxy voter was further required to attest to an affidavit before a commissioner of oaths who was present at the meeting, to confirm that he was authorised to vote on behalf of the absent beneficiary. [12] In this Court, Mr McNally, on behalf of the respondents, argued that on a proper interpretation of the trust deed the beneficiaries who appear on the list of 603 beneficiaries referred to in the 2018 order are not the sole repositories of benefits under the trust – rather they are representatives of a family or household. Thus, where a beneficiary had passed away, an individual, properly authorised, was entitled to continue to represent the household. Similarly, properly interpreted, so the argument proceeded, it provides for voting by proxy and accordingly the voting process had been in terms of the trust deed. The trust deed, he contended, was silent on the nomination of candidates and the number of votes which each beneficiary was entitled to cast, thus leaving the decision in the discretion of the trustees. Finally, he argued that, in any event, Mr Malatji, and those respondents supporting the application, were precluded from relying on the trust deed as they had, through their agreement, waived their right to challenge 6 The royal council declined to nominate any candidates with the result that 30 candidates were available for election. the procedure followed, alternatively, they were estopped from doing so. I shall revert to these issues. [13] The primary issue for determination is whether the general meeting was convened in compliance with the 2018 order and the trust deed. This requires the interpretation of the 2018 order and the trust deed. The approach to the interpretation of documents is now well established. It does not stop at the perceived literal meaning of the words used by the contracting parties, but considers them in the light of all relevant and admissible context, including the circumstances in which the document came into being.7 The court in Eke8 stated that court orders are interpreted in the same manner. At para 29 the Constitutional Court held: ‘Once a settlement agreement has been made an order of court, it is an order like any other. It will be interpreted like all court orders. Here is the well-established test on the interpretation of court orders: “The starting point is to determine the manifest purpose of the order. In interpreting a judgment or order, the court's intention is to be ascertained primarily from the language of the judgment or order in accordance with the usual well-known rules relating to the interpretation of documents. 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 in order to ascertain its intention.”’ [14] The first issue relates to the invitation to and attendance by family nominated representatives. In their opposing papers the independent trustees provided no explanation at all for the inclusion of these persons in the invitation. [15] The context in which the 2018 order came to be made is set out earlier. There was a dispute between the parties in respect of the persons who would be 7 See Natal Joint 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; Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd [2015] ZASCA 111; 2016 (1) SA 518 (SCA); [2015] 4 All SA 417 (SCA) para 28. 8 Eke v Parsons [2015] ZACC 30; 2016 (3) SA 37 (CC); 2015 (11) BCLR 1319 (CC). entitled to attend the meeting and to vote. Paragraph 4 of the order was designed to define who would be entitled to do so. The question which remains is whether, in terms of the trust deed, relatives of a listed beneficiary were entitled to send a family representative to the meeting. [16] As I have explained, the trust deed set out the names of the initial beneficiaries. Additional beneficiaries were added in terms of clause 5.2 thereafter. Ultimately, with the assistance of the Department of Rural Development and Land Reform a list of beneficiaries was compiled. A summary of the list, which served before this Court in 2018, reflected: ‘4.1 Total number of claimants = 4.2 Total number of beneficiaries = 1087 4.3 Total number of female headed households = 4.4 Total number of male headed households = 4.5 Total number of households = 603’ [17] Clause 16 of the trust deed, upon which the respondents relied for the contention that the trust deed envisaged a succession of benefits, required a register to be kept of the interest of each beneficiary. Clause 16.1.2 provided: ‘Each Beneficiary shall nominate one further beneficiary, who shall be a family member, to succeed in his stead should the nominating Beneficiary cease to be a Beneficiary. A list of such nominated Beneficiaries shall be recorded in a registry kept at the office of the Trust. A non- family member may only be nominated if the Beneficiary has no member.’ A person ceases to be a beneficiary, inter alia, upon his death.9 [18] The trust deed was before this Court when the 2018 order was made. The context of the dispute which served before this Court and the provisions of clause 16 of the trust deed lead ineluctably to the conclusion that the reference to the ‘beneficiaries who appear on the list of 603 beneficiaries’ in the 2018 order is 9 Clause 16.1.3. to the 603 claimants recorded in the list of beneficiaries, ie, the 360 women and 243 men whose names appeared on the list. In the event of their death their name on the list might have been substituted in accordance with the provisions of clause 16. However, the trust deed makes no provision, directly or by inference, for the nomination of a successor to a beneficiary other than by way of clause 16.1. [19] I turn to the issue of proxies. The 2018 order directed that the nomination and appointment of the new board of trustees was to take place ‘in accordance with the relevant provisions of the Trust Deed’. It is accordingly primarily the interpretation of the trust deed which had to be considered. I shall refer to the material provisions of the trust deed where necessary below. The trust deed enjoined the trustees to hold a general meeting for the purpose of the election of trustees ‘by beneficiaries present and entitled to vote in terms of this Trust Deed’. The entitlement to vote is circumscribed in clause 2.9 of the trust deed which provides: ‘“Beneficiaries” for purpose of . . . a General Meeting at which it is required that a vote be taken for any reason whatsoever, shall mean Beneficiaries present at such meeting and not younger that 21 (TWENTY ONE) years of age as being a Beneficiary qualified to vote.’ [20] Mr McNally argued that ‘present at such meeting’ should be interpreted to include ‘present by proxy’. As adumbrated earlier the argument was that the beneficiary named in the register is not the sole repository of benefits under the trust. Where the beneficiary had passed on, so the argument went, there was no warrant to disqualify that household or family from having its voice heard. [21] Thus, the respondents submitted, the approach taken by the independent trustees to allow voting by proxy through mandated representatives is entirely consistent with the scheme of the trust deed. The argument cannot be sustained. The scheme of the trust deed in respect of succession of rights is set out earlier. It provides no support for the respondents’ argument. Moreover, a proxy is simply a form of mandate.10 It requires a mandate to be extended by the principal to their agent to exercise the vote to which the principal was entitled at the meeting. Self- evidently a deceased beneficiary is unable to extend a mandate and the procedure adopted by the independent trustees in respect of the deceased beneficiaries is unrelated to proxies. It is also contrary to the provisions of clause 16 of the trust deed. For these reasons the first issue must be resolved in favour of Mr Malatji. [22] I turn to the interpretation contended for, which was not raised on the papers, to the extent that it was applied to absent beneficiaries. In England it has been held that members of a corporation have no right by common law to vote by proxy.11 In this country, too, where a person is required by statute to perform an act involving the exercise of his discretion in a matter in which another has an interest he may not, by common law, delegate his power.12 Thus, a citizen is not entitled to vote by proxy in a public election. No reason in logic commends itself to hold otherwise where a trust deed entitles beneficiaries under the trust to vote for the appointment of trustees. Voting by proxy could therefore only have been permitted if the trust deed provided for it. It did not do so expressly and Mr McNally was unable to refer to any other provisions in the trust deed which might be indicative of an intention to permit voting by proxy. The ordinary language and syntax of the provisions of the trust deed indicate a contrary intention. Clauses 15.1.3 and 2.9 require of a beneficiary to be both present at the meeting and of sufficient age in order to qualify to vote. ‘Present at the meeting’, means physically present. 10 The term derives from the Latin ‘procurator’ which means ‘mandate’. 11 See Harben v Phillips (1883) 23 Ch 14 (CA) at 35; Halsbury’s Laws of England para 701. 12 See Shidiack v Union Government 1912 AD 642; Strydom v Roodewal Management Committee and Another 1958 (1) SA 272 (O). [23] It was not alleged that voting by proxy has ever previously been permitted and no notice was given in the invitation to attend that absent beneficiaries would be entitled to delegate their voting rights to a proxy. The 259 beneficiaries who did not attend and had not been notified of the intention to permit voting by proxy were unrepresented at the meeting where agreement was reached. Accordingly, the acceptance of proxy votes by persons who were not entitled to attend in terms of the 2018 order would operate to the prejudice of absent beneficiaries who had not been advised of the intention. [24] For these reasons, I find that on a proper construction of the 2018 order, read in the context of the trust deed, the presence of persons not listed as beneficiaries in the register was irregular and the acceptance of votes by ‘proxy’ on behalf of absent beneficiaries was in breach of the trust deed. The second issue must accordingly also be resolved in favour of Mr Malatji. By virtue of the conclusion to which I have come on this issue it is not necessary to consider the third issue. [25] I turn to consider the method of voting adopted by the meeting. As I have said 333 votes, of which approximately 100 were by proxies, were cast. By virtue of the ruling that each attendee was entitled to cast only one vote, there were no trustees appointed with the support of the majority of the attendees. In some instances trustees were appointed who had secured less than ten votes. The independent trustees contended that the trust deed was silent in respect of the manner of election and that they were therefore entitled in their discretion to adopt the methodology which they applied. [26] Such an assertion is incorrect. Clause 15.5 of the trust deed provides for notice to be given of a general meeting. It requires the notice to state that a decision of a simple majority of beneficiaries at the meeting shall be considered the decision of the beneficiaries. The invitation distributed by the independent trustees omitted this requirement of the trust deed, but Mr McNally was constrained to acknowledge that the provision finds application to the appointment of trustees. What the trust deed envisaged is that all beneficiaries present at the meeting13 would be entitled to cast one vote in respect of each appointment which was to be made. Only if a candidate secured a majority of the votes could they be appointed. It follows that none of the trustees was validly appointed and the fourth issue must also be decided in Mr Malatji’s favour. [27] To summarise, the inevitable conclusion is that, as a result of the invitation, the meeting was not properly constituted or conducted as envisaged in the 2018 order and in the trust deed and that the votes by ‘proxy’ on behalf of deceased and absent beneficiaries was in conflict with the provisions of the trust deed. The methodology adopted for the election was also in breach of the trust deed and the election must therefore be set aside. [28] As I have recorded, Mr McNally argued that, in any event, Mr Malatji, by his agreement to the process followed, waived any rights which may have accrued to him in terms of the trust deed or the 2018 order to object to the methodology adopted, alternatively, that he was estopped from doing so. [29] Waiver constitutes a special defence and must be pleaded. It is only under exceptional circumstances that a court would consider the defence in the absence of proper pleadings.14 Neither the independent trustees nor the twelfth to twentieth respondents raised the question of waiver on the papers. However, Mr McNally submitted that the underlying facts to establish a waiver were fully 13 Clause 2.9 and 15.1.3. 14 See Montesse Township and Investment Corporation (Pty) Ltd and Another v Gouws NO and Another 1965 (4) SA 373 (A); Dale v Fun Furs (Pty) Ltd 1968 (3) SA 246 (O). canvased on the papers and that we should accordingly hold that Mr Malatji was precluded from relying on the 2018 order and the trust deed by virtue of his agreement to the procedure. The first difficulty with the argument, as I have found earlier, is that negotiations proceeded with persons who were not entitled to be at the meeting. It was simply not the meeting envisaged in the 2018 order. The second difficulty arises from the admission by the independent trustees that there was no agreement in respect of the acceptance of proxy votes on behalf of absentee beneficiaries (as opposed to deceased beneficiaries) and that they decided on the admission thereof. The high water mark of the respondents’ case in this regard was that when the voting eventually started, Mr Malatji did not object to the acceptance of proxy votes. His silence, so it was argued, was plainly inconsistent with the intention to enforce the right to rely on the provisions of the trust deed in respect of the entitlements to vote. Thus, we were urged to hold that the waiver has been established. This argument, too, cannot be sustained for the reasons which follow. [30] The waiver of a right has the effect of extinguishing that right and the corresponding obligation. It is a question of fact and it is difficult to establish15 as there is a factual presumption that a party is not lightly deemed to have waived his rights. For this reason clear evidence of the waiver is required.16 For a successful reliance on waiver the evidence must establish that when the alleged waiver occurred the party waiving their right had full knowledge of the existence of the right which they decided to abandon.17 In this case the evidence shows that Mr Malatji approached an attorney, one Louis Erasmus, in the week following the appointment of the new board of trustees. It was Erasmus who set out the grounds of objection in a letter to the new board of trustees. There is no averment 15 Laws v Rutherfurd 1924 AD 261. 16 Hepner v Roodepoort-Maraisburg Town Council 1962 (4) SA 772 (A); Borstlap v Spangenberg en Andere 1974 (3) SA 695 (A). 17 Netlon Ltd and Another v Pacnet (Pty) Ltd 1977 (3) SA 840 (A) at 873-4. in the papers that Mr Malatji knew at the time that the voting occurred that the trust deed did not permit the acceptance of proxy votes. On the contrary, Mr McNally argued that all the beneficiaries understood that it clearly did. [31] I conclude therefore that the issue of waiver was not properly raised on the papers and the evidence did not establish the defence. [32] Estoppel, like waiver, is a special defence which must be raised in the pleadings.18 The respondents relied, for the estoppel, on the silence of Mr Malatji when the voting took place, which, it was contended, conveyed to the independent trustees that he had consented to the voting procedure. The essence of an estoppel is that a person is precluded (or estopped) from denying the truth of a representation made by him to another if the latter, believing in the truth of the representation, acted thereon to his detriment. A causal connection must therefore be established between the representation and the act.19 These matters were not canvased in the papers and there was no allegation that the independent trustees took the decision to permit proxy votes in consequence of a representation made by Malatji, nor that they would have acted differently had he protested. In the result estoppel, too, has not been established. [33] That brings me to the form of the order sought. The appellant sought to enforce the 2018 order, which the independent trustees have failed to comply with. In view of their previous failure he sought a more elaborate order to ensure compliance with the 2018 order and the trust deed. Such an order is justified. 18 Blackie Swart Argitekte v Van Heerden 1986 (1) SA 249 (A) at 260. 19 See Mahabeer v Sharma NO and Another 1983 (4) SA 421 (D). [34] In the result: The appeal is upheld with costs, including the costs of two counsel, where so employed. The order of the court a quo dated 8 August 2019 is set aside and replaced with the following: ‘2.1 The voting process and the general meeting of the Mamphoku Makgoba Community Trust (trust registration no IT8699/2004) (the trust) held on 12 January 2019 are declared unlawful and irregular and are set aside. 2.2 The trustees elected at the general meeting on 12 January 2019 are interdicted and restrained from acting as trustees of the trust. 2.3 The letters of authority issued by the third respondent to the elected trustees are reviewed and set aside in terms of s 23 of the Trust Property Control Act 57 of 1988 and the third respondent is directed to issue letters of authority to the first and second respondents. 2.4 The first and second respondents (the independent trustees) are directed to continue to act as the only trustees of the trust and to: (i) Convene and hold a general meeting of the trust within 60 calendar days of the date of this order for purposes of nominating and appointing a new board of trustees who are eligible to stand for election in terms of the trust deed; and (ii) Give notice of the meeting at least 14 days before the meeting in accordance with clause 15.5 of the trust deed. 2.5 The independent trustees are directed to apply the following voting procedure at the general meeting referred to in para 2.4 above: (i) Only the 603 beneficiaries/claimants whose names appear on the list of 603 beneficiaries, or who have succeeded such beneficiaries in accordance with the provisions of clause 16.1 of the trust deed (the qualifying beneficiaries) are entitled to attend and vote at the general meeting. (ii) No person shall be allowed to vote by proxy. (iii) Nominations for the new trustees must be received in writing at least 5 (five) days prior to the meeting referred to in para 2.4 above by the independent trustees, which nominations must be in writing and signed by the proposer, the seconder and the nominated trustee. (iv) Both the proposer and the seconder must be qualifying beneficiaries. (v) Six hundred and three ballot papers must be prepared, numbered consecutively, one copy of which shall be handed to each qualifying beneficiary present at the meeting who is entitled to cast a vote as provided in clauses 2.9 and 15.1.3 of the trust deed. (vi) Each qualifying beneficiary present at the meeting shall be entitled to cast one vote in respect of each vacancy which is to be filled. (vii) Any person casting more votes than the number of vacancies to be filled will be deemed to have cast a spoilt vote. 2.6 The first and second respondents are to publish the results of the election within 48 hours of it being held.’ _________________________ J W EKSTEEN ACTING JUDGE OF APPEAL Appearances For appellant: A G South SC Instructed by: Thomas & Swanepoel Inc, Polokwane Symington & De Kok, Bloemfontein For twelfth to twentieth respondents: J P V McNally SC Instructed by: Mapulana Maponya Inc, Polokwane Rampai Attorneys, Bloemfontein

SUPREME COURT OF APPEAL SOUTH AFRICA MEDIA SUMMARY – JUDGEMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 30 March 2021 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgement of the Supreme Court of Appeal. THETELE JOSEPH MALATJI v MAPONYA LAZARUS LEDWABA NO AND OTHERS (Case no 1136/19) [2021] ZASCA 29 ______________________________________________________________________________ The Supreme Court of Appeal (SCA) today upheld the appeal of the appellant, Mr Thetele Joseph Malatji, against a decision of the Limpopo Division of the High Court, Polokwane (high court) which had dismissed his application to declare the election and appointment of a Board of Trustees of the Mamphoku Makgoba Community Trust (the trust) unlawful and to set it aside. On 4 December 2018 the SCA had made an order directing that the first and second respondents, Mr Maponya Lazarus Ledwaba and Ms Gisela Stols, the trustees of the trust at the time (the trustees), convene and hold a general meeting of the trust for the purpose of nominating and appointing a new Board of Trustees, in terms of the trust deed. The SCA had directed that only the 603 beneficiaries whose names appear on the list of beneficiaries were entitled to attend and vote at the meeting. A general meeting was held accordingly and a new Board of Trustees was appointed. However, the trustees invited families of beneficiaries who had died to send a representative to the meeting to vote as a proxy on behalf of the deceased beneficiary. The trustees further resolved at the meeting that persons who had arrived at the meeting claiming to be representatives of absent beneficiaries could vote, as proxies on behalf of the absent beneficiaries, without any written mandate from the absent beneficiary. The SCA held that the procedure was in breach of its order and the trust deed, which did not provide for voting by proxy. At the meeting, attended by 344 persons, an agreement was reached between competing factions in the meeting that 15 new trustees would be elected and that each person present would be entitled to cast only one vote. In the result no candidate secured a majority of votes and in some instances candidates who had secured less than 10 votes were declared to have been elected. The SCA held that in terms of the trust deed a candidate was required to secure a majority of votes to be validly elected. The SCA therefor declared the election unlawful and set it aside. The SCA ordered the trustees to convene and hold a fresh general meeting which may be attended only by the 603 listed beneficiaries or their successors, determined as prescribed in the trust deed and listed in the trust register. It further directed that no-one may be permitted to vote by proxy and that each beneficiary shall be entitled to cast one vote in respect of each appointment which will be made.